At the beginning of May, the Department of Administration (DOA) announced their decision to defer the payment of $101 million commercial paper principal. Under the 2015-17 biennial budget, the state was expected to retire $131.7 million in commercial paper on May 1, 2016. With this delay of the $101 million payment, the Legislative Fiscal Bureau (LFB) projects that the delayed payment will be amortized over an eight-year period, resulting in $2.2 million in additional interest payments.
The decision to delay the $101 million payment will increase the 2015-16 general fund ending balance by $101 million. In January 2016, LFB projected a surplus of $70.2 million at the end of the 2015-17 biennium (June 30, 2017). This was a decrease from LFB’s previous estimate that projected a net general fund surplus of $164 million at the end of the biennium.
This is not the first time the administration has chosen to delay a debt payment to help increase the GPR ending balance. In February 2015, the administration announced the restructuring of a $108 million GPR payment. The administration is able to restructure repayments of commercial paper principal without legislative approval. This practice, known as the “scoop and toss,” has been utilized by past administrations and a LFB February 2015 memo tracked that since 2001, $1.5 billion in GPR debt has been restructured.
Even without the extra $101 million cushion to the bottom line, the recent Department of Revenue (DOR) report on tax revenues through April 2016 shows the state is on track with projected estimates. In January 2016, the LFB projected that general fund tax collections would be up in fiscal year (FY) 2016 by 4.4 percent. The DOR report shows that the collections in FY 2016 are up 4.5 percent compared to the same period in FY 2015. In addition, the DOR report shows that the sales tax revenue was up by 3 percent compared to FY 2015. The 2015-16 fiscal year ends June 30, 2016.