Yesterday evening the conference agreement on the 2018 supplemental operating budget was announced. It would increase near general fund–state plus opportunity pathways (NGFS+) appropriations by $941.0 million over enacted 2017–19 appropriations. That’s $176.5 million less than the Senate-passed budget and $560.6 million more than the House-passed budget. (For more on the budgets that passed each chamber, see our policy brief.)

The conference agreement would fully fund the increase in school staff salaries in SY 2018–19, as ordered by the state Supreme Court. It would not change the apportionment schedule to save $609 million in the current biennium, as the House-passed budget would have done. It would create the dedicated McCleary penalty account to house the fines that have been accruing in the case ($105.2 million), and it would appropriate the full amount for basic education items.

The agreement would add a 6 percent regionalization adjustment for school salaries in certain districts, as well as a 4 percent experience factor adjustment. It would delay the planned phase-in of professional learning days by one year to save $27 million.

It would also appropriate $18.5 million to reduce the state need grant wait list.

On revenues, the agreement assumes enactment of SSB 6614. It would reduce the CY 2019 state property tax rate to $2.40/$1,000 of assessed value. This would reduce revenues by $390.2 million over two years. As I wrote yesterday, the bill would also redirect $935 million of property tax collections from the general fund to the education legacy trust account (ELTA). According to the staff summary, this would have

the effect of lowering by approximately $700 million the amount of extraordinary revenue which otherwise would have been transferred to the Budget Stabilization Account in the biennium. That amount is not transferred, instead remains in the state general fund, and is then subsequently reduced by the lowering of the state property tax rate.

SSB 6614 was passed by the Senate yesterday and a House Finance Committee hearing on the bill is scheduled for this morning at 8.

The agreement would not impose a capital gains tax, and it would not reduce B&O tax rates for manufacturers.

The unrestricted NGFS+ ending fund balance would be $1.227 billion in 2017–19 and $103 million in 2019–21. The budget stabilization account ending balance would be $1.139 billion in 2017–19 and $1.691 billion in 2019–21.