In light of declining state revenues due to the national economic recession, Governor Culver took swift action last week to cut state spending and keep the state budget balanced. The Governor ordered a 10% across-the-board cut, which is estimated to reduce the state’s general fund budget by $565 million.
The reduction came after the non-partisan Revenue Estimating Conference (REC) held their quarterly meeting on Wednesday and lowered their revenue estimate for the current fiscal year 2010, from a negative 0.7% to a negative 8.4%. The new estimate means the state will have $415 million fewer dollars than was estimated by the REC at the March 20th meeting.
When the Legislature adjourned last April, they approved a fiscal year 2010 budget that expends $5.755 billion with an ending balance of $99.6 million. This new revenue estimate and other adjustments to the budget put it out of balance by approximately $363.1 million. The Governor’s Executive Order brought the budget back into balance.