Yesterday Sen. Wilson, ranking member of Ways & Means, proposed a striking amendment to the Senate operating budget. She had previously proposed a budget back in February, without the benefit of the improved March revenue forecast or the latest federal relief bill.

The new proposal would appropriate $3.780 billion less in 2021–23 from funds subject to the outlook (NGFO) than the budget that was approved by the Ways & Means Committee on Monday. (It would spend $1.948 billion less from all funds.)

Sen. Wilson would use the improved forecast to reduce state revenues rather than to increase spending. Indeed, her new proposal would appropriate just $11.8 million more than her February proposal in 2021–23 from the NGFO. (Spending from all funds would be $11.822 billion higher than her February proposal.)

Notably, Sen. Wilson again includes savings from merging the Teachers’ Retirement System (TRS) plan 1 with the Law Enforcement and Firefighters’ System plan 1, to eliminate the TRS 1 unfunded liability. This would save $705 million in 2021–23 and $830 million in 2023–25. (I wrote about the idea here.) Neither of the budgets approved by the W&M and Appropriations committees would take advantage of these savings. However, the W&M-approved budget would appropriate $800 million in 2021–23 for TRS 1 to reduce the unfunded liability.

The new proposal from Sen. Wilson assumes passage of several bills that would reduce revenues, including:

• SB 5440, which would reduce the business and occupation tax rate for manufacturing to 0%. It would reduce revenues by $354.0 million.
• SB 5463, which would exempt the first $250,000 of valuation of residential property from the property tax. This would reduce revenues by $623.0 million.
• SB 5449, which would redirect sales tax revenues from vehicle sales to the transportation budget. This would reduce NGFO revenues by $721.3 million.

The new proposal would not use the rainy day fund. The rainy day fund balance would be $2.887 billion at the end of 2023–25, and the proposal would leave an unrestricted NGFO ending balance of $148 million at the end of 2023–25.