The state’s operating budget deficit was cut in half Wednesday when a new report improved the outlook for the rest of the current fiscal year and the two-year budget cycle set to begin July 1.
The Economic and Revenue Forecast Council improved the bottom line in the current biennium by $2.2 billion and by $2.4 billion in the 21-23 biennium. You can read its full report here and you can find the press release from the state budget office here.
While undoubtedly good news, there remains much downside risk in the economy and anticipated revenues could slide once more in future forecasts. Some unanticipated economic activity occurred as the result of federal stimulus efforts that are unlikely to be repeated. Further, any shift in aerospace production would have significant ripple effects throughout the state.
The Council will produce another forecast in November. The governor will use assumptions made in that forecast to write his 2021-23 operating budget proposal. The Legislature will draft its proposal based on the subsequent forecast that is likely to be issued in February.