Henry spokesman Paul Sund said Wednesday the two sides were having general discussions about how to address the state’s deteriorating revenue outlook, “but they have made no definitive decisions about how to proceed at this point.”
State Treasurer Scott Meacham said earlier this month that the budget shortfall this fiscal year could exceed the $700 million shortfall experienced in 2003 — the worst in state history.
The governor or two-thirds of the Legislature can convene a special session. If they decide to meet, lawmakers could target budget cuts for state agencies and tap a portion of the nearly $600 million in the state’s Rainy Day Fund.
In order to access the fund, the State Board of Equalization would have to first anticipate a budget shortfall for the entire year and declare a revenue failure. In that case, lawmakers could tap up to 3/8, or $233.7 million, of the fund, said Shelly Paulk, a revenue analyst for the Office of State Finance.
Another option is if the governor and two-thirds of both legislative houses declare an emergency, they could tap up to one-quarter, or $149 million, of the Rainy Day Fund, Paulk said.
The 2009 fiscal year ended June 30 following six straight months of declining revenues, and the first month of the new fiscal year was even worse. Tax revenue collections totaled nearly $337 million in July — a drop of more than $120 million, or about 26 percent, from July 2008. The total also was more than $74 million, or 18 percent, below what the state expected.
State officials responded by ordering a 5 percent across-the-board cut in state agencies’ August budgets, even though 7 percent cuts hit most agencies on July 1, when the state’s $7.2 billion budget adopted by lawmakers last spring took effect.