As part of Monday’s Appropriations Committee work session, the Office of Program Research (OPR) presented a preview of the legislative session and a look at how the pandemic has affected the budget.

The preview includes an unofficial outlook, based on preliminary maintenance level estimates. The unrestricted ending fund balances for each biennium are very close to the Senate Committee Services version that I wrote about yesterday. One difference is that OPR assumes that the rainy day fund will be backfilled with the funds from the Coronavirus Relief Fund, which would occur in 2021–23.

OPR also includes an estimate of what total reserves would be if actual revenues look more like the pessimistic revenue forecast. With each forecast, the Economic and Revenue Forecast Council adopts a baseline forecast and optimistic and pessimistic alternative forecasts. Each is assigned a probability. In the November forecast, the baseline was assigned a 50% probability and the optimistic and pessimistic forecasts each were assigned 25% probabilities. The optimistic forecast would add about $5.2 billion through 2021–23 and the pessimistic forecast would subtract about $5.4 billion through 2021–23. OPR estimates that total reserves (including the rainy day fund) would be $1.644 billion in 2019–21 and negative $3.547 billion in 2021–23 if the pessimistic revenue forecast is used. On the other hand, I estimate that total reserves would be $4.214 billion in 2019–21 and $7.088 billion in 2021–23 if the optimistic forecast is used.

The wide range between the optimistic and pessimistic forecasts illustrate how uncertain the revenue situation is. On top of that, the House and Senate estimated outlooks don’t include any new policy spending that the Legislature may enact. OPR notes that policy spending could include collective bargaining agreements, vendor rate changes, addressing funding gaps due to the reductions in caseloads, and any tax changes.

But, as things stand today, both House and Senate fiscal staffs estimate that the unrestricted ending balance for 2019–21 is positive, without using the rainy day fund. The current budget easily balances through 2023–25 if the rainy day fund is used.