The 1st meeting of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, August 28, 2008, at 1:00 PM, in Room 154 of the Capitol Annex. Representative Harry Moberly Jr., Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Charlie Borders, Co-Chair; Representative Harry Moberly Jr., Co-Chair; Senators David E. Boswell, Tom Buford, Denise Harper Angel, Ernie Harris, Dan Kelly, Bob Leeper, Vernie McGaha, R.J. Palmer II, Tim Shaughnessy, Brandon Smith, Robert Stivers II, Gary Tapp, Elizabeth Tori, and Jack Westwood; Representatives Royce W. Adams, John A. Arnold Jr., Scott W. Brinkman, Dwight D. Butler, Larry Clark, James R. Comer Jr., Jesse Crenshaw, Mike Denham, Bob M. DeWeese, Danny Ford, Derrick Graham, Keith Hall, Jimmy Higdon, Jimmie Lee, Rick G. Nelson, Fred Nesler, Don Pasley, Marie Rader, Rick Rand, Charles Siler, Arnold Simpson, John Will Stacy, Tommy Turner, John Vincent, Jim Wayne, Robin L. Webb, and Brent Yonts.
Guests: Commissioner Thomas Miller, Department of Revenue; Mary Lassiter, State Budget Director; Jim Host, Chairman, Louisville Arena Authority.
LRC Staff: John Scott, Jennifer Hays, Eric Kennedy, and Sheri Mahan
Chairman Moberly welcomed the new Commissioner Thomas Miller of the Department of Revenue and asked him to briefly address the committee. Commissioner Miller greeted the members and briefly discussed his vision for the Department of Revenue.
Next, Mr. Jim Host, Chairman of the Louisville Arena Authority, updated the committee regarding the Louisville Arena Project. Mr. Host detailed the history of the project and discussed the current status of the property, construction contracts, and financing.
Finally, State Budget Director Mary Lassiter, John Hicks, and Greg Harkenrider reported to the committee on state revenue receipts and implemented cost saving measures. She stated that the General Fund grew in Fiscal Year (FY) 08 by 1.1%, which resulted in total revenues of $8,664.3 million for the year. This amount was $28 million greater for FY 08 than General Fund receipts anticipated by the Consensus Forecasting Group (CFG).
Director Lassiter then discussed the current budgetary view. She stated that there was $28 million in revenues greater than what was budgeted and that there were $7.8 million in unbudgeted appropriation lapses. This resulted in a potential $35.8 million General Fund surplus, but when fund transfers, dedicated revenues greater than those budgeted, and unbudgeted expenditures are taken into account there is a $22.7 million General Fund surplus. She stated that by statute 50% of the surplus must be deposited into the Budget Reserve Trust Fund and the remainder into the General Fund Surplus Account. Director Lassiter stated that the Budget Reserve Trust Fund currently has a balance of $226.1 million, with an unobligated balance of $35 million.
Director Lassiter discussed the General Fund revenue growth. She said that the growth for FY 08 was 1.1%. She then stated that the estimated growth for FY 09 is 2.6% and for FY 10 is 2.8%. General fund receipts for July 08 were $646 million, which is 1.9% growth over July 07.
Next, Director Lassiter discussed the Road Fund receipts and future outlook. She stated that the Road Fund grew by 3% in FY 08 to $1,262 million, with a majority of the funds coming from motor fuels and motor vehicle usage taxes. Even with the growth, the FY 08 Road Fund receipts were below revised CFG estimates. The Road Fund had $20 million less in revenues than were budgeted, but the Fund had $47 less in expenditures than were budgeted. She stated that this left the Fund with an ending balance of $27.2 million. Director Lassiter said that the majority of growth in the Road Fund was due to the increase in the motor fuels tax.
Finally, Director Lassiter discussed budget planning for FY 09 and current cost saving efforts. She said that state agencies are focusing more on the core mission of that agency, and focusing their resources in way that best meet that mission. Agencies are reducing operating costs in various ways, such as reductions in travel, office supplies, contracts, office space, and use of state cars. She stated that HB 406 required $179.9 million in General Fund expenditure reductions, and measures to meet this mandate have included reduction in personnel costs through attrition and retirements, reduction in excess debt service, implementation of efficiencies and cost-saving measures, and debt restructuring. She discussed the Governor’s objectives and desire to preserve budget priorities. She also discussed preliminary plan to balance the FY 09 budget, and provided on update on state government retirements.
Chairman Moberly addressed the committee regarding a resolution honoring Ruth Webb’s service to the Appropriations and Revenue Committee and the General Assembly. Chairman Borders read the resolution and the committee unanimously adopted the resolution.
Being no further business, the meeting was adjourned at 3:30 p.m.
A copy of meeting materials is available in the Legislative Research Commission library, and a video tape of the meeting is available from the Legislative Research Commission Public Information Office.