FOURTH QUARTER FREEFALL SINKS 08 BUDGET
A "perfect storm" of deepening economic problems dropped FY2008 state revenues into negative territory for the first time in five years as June figures ended the fiscal year. While it was apparent the past few months that the state would not make the revenue growth estimate and that dipping into the reserves would be necessary, the June revenues were a negative $168 million in what was expected by many to be a positive revenue month.
Georgia will be forced to draw down reserves of $590 million out of the $1.5 billion total to balance the books for FY08.
There are two positive things you can say about this result:
1. Georgia, unlike the federal government, must balance its books yearly and cannot just continue spending or printing money. So the state faces its problems straight up and takes the action necessary to balance its budget.
2. Due to the foresight of Gov. Perdue and the legislative leadership, Georgia has a robust Revenue Shortfall Reserve and the $590 million will not present a problem.
Bonus Positive note....At least the Legislature did not listen last session to those who proposed huge tax cuts funded out of the Reserve fund.
This week and next we will discuss some of the problems the FY08 shortfall creates in the 2009 budget which just began in July...
Click here to read the JUNE REVENUE REPORT and the FY2008 REVENUE REPORT
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