Georgia state budget

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Georgia has a $17.9 billion budget for FY2011 which was signed into law in June 2010, prior to the start of the fiscal year which began on July 1, 2010. Many cuts were made to the state budget as tax collections tumbled 9% in FY2010 as a result of the recession. Although the budget was balanced, lawmakers drafted it assuming that Congress would approve $375 million in funds.^[1] Congress approved H.R. 1586, and Georgia will receive $550 million of a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[2] Before the funds were approved, Gov. Sonny Perdue made additional budget cuts, ordering state agencies to reduce spending by another 4%. He exempted K-12 schools but not the university system from the cuts. Officials have cut the state budget by more than $3 billion during the past two years.^[3]

Sales tax revenues are up. June 2010 state tax collections increased 3.8% when compared with June 2009, according to state revenue officials reported. They also noted that personal income collections rose 9% and sales and use taxes were up 5%.^[4] In July 2010 tax collections rose 4.7%. Personal and corporate income, sales and gas tax collections were all up. ^[5]

Despite two good months of sales tax revenue,the state's tax design doesn't bring in enough money to pay all of the expenses of state government, leading financial experts to predicted that the state will come up short $1.5 billion to $2.1 billion during each year well past fiscal year 2015.^[6]

See also: The Georgia State Budget on State Budget Solutions

[edit] FY 2011 State Budget

Georgia's $17.9 billion state budget for FY2011 which begins on July 1, 2010, was passed on time and signed on June 9, 2010, by Gov. Sonny Perdue after much wrangling in the state legislature.^[7] The FY2011 appropriations bill that the governor signed into law was House Bill 948, the text of which can be found as signed here. One key part of the budget was contained in House Bill 307, which would impose a 1.45 percent bed tax on hospitals^[8] and generates $216 million, funds which are critical to balancing the state's budget.^[9]

[edit] Federal Funds

The amount of state aid approved by Congress in August 2010 would include for Georgia $234 million in Medicaid-related funding and $322 million in education funding.^[10] The extent to which that money would have an immediate impact, however, is unclear. The budget for the 2010-2011 school year is already set, and no further education layoffs are planned, said spokesman for the governor Bert Brantley. He also said that the 4% across-the-board budget cuts for state agencies would continue and that the federal funding would be most useful if the state can keep it until 2012, when other federal funds will run out. ^[10]

[edit] Additional Cuts

Three weeks into the fiscal year, Gov. Perdue ordered state agencies to cut an additional 4% because Congress had not yet approved $375 in federal funding which the budget drafters presumed would arrive. The governor ordered the cuts preemptively and estimated it would reduce state spending by $25.5 million per month.^[3][11]

The governor ordered the university system to comply with the cuts, but exempted K-12 education.^[3]

The latest cuts could mean furloughs for more state employees. While some of the state workers were taking days off without pay before the cuts, many more may have to do so under the governor's order.^[3]

[edit] Passage of the Budget Bill

On April 13, 2010, the House of Representatives budget committee passed a $17.7 billion state budget for FY2011 that would cut spending about $500 million below what Gov. Sonny Perdue recommended three months prior.^[12] The budget, with cuts state agencies across the board, adds a 1.45 percent tax on Georgia hospitals’ net revenues and moves more than $300 million in federal stimulus dollars from Georgia’s k-12 education program and university system into this year’s budget to plug a shortfall^[12], but also includes $10 million to help fund the relocation of the College Football Hall of Fame to Atlanta, was approved by the House.^[13]

The Georgia State Senate approved $17.8 billion budget by a 49-2 vote a $17.8 billion FY2011 budget on April 21, 2010.^[14] The Senate restored nearly $900,000 to the budget to fund the Georgia Arts Council^[14], the elimination of which in the House's version triggered protests.^[15]

The full House and Senate approved the $17.9 billion budget on April 29, 2010, the last day of the legislative session.^[16] Gov. Perdue signed the budget on [SC|June 9, 2010]. Due to declining state revenues, the FY2011 budget is more than $300 million smaller than the budget Perdue recommended to the legislature in January, a reflection of continuing recession-driven declines in state tax collections.^[14]

