State surplus projected at $64.5 million

It’s early in the state’s budget year, but a $64.5 million question of sorts awaits lawmakers: What to do with what appears to be a burgeoning surplus?

Through the first two months of the 2016-17 budget year, state revenues could be $64.5 million ahead of the projections legislators made at the end of the 2016 session.

One reason for the surplus: August revenue collections beat projections by $17.2 million. Sales, income and corporate tax collections are up from 2015-16; overall, revenue collections are up by 7.8 percent from a year ago.

Also part of the equation: the state Department of Health and Welfare returned $19.1 million to the state general fund in August. Meanwhile, the Division of Financial Management’s revenue projections are $28.5 million higher than those used by the Legislature.

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If the surplus holds — or grows — between now and January, lawmakers could have an unanticipated question on their hands when the 2017 session convenes. It could trigger a debate about whether to put the surplus into K-12 or other state programs, or return it through tax relief.

More reading: State superintendent Sherri Ybarra proposes a 6.6 percent budget increase for K-12.