Proposed Federal FY 2008 Budget Will Have Major Effects on Georgia

For Immediate Release
March 22, 2007
Contact: Alan Essig, Exec. Director
(404)-420-1324
http://www.gbpi.org

Proposed Federal FY 2008 Budget Will Have Major Effects on Georgia

Atlanta - The Georgia Budget and Policy Institute (GBPI) today released an analysis of the President’s Federal Fiscal Year (FY) 2008 Budget Proposal. According to the GBPI analysis, cuts proposed in the federal budget would cost Georgia over $846 million in funding over the next five years for many vital services that rely on federal support.

Georgia receives approximately $11.1 billion in federal funds, which accounts for about 32% of the state budget. The list of programs supported with federal monies include Head Start, Medicaid and PeachCare, K-12 education support (Title I), and clean drinking water projects, in addition to several grants to address needs for public housing, child nutrition, childcare, low income energy assistance, criminal justice, homelessness, and the disabled.

“The impact of these cuts will force some very tough decisions on Georgia in the coming years,” said GBPI Executive Director Alan Essig. “If Congress approves the President’s budget as proposed, the state will either have to increase its own spending for many vital services or make its own cuts. The result would be drastic reductions in certain services and in some cases, complete elimination of them.”

The President’s projection for federal spending over the next five years begins with a budget for FY 2008 that totals $2.9 trillion. Funds for defense and homeland security will be increased, but spending for domestic discretionary spending is projected to drop by as much as $13 billion. Proposed cuts will affect federal funding for states to provide health care, food assistance, education, child care assistance, public housing, and environmental protection.

By 2012, Georgia will have lost over $846 million of the federal funds it would need to maintain the operation of more than a dozen services and block grant programs at 2007 funding levels.

The federal cuts involve a broad roster of programs in Georgia that serve millions of people. Proposed cuts in the federal budgets that follow FY 2008 will become progressively deeper, causing progressively more serious funding shortfalls for the programs in Georgia. The list below cites just a few of the programs affected, and it indicates how much deeper those cuts are projected to become over the next five years:

Vocational and Adult Education: $23.3 million in 2008; $127.1 million in 2012
Elementary and Secondary Education: $169.5 million in 2012
Head Start: $5.7 million in 2008; $62.0 million in 2012
Childcare and Development Block Grant: $1.5 million in 2008; $17.5 million in 2012
Low Income Energy Assistance Program: $4.6 million in 2008; $26.2 million in 2012 Criminal Justice Grant Programs: $15.9 million in 2008; $82.6 million in 2012
Community Services Block Grant: $17.2 million in 2008; $89.1 million in 2012
Women, Infant, and Children Nutrition (WIC) program: $20.6 million in 2012

The President’s proposed budget also includes changes to Medicaid that could result in additional losses of hundreds of millions of dollars in federal funding. The federal government proposes to obtain these savings by pushing for greater efficiencies in the purchasing of services for recipients and by limiting the state medical expenditures it is willing to match, thereby shifting the costs to states.

Although the President’s budget proposal claims to balance the budget by 2012, the reality is that the budget will be balanced on paper only. The President’s budget omits well over $100 billion in costs for 2012 and projects optimistic revenue collections.

“Federal spending reductions alone cannot resolve the federal deficit,” Essig said. “Rather than shifting costs onto Georgia state and local governments and potentially damaging essential service provision, the federal government should offer a budget package that includes both revenue increases and targeted spending reductions resulting in true deficit reduction, an honest federal budget, and a minimal impact on Georgia state government.”

Mr. Essig is available to answer questions regarding the GBPI analysis and can be reached at 404-420-1324.

All of GBPI’s research reports are available on its web site at www.gbpi.org.

ABOUT GBPI
The Georgia Budget and Policy Institute (GBPI) is the state’s leading independent, nonprofit, nonpartisan organization engaged in research and education on the fiscal and economic health of the state of Georgia. The Institute provides reliable and timely analysis of Georgia’s budget and tax policies and promotes greater state government fiscal accountability, improved services and enhanced quality of life for all Georgians.