The budget includes two revenue generating proposals: (1) a 1.45 percent tax on Georgia hospitals’ net revenues and (2)increases in approximately 80 fees for assorted state services. Together, the two measures would increase state revenues by about $275 million.^[14] Another revenue generator is the provision for the sale of most of a state bond program used to help underwrite local water and sewer projects, which would raise $300 million.^[14][17]

The budget includes $42 million for increased staffing at state mental hospitals and programs run by the Georgia Department of Behavioral Health. It also contains a bond package of $858 million, with $393 million for equipment and building projects for Georgia schools and $200 million meant for transportation projects.^[17]

The governor vetoed bond funding for five projects, including $6.4 million for road improvements on the campus of [www.kennesaw.edu/ Kennesaw State University], because he said the affected state agency did not requested the funding or the project should have been funded through a different department.^[17]

[edit] Prior Budgets

The state had to repeatedly revise and amend its state budgets for FY 2009 and FY 2010 as their revenue projections consistently declined. Gov. Perdue signed on May 13, 2009^[18] the FY 2010 budget passed by the Georgia General Assembly and then he had to order state agencies 16 days later to cut 25% for the month of June to squeak by to end FY 2009.^[19] Further cuts were required due to declining revenue, and the revised state budget saved funds in part with furlough days for state employees.^[20]. The text of HB 947, the Amended FY2010 Appropriations Bill as signed, can be found here.

The start of FY 2010 (July 1, 2009) did not bring relief from declining revenues and corresponding appropriation revisions as Gov. Perdue (agreed by legislative leaders to avoid a special session) on July 21, 2009 called on 128,000 teachers to take 3 unpaid furlough days while ordering 3% cuts in Medicaid and education budgets. Most other state agencies were ordered to take 5% cuts and their state personnel to also take 3 unpaid furlough days to cover the new $900 million deficit.^[21]

The Georgia Department of Revenue released October 8, 2009 figures showing September 2009 state revenues were down 16% ($585 million) from September 2008, and FY 2010 year-to-date collections are down 14.2% ($1.37 billion) compared to FY 2009.^[22] Georgia’s FY 2010 budget of $18.6 billion is $2.5 billion less than the original FY 2009 budget.^[23] Georgia Budget and Policy Institute (GBPI) predicts the FY 2010 budget will be $1.2 billion short above and beyond the cuts made during its passage. GBPI estimates a deficit of $740 million for FY 2011, at which time the state will not have any reserve funds available and less federal stimulus money to cushion the impact.^[24]

A total of $4 billion in measures have been taken to close Georgia's 2010 budget gap, $3.1 billion by the General Assembly during passage and $900 million by Gov. Perdue in July 2009. Actions on the FY 2010 budget break down into:^[25]

• 38% Budget Cuts
• 34% Federal Stimulus
• 17% Reserves & Other Actions
• 11% Elimination of Homeowner Tax Relief Grant

[edit] Budget Background

The 2009 Georgia General Assembly Session's $3.1 billion budget adjustments for FY 2010 were:^[26]

• Cutting $800 million from state agencies
• Eliminating the Homeowners Tax Relief Grant raising $428 million
• Using $1.4 billion from the federal State Fiscal Stabilization Fund and an increased federal Medicaid match (ARRA funds)
• Using $500 million in various reserve funds

During FY 2009, revenues declined 10.5 percent from FY 2008 levels. This resulted in a FY 2009 budget shortfall of approximately $650 million. Lawmakers closed the shortfall by using approximately $365 million of the remaining Revenue Shortfall Reserve funds, approximately $190 million in ARRA funds, and end-of-year budget savings.^[27]

Top 2 sources of revenue are individual income taxes, $8.2 billion (anemic increase of .2% in FY 2010) and Sales & Use Taxes, $5.2 billion (-4.0% in FY 2010).^[28]

Total State Funds^[29]

FY 2009 Amended Revenue	FY 2010 Estimated Revenue	Percentage Change
$18,629,356,585	$18,569,866,489	-0.3%

FY 2010 Total State Funds Budget (Includes Lottery Funds and Tobacco Funds) Funding Area^[30]

Education	58.1%
Health and Social Services	10.0%
Criminal Justice	9.1%
Medicaid and PeachCare	8.9%
Debt Service	6.1%
Transportation	3.8%
All Other Government	4.0%

Georgia's fiscal year runs from July 1 to June 30. The Governor submits the budget to the Legislature in January for their annual session.^[31]

[edit] Budget figures

The following table provides a history of Georgia's expenditures and gross domestic product (GDP).

