The fiscal year 2009 figures for Georgia’s state budget are in and the news is concerning.
Where we’re at
One year ago today, Georgia had a budget of $21.2 billion for Fy009 and over $1 billion in reserve funds. We ended FY09 with a budget of $18.7 billion and, after using nearly all of our reserves to balance the FY09 budget, now start the FY10 budget with very little left in reserves.
Certainly no one needs to be reminded of what has happened to the national economy over the past year. All of us have felt the effects of what is being called “the great recession,” and the state of Georgia is no exception.
In Georgia, the governor has the responsibility of setting the official revenue estimates for the state budget.
Each year the governor, working with the state’s economists, sets a revenue estimate that is adopted by the General Assembly. While it would be easy to criticize everyone involved, including the General Assembly, for missing the revenue estimates by such a large margin, few people saw this coming and historically revenue estimates have been fairly accurate.
As is typical with state governments, fiscal conditions in Georgia did not start to deteriorate until a few months after the national economy started to show signs of a letdown. In fact, it was not until January of this year that Georgia’s figures started to tank.
But tank they did — for FY09, collections of state personal income, corporate income and sales taxes, the three taxes that make up the bulk of state revenues, were off 11.1 percent. Most of this decrease has come during the past seven months, with June alone seeing an 18 percent decrease from the same month in 2008.
Looking at the different revenue sources individually, for the year corporate income tax collections fell most dramatically as the state took in 26.3 percent less from businesses in 2009 than in 2008 while personal income taxes fell by 12.2 percent and sales taxes by 8.8 percent.
Meanwhile, as would be expected with such dramatic decreases in these critical revenue areas, Georgia’s jobless claims have skyrocketed. From June 2008 to June 2009 the number of people receiving regular state unemployment insurance benefits has increased 97.1 percent.
In fact, this past month unemployment levels in the state of Georgia reached historic numbers as the jobless rate of 10.1 percent was the highest ever recorded.
Where we’re going
During this past legislative session, the governor and general assembly agreed on a FY10 budget of $18.6 billion, assuming little or no revenue growth over FY09. Already the governor is adjusting his revenue estimates and calling for nearly $900 million of more budget cuts setting FY 10 revenues at the same level as they were five years ago
Currently, the governor, along with House and Senate leadership, are discussing how to proceed with those cuts in hopes of avoiding a special session of the legislature.
Among the suggestions being discussed are more furlough days for all employees, agency wide decreases and one time cuts to certain programs.
Last week, in an unprecedented move, the House and Senate leadership decided that furloughs would also be taken by legislators for the rest of the year.
Just like state employees who are being forced to take furloughs because of budget cuts, senators and representatives will be furloughed for one day each month through December, saving the state $16,500 each month.
While uncertainty still remains as to whether we have hit the bottom of this current downturn, all hopes are that revenues will stabilize over the next few months, offering relief to the agonizing process of budget cutting.
After all, budget cutting and recessions have one thing in common — they end.