Individual income tax and use tax are the major areas of concern. Although we are currently under the forecast, collections for June have yet to be added to the total and we are optimistic that the revenue will improve. This is the State's emergency fund, to be used in the event of a natural disaster or a cash crunch. Should the situation worsen, the Governor has the authority to set processes into motion to belt tighten, such as reallocation of agency budgets, hiring and budget freezes, borrowing from Working Cash, or direct budget cuts, with discretionary exemptions. Budget cuts would be a worst-case scenario.
Unemployment remains very low by historical measures.
Ending cash will be divided between the Education Enhancement Fund and Beginning Cash for fiscal year 2001. There are expenditures in higher education that were budgeted under the assumption that more cash would be diverted to Education Enhancement. We should make every effort to improve our budgeting process so that below estimate revenue does not become an ongoing problem. First, examine the possibility of budgeting against a zero beginning cash balance, instead of appropriating an unknown forecast and being under-funded when revenue falls below expectations. Then, remember that we will experience ups and downs in the economy and we must continue to diversify our economic base so that our positives are greater than the periodic negatives.