| Georgia Budget & Policy Institute |
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| This Week in the Georgia Legislature |
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State Revenues
State revenues for the first six months of this fiscal year are running 13.7 percent behind FY 2009 revenue collections.
The governor's FY 2010 revised revenue estimate projects a decline in revenues of 8.9 percent. Revenues will need to increase by 1.4 percent over the remaining six months of the fiscal year in order to meet this estimate.
The governor's FY 2011 revenue estimate, which includes new taxes and fees, is an increase of 8.1 percent compared to FY 2010 projected collections. Without adding in his new revenue proposals, the governor's FY 2011 revenue estimate projects a 3.9 percent increase. |
| House and Senate Calendar
The House and Senate are scheduled to go into session for the 9th legislative day on Monday February 1st. |
| State Budget: FY 2010 Amended and FY 2011
The governor released his proposed budgets on January 15, 2010. The House and Senate held joint Appropriations Committee Hearings to hear from the governor and agency heads January 19th through 21st. Both the House and Senate Appropriations Sub-Committees have begun their budget hearings on the Amended FY 2010 budget.
GBPI Analysis
Please see the following reports for analysis of the governor's budget proposals:
Highlights of the Governor's FY 2011 Education Budget Proposals
Governor's Proposed FY 2010 Amended Budget
The FY 2010 Amended budget closes an additional $1.4 billion budget shortfall, for a total FY 2010 shortfall of $4.6 billion. The shortfall is closed through almost $2 billion in state agency budget cuts, $1.4 billion in Recovery Act funds, eliminating the Homeowners Tax Relief Grant ($428 million), and using almost $800 million in various reserve funds.
Governor's Proposed FY 2011 Budget
The proposed FY 2011 State General Fund budget is $18.1 billion. It is based on an 8.1 percent increase in General Fund revenues. The increased revenues consist of securitizing certain Georgia Environmental Facilities Authority (GEFA) loans ($287 million), a new 1.6% provider fee on managed care organizations and hospitals ($345 million), eliminating the Medicaid CMO exemption on the existing Insurance Premium Tax ($68 million), and a 3.9 percent growth in revenues from FY 2010 ($599 million).
The proposed FY 2011 budget incorporates and annualizes many of the budget cuts implemented in FY 2010, but also includes $1.25 billion of revenues above the Amended FY 2010 revenue estimate. These additional funds replace the almost $800 million in reserve funds used to balance the FY 2010 budget and accounts for student growth in the Board of Education, Board of Regents, and Technical College System budgets. Approximately $1.4 billion in Recovery Act funds are in the base of the FY 2011 budget (8 percent of budget).
The governor's proposal expends almost 96 percent of the budget on education, health, public safety, human services, tansportation, and debt service.
Compared to the original FY 2009 budget as passed, and including Recovery Act funds, the FY 2011 proposed budget cuts education agencies 10.7 percent, public safety agencies 9 percent, Department of Human Services 18.2 percent, and the Department of Transportation 17.8 percent.
Due to the infusion of Recovery Act funds and increased enrollment, the governor's proposal increases the Department of Community Health budget 10 percent. The debt service on Georgia's bonds has increased by almost 18 percent. All other state agencies will see their budgets reduced by an average of 20 percent with this budget.
Since 2008, state government has been reduced by more than 13,300 (12.2 percent) authorized jobs.
Federal Recovery Act Funds
The Amended FY 2010 and FY 2011 budgets contain $1.4 billion in stabilization and Medicaid funds. In FY 2011, education agencies have $506 million in Recovery Act funds in their base budget, public safety agencies have $128 million, and Medicaid has $757 million.
The proposed FY 2011 budget includes $375 million in federal Medicaid funds, assuming that Congress will extend the enhanced FMAP rate for six months. If Congress does not extend the enhanced FMAP rate, the FY 2011 Medicaid budget will be facing a $375 million shortfall.
Revenue Shortfall Reserve
The Revenue Shortfall Reserve (RSR) contained only $103 million at the end of FY 2009. The governor used more than $1.4 billion in RSR funds to help balance the state budget in fiscal years 2008, 2009, and 2010. Due to the lack of funds in the RSR, it is imperative that the governor submits a very conservative revenue estimate for both AFY 2010 and FY 2011.
FY 2012 Projected Deficit
The governor projects a $2.6 billion deficit in FY 2012. This projected deficit is due to the need to replace one-time funds used in FY 2011 and projected growth in the FY 2012 budget. To close the $2.6 billion FY 2012 projected budget deficit through revenue growth, state revenues would need to grow by more than 15 percent in FY 2012.
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| Fiscal and Tax Policy
Transparency for Tax Breaks
This week the House Appropriations Subcommittee on Zero-Based Budgeting passed Senate Bill 206, which would require detailing tax breaks currently in the tax system. The House Appropriations Committee held a hearing on the bill, but plans to make amendments before voting. The bill passed the Senate unanimously last year. Read information on the topic here.
Legislators Hold Press Conference to Re-introduce Tax Cut Package
On Thursday, legislators held a press conference to announce House Bills 1023 and 1024, almost identical legislation to the so-called JOBS Act the governor vetoed last session.
The bills would provide a tax credit for hiring unemployed workers, give a holiday for business filing fees, eliminate corporate net worth tax, give a $10 million angel investor tax credit, and reduce the tax on capital gains 50 percent, among other cuts. The main changes are the angel investor tax credit and a trigger mechanism for the capital gains tax cut (the rainy day funds would have to return to $500 million for the cut to take place). Read the Institute's analysis of these cuts from last session.
GBPI Resources About Taxes
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Annual Policy Conference Provides Solutions to State Budget Turmoil
By Bruce Borowsky and Sanjita Sarkar
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| For more info and reports, please visit:
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GBPI in the News
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Stimulus Package Puts Nearly $10 million in Floyd Pockets
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The Georgia Budget and Policy Institute, the state's leading independent, nonprofit, non-partisan organization, seeks to build a more prosperous Georgia. We rigorously analyze budget and tax policies and provide education to inspire informed debate and responsible decision-making, advancing our vision of a state in which economic opportunity and well-being are widely shared among all. |
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