The challenges of the State Budget

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ATLANTA (January 24, 2012) – Although the Georgia General Assembly recessed for an entire week only five days into the 2012 legislative session, it was to enable a very important task: reviewing Governor Deal’s budget recommendations for FY 2013, alongside the amended FY 2012 budget.



As required by law, Georgia must have a balanced budget and cannot allow any sort of deficit spending. These meetings are an essential part of the legislative process; allowing for a careful line-by-line review of the proposed budget and providing an open forum for conversation between legislators and state agency officials.



The FY2013 General Budget recommendation presented by the Governor called for a spending plan of approximately $19.2 billion. Governor Deal’s budget does not include any tax increases and is built on $929 million in revenue growth from existing sources. Tax revenue is projected to grow 5% over the FY12 Amended budget. While this might seem like a lot, it is less than 2007 when revenues approached their peak at $19.9 billion. In testimony before the committee, Dr. Ken Heaghney, the state’s economist, projected that the state would not reach the 2007 peak again until at least 2015.



The majority of the increased revenue went to cover growth due to population increases as well as to close projected deficits. K-12 enrollment growth of .36% required $59 million and teacher step increases for training and education required $56 million. Enrollment growth of 3.05% in the University System and 6.6% in Technical Schools resulted in a combined $93 million recommended for these agencies.



In order to meet our retirement obligations, $154 million was added to the budget. This increase was required primarily due to stock market losses, as well as the increase in state employees and teachers retiring. Not only does this “annual required contribution” keep the retirement plans fiscally sound, it is an important factor for bond raters as they assess the state’s Triple AAA bond rating. Deficits and enrollment growth in Medicaid and deficits in the State Employee Health Benefit plan claimed approximately $300 million of the increased growth revenue. Other deficits in the budget claimed an additional $100 million.



It is important to remember that though revenues have dropped since 2008, the State has seen an increase in the demand for services. The university system has seen 17% growth over this time. Technical schools have seen an increase of 46% from 2008 to 2011. Medicaid and PeachCare recipients grew 17% during this time as well.



Georgia needs to focus on pro-business incentives that will spur job creation and put Georgians back to work in order to propel further economic growth. Strategic tax reform is necessary rather than the quick alternative of simply raising taxes. The quickest way to turn Georgia’s economy around is to provide incentives for businesses seeking to relocate or expand operations in our state. In turn, these businesses will provide the jobs that will put Georgians back to work.





Highlights of Governor Deal’s Budget:



Education

Governor Deal has appropriated $58.7 million to fund enrollment growth in K-12 schools, along with $55.8 million for training and experience salary step increases for teachers. In addition, Governor Deal has included $8.6 million for the State Special Charter Schools in order to cover the state and local funding lost when the Georgia Supreme Court declared the Charter School Commission unconstitutional in May 2011.



Higher Education

The HOPE scholarship program will maintain the same award levels and grants as FY 2012, and the state will continue to appropriate $20 million for the needs-based one percent student loan program. In an effort to keep medical residents in Georgia, the Governor has proposed $5 million to create a second National Cancer Institute designated Cancer Center at Georgia Health Sciences University and $3.64 million to develop new graduate medical education programs.



Public Safety

The FY 2013 budget will utilize $10 million to create new Accountability Courts (drug, DUI, mental health and veteran courts), a proven method of reducing costs and recidivism rates, and also $35.3 million to add more beds to our prisons. Another $1.4 million will be used to create positions for parole officers to implement re-entry supervision for offenders serving their maximum service.



Bonds

The addition of $46.7 million in bonds to complete the Savannah Harbor Expansion Project will keep our state globally competitive, while $177.8 million will fund infrastructure needs for K-12 schools, including the $25 million purchase of 320 buses.



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Sen. Cecil Staton serves as Senate Majority Whip. He represents the 18th Senate District, which includes portions of Bibb, Crawford, Houston, Jones, and Monroe counties. He may be reached at 404.656.5039 or by email at cecil.staton@senate.state.gov

Read more: The Warner Robins Patriot - Budget overview for FY 2012 and FY 2013