NOTES FROM THE SENATE
BY SENATOR JACK HILL,
4th DISTRICT
As the 2008 fiscal year limped to the June 30 end, one thing is certain, the economists predicting Georgia's growth for this fiscal year were wrong all year long and wrong as recent as March when the Governor lowered the Revenue Estimate for FY 2009 by $245 million. The economists seemed confident the FY08 revenue growth would be within shooting distance of balancing with maybe $100 million to make up out of the Reserve Fund. The final FY08 figures will come out this week, but the odds are that the state will have to dip into the Reserve Fund for several hundred million dollars.
This continued decline in revenues – now virtually flat with no growth - means the 2009 Budget could be overspent by $600 million. And that is if the bottom of the revenue slide has been reached and the state does not continue the decline into negative territory.
Based on weakening revenue forecasts, Governor Perdue has directed state agencies to make significant budget reductions in their 2010 annual budget request submissions due this September. Additionally, the Governor has asked that state agencies reduce spending in the Amended Fiscal Year (FY) 2009 budget by 3.5% of the amount budgeted for FY09, that the General Assembly approved this past Session. Agencies are further directed to take an additional ½ % reduction in the FY10 General Budget resulting in a 4% budget cut over FY09. Hopefully, this is a worst case scenario and only a combination of cuts and Reserve Funds would be needed.
But Georgia is not alone in having to curb spending in FY09 and FY10. States across the nation are feeling the effects of the economic slowdown. The Center for Budget and Policy Priorities in Washington, DC reports that 29 states and the District of Columbia are facing revenue shortfalls in FY09. They also report that three additional states will face budget shortfalls in FY10...
(Click here for a comparison of other states)
...So, there are uncertain times ahead. Until the economic slide reverses itself and an upward trend is established, Governor Perdue and the state leadership must operate on a “pay as you go” basis.
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