As we posted earlier, OFM has discontinued production of the familiar six-year budget outlook. Sen. Joe Zarelli subsequently asked the Senate Ways and Means Committee to make the forecast. The committee's projections are here and its methodology here.
By the end of the next biennium, in 2011, the outlook shows the General Fund running in the red by $937 million. Looking out to the end of the 2011-2013 biennium, the General Fund shortfall is $2.5 billion. The outlook also looks at the emergency reserve account and budget stabilization account, both of which would be drained (assuming the requirements to tap the budget stabilization account could be met).
As we've written before, a big part of the problem stems from the need to use general fund money to bail out dedicated accounts - near general fund state accounts - which typically have heavy spending requirements inadequately supported by slow growing revenues.
Of course the state won't spend into a hole that size. Adjustments will be made as necessary. Spending will be trimmed. Taxes may be increased. And the economy may outperform the estimates, although the new revenue forecast next month is likely to show that this estimate is optimistic.
It's true that, as Yogi Berra is said to have commented, that "forecasting is awful difficult, particularly about the future." And given the current economic volatility, it's especially difficult now. But there's utility in looking ahead, if only to get an idea of where current patterns would take you. Recognize that things will change, but benchmark according to plan.
And this plan reveals long term problems.
