State budget writers should move with caution after receiving the latest revenue certification from the State Board of Equalization today, according to a State Senate budget leader.
Even though the panel today certified an additional $17.9 million for appropriation next fiscal year, it also reduced budget estimates for every major revenue source but one - gross production taxes.
"When every revenue source but one declines, warning bells should go off because it usually signals that tough economic times are ahead. We need to remember that as we go about our budget writing chores," said Senator Kelly Haney, chairman of the Senate Appropriations Committee.
At their meeting today, equalization board members revised the budget estimate they made in December. Estimates for sales taxes, personal income taxes, corporate income taxes, estate taxes, franchise taxes, liquor taxes, cigarette taxes were all reduced, meaning forecasters don't expect revenue collections to be as high in those categories as they first estimated in
December. Gross production was the only major revenue source that had its projection increased.
"If the energy industry wasn't enjoying such a good run, we would be in some trouble right now. Because of the boom and bust nature of oil and gas, we have to be careful not to try to balance the budget on the back of energy revenues alone. If we do and prices drop, we'll find ourselves coming back in special session to cut budgets instead of increase them," said Senator Haney.
The Senate budget leader pointed out that one of the state's major revenue sources, sales taxes, has actually fallen below estimates the last two months - a trend that can signal an economic downturn if it continues. He noted that 15 other states around the country have experienced similar revenue declines in recent months and are facing budget shortfalls and
program cuts as a result.
Senator Haney said those signs and the latest revenue certification justify a more than cautious approach to this year's appropriation process.
"With three months left in the session, I'm certainly not ruling out tax relief or anything else, but I am advocating a very conservative approach to the budget process. We don't want to overextend ourselves and then get burned somewhere down the road," said Senator Haney.