The House Appropriations Committee Chair has proposed a 2019–21 operating budget that would appropriate $52.811 billion from funds subject to the outlook (NGFO). This is an increase of $8.150 billion (18.2 percent) over 2017–19 appropriations. This increase would be the largest in at least 25 years, after a 17.9 percent increase in 2005–07 and a 16.9 percent increase in 2017–19.

Of the increase, $5.834 billion is a historically large maintenance level (the cost of continuing current services, primarily due to the response to the McCleary decision on school funding, which is fully paid for the first time). Another $2.316 billion comes from newly proposed policies. (On top of this, $389.6 million would be appropriated outside of the NGFO for higher education programs. Including these funds, the proposal would appropriate $53.201 billion.)

Despite $5.6 billion in new revenue growth since the supplemental budget was adopted last March, the Chair proposes a significant tax package to help fund new policies. Included in the package is a capital gains tax. As proposed, the budget would balance over four years. However, that balance depends on capital gains tax collections. In the event of a legal challenge (which could take years to resolve), it is unlikely the state would collect capital gains revenues in 2019–21. This would put the budget out of balance in 2019–21, even if there is no economic downturn. With many economists indicating that a downturn is somewhere on the horizon (perhaps within the four-year balanced budget timeframe), legislative leaders would be wise to consider the sustainability of such historic spending increases.

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