GUIDELINESFORFY18LFCAPPROPRIATION.pdfVIP

GUIDELINES FOR FY18 LFC APPROPRIATION RECOMMENDATION I. PURPOSE The Legislative Finance Committee (LFC) budget guidelines provide analysts with direction on performance-based budgeting, the preparation of the budget narrative, and the development of FY18 recommendations on recurring appropriations, priority capital spending, and other one-time investments. The guidelines also serve to inform state agencies and the general public about the LFC priorities and the committees approach to budget recommendations for FY18. II. REVENUE OUTLOOK The August 2016 consensus revenue estimate projects FY17 recurring general fund revenue will be $5.7 billion, and FY18 recurring revenue will be $6 billion. Preliminary FY16 ending reserve balances are estimated at $130.3 million, or 2.1 percent of recurring appropriations, prior to any current-year adjustments made by the Legislature. Preliminary estimates for FY17 ending reserve balances are negative $333.2 million, or -5.3 percent of recurring appropriations. There will be no “new money” in FY18, defined as FY18 projected recurring revenue less FY17 recurring appropriations, because the difference is projected to be a decline of $210.9 million, or 3.4 percent, from FY17 appropriations. III. FY18 PRIORITY AND APPROACH No one could foresee with any certainty the extent to which oil and gas prices and production would fall and the consequent decline in gross receipts and corporate incomes taxes in the months after the Legislature adopted the current year budget. Even though legislators reduced general fund spending for FY17, appropriated levels were higher than revenue collections, resulting in a projected spend down of general fund reserves into negative territory. Actions taken in a special legislative session to rebalance the FY17 budget did not