The February revenue numbers are expected to be announced Monday or Tuesday. State revenues through January (first seven months of FY 2010) are running 12.9 percent behind FY 2009 revenue collections.

The governor's FY 2010 revenue estimate, however, is based on a decline of 7.3%. The Georgia State University Economic Forecasting Center February forecast projects an FY 2010 revenue decline of 8.5%, which also may be optimistic since unemployment continues to increase (now 10.4%) and revenues are not expected to pick up any time soon. 

 

This continued revenue drop indicates that the potential FY 2010 shortfall could be between $400 million and $600 million. 

 

The most likely scenario for making up this shortfall is to transfer $300 million to $400 million in federal Recovery Act funds budgeted for FY 2011 into the FY 2010 budget, as well as cutting spending (furloughs, travel, purchasing) in the final three months of the fiscal year. The Revenue Shortfall Reserve, which is what is typically used at the end of fiscal year to balance the budget, totals only $103 million.  

 

The governor's FY 2011 revenue estimate projects a 3.9 percent revenue increase over projected FY 2010 revenues. The Georgia State University Economic Forecasting Center February Forecast projects an FY 2011 revenue increase of 3.5%, which again may be optimistic due to the continued weak economy. 

 

Every percentage point revenues come in below the governor's revenue estimate results in a $168 million shortfall.   

 

Why Georgia Has a Potential FY 2011 Shortfall of $1 billion