Revenue shortfalls wiping out state’s cash balance

emptypocketThe $28 million state tax revenue shortfall in June may not seem too bad compared with the April and May collections, which were $310 million less than estimates. But those two months’ shortfalls already wiped out all but about $50 million of the ending cash balance projected for this new fiscal year, which began July 1. The June shortfall cuts that ending balance in half, leaving almost no margin for error. Unless the state’s revenue collections for the next 12 months are on target, which seems unlikely, the state could quickly use up the remaining ending balance and be forced to make midyear spending cuts. Even if the state manages to squeak by this new fiscal year, there is no getting through the year after that without raising taxes or significantly cutting spending.