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A look at plans, taxes
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Gov. Sonny Perdue formally submitted his amended FY09 and FY10 budget recommendations in his annual State of the State address on Jan. 14 before a joint session.

Gov. Perdue plans to introduce three budget and legislative proposals concerning education:  

1.) His first proposal is a high school principal incentive pay program ($10,000 bonus) for those principals who increase student achievement – raising graduation rates and improving SAT and end of course test scores.

2.) Gov. Perdue also proposed a merit pay program that will reward teachers who show evidence that their classroom instruction leads to increased student achievement. Increases of 10 percent and 15 percent are possible.  

3.) The third proposal involves differentiated pay for math and science teachers. This is in response to teacher shortages in those disciplines. This would advance new teachers to the fourth step of the teacher pay scale. Current math and science teachers would advance up to step 4. Additionally, those teachers would have to earn master teacher status within five years to retain the raise.

Bond package
On the bright side, Georgia remains one of seven states with a triple-A bond rating. The governor’s bond package, which totals over $1.2 billion in new investment, will hopefully provide many jobs for Georgians as well as build critical infrastructure.  In contrast to the past, this year’s package will feature many projects in which both design and construction are funded in the same year, ensuring their timely completion. These projects touch every corner of the state and include new construction at our universities, technical schools, local school systems, libraries and state facilities.

Future columns will address other areas of the governor’s budget proposal.

December revenue results
The Department of Revenue reported a decrease of $146 million or -8.9 percent in monthly net revenue collections compared to those reported in December 2007. Below are the 2008 comparative revenue figures:

Individual income tax: Individual income tax collections for December 2008 reported a decrease of $74 million or -9 percent, down from $822 million in December 2007 to $748 million in December 2008.

Sales and use tax: Sales and use tax reported a decrease in net collections of $47 million or -9.7 percent, down from $482 million in December 2007 to $435 million in December 2008.  

Motor fuel taxes:  Motor fuel taxes combined reported a decrease of $9 million or -10.4 percent in collections, decreasing from $85 million in December 2007 to $76 million in December 2008.

Corporate income tax: Corporate income tax experienced a decrease of $28 million or -17.3 percent in December 2008 compared to December 2007.

Year to date – 6 months in
The sharp decrease in December numbers brought down the year to date total. Overall total revenues are now hovering at a -2.7 percent. Individual income tax collections, 50 percent of Georgia’s revenue, now stands at a -3 percent. Sales taxes YTD are at a -3.4 percent overall. Corporate income taxes are down 18.4 percent.

Inside the sales tax numbers categories showed dismal results YTD with food down 11.5 percent YTD, apparel down 6.8 percent, general merchandise down 4.4 percent, automotive sales down 5.3 percent, home furnishings down 11.9 percent, lumber down 17.7 percent, and manufacturing down 2.9 percent.   

Motor fuel taxes are struggling so far this year. The excise (by the gallon) taxes are down 8.6 percent so far and motor fuel sales taxes are off by -3.8 percent. Total fuel revenues are off by $30 million.  

Revenue shortfall reserve
The state is required to retain at least 4 percent of the previous year’s revenue in the revenue shortfall reserve fund, now totaling $1.2 billion. Gov. Perdue is recommending that Georgia use the maximum amount available for appropriations from the reserves, $458 million. He has recommended appropriating $50 million in the amended FY09 budget and $408 million in FY10, as well as $187 million for the midyear education adjustment. Using the reserve fund lessens the budget cuts needed to balance.
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