Tuesday, May 09, 2017

We Are At Loggerheads.  Any trace of optimism that was present last week has evaporated over the past 24 hours with the Legislature's decision to pass its conference committee reports and send them to the Governor for what is expected to be a rapid-fire series of vetoes.  

I don't know how many of you follow baseball that closely, but one element of hitting that is now measured is exit velocity, which clocks the speed of the ball off of the bat when a hitter successfully makes contact. In a tortured analogy, the Legislature will be tossing some pitches at the Governor and those pitches will come flying back through the box at record speed when the Governor swings his veto bat.  While that doesn't put us back at square one, it certainly does absorb time (and perhaps good feelings) and with less than two weeks left in the regular session, this development is unfortunate.

So now we enter into the next phase of what was expected all session:  a funding and policy tug-of-war.  It is difficult to know exactly how budget negotiations will ensue.  Some discussions took place over the weekend, but the process obviously didn't go that well, which influenced the Legislature's actions.  If one is dispassionate, it is easy to see where the compromises will be struck.  The size of the Legislature's proposed tax cut will likely come down and the spending for a variety of the budget areas will likely go up.  The pertinent question is to what degree both of those gears will turn as the Legislature and Governor try to come to final agreements prior to the May 22 regular session adjournment date.

As the tax bill was woken up (and quickly put back to bed) this morning, there was a change to the debt service provision that is part of the Legislature's tax proposal.  When the report was first adopted last week, the debt service equalization was a one-year provision that lowered the eligibility threshold for the program to 10% of tax effort and hiked the state participation rate on the first tier of equalization to 87% of the state average ANTC.  The change made to the bill would expand it to a two-year program, with the eligibility threshold staying at 10% of tax effort and the state participation rate set at 75% of the state average ANTC.  The framework in the conference committee report reflects the framework in the Senate bill with an extra year added.  I think I speak for everyone when I say that I hope the provision is made permanent as discussions on the tax bill continue in negotiations with the Governor.  While the legislative approach concentrates on delivering the relief through the first tier of equalization and the Governor targets his relief on the second tier, there is room for an agreement.  What the heck, I say add the two approaches together.  I'll even print the money needed in my basement if it comes to that.  Seriously, we're on the cusp of getting a considerable increase in debt service equalization for the first time in over two decades, so it's up to us to help push it through and make it permanent.

As I am writing this entry, the Senate has passed the E-12 conference committee report on a party-line vote of 34-32.  Earlier in the evening, the House passed the report on a vote of 75-54, which also followed party lines.

I will keep you posted as to what is happening as things unfold.

No comments: