I want to thank everyone again that participated in the recent online survey. A number of you mentioned in the comments section that we should put most of the current $1.65 billion budget surplus into reserves.
We do have a program that is systematically building up our budget reserves. Right now those funds stand at about $1.953 billion total. About $1.603 billion is in a dedicated reserve account and another $350 in a cash flow reserve account. The $1.953 billion in reserves is separate from the state’s $1.65 billion projected revenue surplus.
Current law provides that we annually put one-third of surplus funds as counted by the annual November budget forecast into dedicated reserve and also replenish the cash flow reserve account to $350 million. The long-term goal is about $2.6 billion in total reserves. At $1.953 billion, we are well on our way to reaching that goal.
A handful of years ago we drained our reserves to help mitigate the severe recession we experienced. More recently, a rebounding economy and disciplined spending - with one of the lowest spending increases in state history for this current biennium – are producing results.
That brings us back to the current situation of a $1.65 billion surplus in revenue. What do we do about that? With a relatively healthy bottom line and a disciplined approach for building reserves, we have some options.
As many have suggested there is a need for tax reform. Reducing the amount of state income tax we collect on seniors' social security retirement pensions and reducing collections from businesses with the state general tax are particular areas that need adjustment.
We are working hard to include a $270 million reduction in state income taxes on seniors and a $203 million reduction in state general tax collections from small businesses. That still leaves significant dollars available for new transportation spending and reasonable increases in areas such as education.
Again, we do have a disciplined program that continues to build reserves. The $1.953 billion in reserves is separate and in addition to the $1.65 billion surplus we are dealing with as we shape the next two year budget.
Tomorrow we have seven bills up for final passage in the House. These are smaller, technical bills. Next week, I expect we will move forward on some of the major agency finance bills.