Today the Senate Ways and Means Committee Chair proposed a 2019–21 operating budget that would appropriate $52.172 billion from funds subject to the outlook (NGFO). This is an increase of $7.5 billion over enacted 2017–19 appropriations. It is $687.9 million less than the budget proposal that was passed by the House Appropriations Committee on Wednesday.

The proposal would increase revenues by $421.1 million by making the real estate excise tax graduated (SB 5991). It would also increase revenues by $63.6 million by changing the nonresident sales tax exemption to a refund program and increasing business and occupation taxes for travel agents. It would increase revenues by $38.5 million by increasing business and occupation taxes for prescription drug resellers.

The proposal would transfer $74.6 million from other funds to the general fund, including $52.6 million from the disaster response account. No funds would be transferred from the public works assistance account.

Outside of the NGFO, the budget would increase revenues by $90.6 million by increasing property and casualty insurance premiums for a new dedicated account for wildfire prevention and suppression.

Unlike the House proposal, the Senate Chair’s proposal does not depend on a capital gains tax. However, a separate bill would impose a capital gains tax and use the revenues to reduce taxes for small businesses and fund a working families tax credit. According to the Associated Press, the tax rate would be 8.9 percent on gains above $250,000.

The budget would balance over four years, leaving unrestricted NGFO ending balances of $564 million in 2019–21 and $77 million in 2021–23. It appears to make appropriations from the rainy day fund totaling $41 million in 2017–19 and $1 million in 2019–21.

Some major spending items:

• School employee health benefits ($507 million)
• Special education ($156 million)
• Paraeducator training ($23 million)
• State hospital operations ($55 million)
• State need grant expansion ($98 million)
• Foundational support for higher education institutions ($36 million)
• State employee collective bargaining agreements ($470 million)

There will be a public hearing Monday.