State Budget Director Linda Luebbering

The gap in the budget had been $500 million but a recent mortgage settlement secured by the Attorney General’s Office has knocked that number down by $40 million.

State Budget Director Linda Luebbering says the Administration’s recommendations to balance the budget includes a $191.7 million reduction from where budget planners expected Medicaid would be. She tells lawmakers, “It’s an actual reduction of $20 million for general revenue from this year, but a $191 million dollar reduction from where we thought we would need to be because of the change in the Medicaid match rate.” Luebbering says it will not require a change in eligibility or a reduction in services provided.

$74.7 million of the administration’s budget recommendations also rely on measures still before the state legislature. A revenue collections bill would generate an estimated $12.9 million, with another $51.8 million to come from a tax amnesty bill. Both are sponsored by Representative Tom Flanigan (R-Carthage).

What had been a $16.9 million dollar recommended reduction to community and technical colleges has been scaled back to $10.5 million, also due to proceeds from the mortgage settlement.

Other amounts include $41 million from restructuring debt, $29.3 million in administrative savings, a $7 million reduction to biodiesel subsidy payments and a $2 million reduction to public health agencies.

The Administration’s top priority for the budget remains $203 million to the Foundation Formula. Luebbering says, “$198 million of that is needed just to keep the formula where it is this year.”

Luebbering tells the committee there are some positive signs in the economy. “The unemployment rate is down. We are starting to see a little bit of growth on the collections side. Not a lot yet this fiscal year. We were at 1.3 percent growth in our revenue collections at the end of January, so not stellar growth, but certainly it’s good to see that we’re continuing a positive on our collections numbers.”

Republicans question the validity of the lower unemployment numbers, saying that federal statistic does not count individuals who don’t have jobs and are no longer looking for them as being unemployed. Luebbering says the data still holds meaning, “Because it has historically looked at people who are looking for jobs or who have jobs. So, I think it is a historically relevant statistic that has been measured the same for years. Granted it’s not a complete number, but it at least is consistently calculated every month.”

The House Budget Committee will continue to hold agency budget hearings this week.