The budget year that everyone has worried about is here and maybe the next bright spot is that tax collections are predicted to grow by 6 percent for FY2012 starting next July.

Agency cuts of 7 percent on average, coming on top of median cuts of 19 percent over the past two years, will force closure of some facilities and reduction of some services.

Higher education will take reductions totaling over $300 million including zero “growth” funds for institutions showing enrollment growth. Technical colleges also will not receive growth funds totaling $62 million and $19 million in cuts.

K-12 education formula received net growth funds of $61.5 million but federal stimulus funds were not replaced.

Systems were expected to have banked stimulus jobs funds of over $300 million received this past fall. The 012 budget proposal cuts over $200 million from K-12 considering federal education stimulus funds not replaced, formula reduction and other non-QBE cuts.

Gov. Deal’s budget acknowledges a $1.53 billion deficit that must be filled. The main components of the “hole” include replacing most of the loss of federal stimulus funds (including enhanced Medicaid match) of $1.1 billion and $287 million to replace lost one-time funds in the 011 budget from the sale of part of GEFA’s bond portfolio.

The major sources of funds to fill this deficit came from:

• 6 percent state tax revenue projection-$922 million

• $153 million-savings from favorable bond sales rates

• Cuts to Regents totaling $173 million (added to no growth funding)

• $19 million cuts to technical colleges (added to no growth funding)

• DOE cuts totaling $225 million

• $9.5 million reduction in public health grant-in-aid to local governments

• $5.6 million cut to the trauma commission reflecting expected “superspeeder” collections.

• $5.9 million in cuts to Department of Human Services

• $20 million in cuts to Department of Corrections from the closure of a prison

• $5.4 million cuts to Department of Natural Resources

• $132 million in cuts to other state agencies

What little new spending there was focused on supporting job creation, starting to meet water needs with reservoir development and meeting the Behavioral Health agreement with the U.S. Department of Justice.

These included:

• $5 million to support industry recruitment projects or by the Department of Economic Development.

• $19.3 million in FY11 Amended to replenish the OneGeorgia economic development program

• $32 million in bonds to support the harbor deepening project for the port of Savannah

• $45.7 million for reservoir development

• $23 million for water and sewer construction program

• $59.4 million in new funds for Behavioral Health per the state’s agreement with DOJ

Bond package

Gov. Deal has proposed the smallest bond package in recent years at only $562 million, or 7.7 percent of prior year treasury receipts. The package is divided up into various departments and needs.

$245 in K-12 school construction bonds, including $25 million for new buses

$81 million for the Board of Regents, mainly equipment and $50 million for maintenance

$43 million for technical colleges, including $10 million for maintenance and $10 to start additional career academies

Previously listed reservoir, infrastructure and Savannah harbor deepening totaling $61 million

HOPE and lottery expenditures

Gov. Deal has proposed appropriating only the amount of lottery dollars expected to be transferred from the Lottery Commission in FY12, a total of $832 million, using no reserves. This appropriation would leave $283 million in lottery reserves that are needed for cash management purposes. These realistic appropriations levels will force decisions to be made this Session on reducing expenditures for lottery programs. The shortfalls include:

HOPE public colleges-$171.2 million

HOPE private colleges-$21.4 million

HOPE Grant-$74.4 million

Pre-K-$19.8 million

The revenue shortfall reserve or rainy day fund now stands at $116 million, or about 2 days of state operations.

I may be reached at
234 State Capitol, Atlanta, GA 30334
(404) 656-5038 (phone)
(404) 657-7094 (fax)
E-mail at Jack.Hill@senate.ga.gov
Or call toll-free at
1-800-367-3334 day or night
Reidsville office: (912) 557-3811