House passes budget that includes increase in sales tax

At the beginning of the House budget debate during the last week in April, the House voted to increase revenues by about $900 million by raising the sales tax to 6.25 percent from 5 percent. The House Ways and Means Committee proposal had not included any new revenues. Even with this increase in revenues, the final House-passed budget includes significant cuts in order to deal with an expected budget deficit of nearly $5 billion.

When the House approved increasing the sales tax, it designated $275 million to deal with transportation needs, $205 million to reduce local aid cuts and the remaining funds to reduce other budget cuts.

Outlined below are changes the House made to the Ways and Means proposal.

PreK-12 Education

  • Chapter 70: The final House-passed bill uses approximately $160 million from the American Recovery and Reinvestment Act to ensure that all districts reach their required foundation budget levels. House 1 had proposed using $184 million to get all districts to foundation. Because local aid is higher in the House budget than in the governor's proposal, the required contribution for district expenditures also increased, reducing the amount of state aid needed to get all districts to foundation.

The House used an additional $20 million in ARRA funds to ensure that all districts receive $50 per pupil. Therefore, all districts will receive ARRA funds.

  • Adds $20 million for reimbursements for regional transportation.
  • Restores $6 million to the "Pothole" account, which had been zeroed out.
  • Includes a new program funded at $400,000 for planning grants to support districts considering regionalization.
  • Restores $500,000 for the Alternative Education program, which had been zeroed out.
  • Adds language ensuring that kindergarten programs previously funded through the Community Partnership will continue to receive funding.

Higher Education

The Ways and Means proposal included a provision to reduce funding of state employees' health insurance premiums from the current 85/15 or 80/20 split (which depends on the hire date of employees) by instituting a 70/30 split for everyone. The final House budget changed the split to 80/20 for everyone, including those now at 85/15.

The House-passed budget provides $13.4 million more than proposed in the Ways and Means budget. This exceeds the FY09 budget by $5 million. The budget:

  • Adds $10 million to scholarship programs for a total of $92.9 million.
  • Provides $1 million for dual enrollment for high school students.

What's Next

The Senate will release its version of the FY10 budget on May 13. It will be debated on the Senate floor during the week of May 18.