Fiscal Year	Expenditures (billions)	GDP (billions)
2000	$43.5 [32]	$290.9 [32]
2001	$48.6 [32]	$299.4 [32]
2002	$53.6 [32]	$306.7 [32]
2003	$56.0 [32]	$317.9 [32]
2004	$58.4 [32]	$338.5 [32]
2005	$58.9 [32]	$359.7 [32]
2006	$63.0 [32]	$376.4 [32]
2007	$72.6 [32]	$396.5 [32]
2008	$81.2 [32]	$409.6 [32]
2009	$90.7* [32]	$408.9* [32]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.

See Georgia state budget (2008-2009) for more details.

[edit] Accounting Principles

Main article: Georgia government accounting principles

The Georgia State Accounting Office was established on October 6, 2004 with an executive order signed by Governor Sonny Perdue. Governor Perdue signed House Bill 293, which codifies the realignment of the state's financial reporting and financial system responsibilities under a single State Accounting Officer (SAO). Greg Griffin was appointed Georgia's State Accounting Officer in August 2008. The State Accounting Office is responsible for the following duties:^[33]

• Establish statewide accounting and reporting standards and practices.
• Operate and improve statewide financial and human capital management systems.
• Prepare the state's Comprehensive Annual Financial Report (CAFR); the annual audited financial statement for the entire state entity.
• Provide statewide financial information on interim basis.
• Train state accounting and payroll personnel in new polices, procedures and standards.
• Improve accountability, efficiencies and internal controls.

The Georgia Department of Audits is responsible for state finanical accountability. The State Auditor is Russell Hinton.^[34]

The Institute for Truth in Accounting (IFTA) rates Georgia “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Georgia’s CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[35] Georgia's CAFRs are published online by the Georgia Department of Audit.^[36]

[edit] Economic Stimulus Package

Georgia is expected to receive $5.9 billion from the $787 billion dollar economic stimulus.^[37] All told, the federal stimulus plan would create or save 106,000 jobs in Georgia, based on White House estimates.^[38]
For more information on how the federal stimulus funds are being used in the state of Georgia, visit the state recovery website.

According to preliminary reports, Georgia is expected to receive:

• $1.7 billion infusion for Medicaid^[37]
• $1.2 billion for education^[37]
• $1 billion to build and repair highways and bridges^[37]

[edit] Budget transparency

Georgia's official spending transparency database, mandated by the Transparency in Government Act of May 2008, was launched by January 2009. It is available here. On August 26, 2008, well in advance of that requirement, however, Karen Handel, Georgia's Secretary of State, launched the Transparency in Government Initiative. This website will be updated monthly to account for the agency's expenditures, and includes Handel's budget for 2009.

See also: Evaluation of Georgia state website

[edit] Legislation

• Georgia Senate Bill 300 (2008), Transparency in Government Act

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Open Georgia

[edit] Limitations and Suggestions

Although "Open Georgia" does not yet list grants or contracts, the legislation which authorized its creation mandates that state grants and contracts be placed online by January 2010.

[edit] Economic Stimulus Transparency

The American Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[39] It is estimated that Georgia will receive at least $4.5 billion in federal funding.^[40]

Five Georgia projects were listed in Senator Coburn and Ballotpedia:John McCain|Senator McCain's]] report “Summertime Blues : 100 Stimulus Projects That Give Taxpayers The Blues.” More than $762,000 was given to Georgia Tech to study improvised music “hopefully also create satisfying works of art.”^[41] More than $677,000 was awarded to Georgia State researchers who will use the funds to study how primates respond when a situation worsens.^[41] Another project granted $427,000 to Georgia Tech to study how seniors react to Nintendo Wii games.^[41] The last project was granted to the Georgia Forestry Commission, the Commission received $900,000 to plant tree in urban areas.^[41]

• The economic recovery website for Georgia is available here.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[42][43]

Millions of dollars in stimulus funds have been disbursed among 7 Congressional Districts in Georgia that do not exist, according to recovery.gov. ^[44]

[edit] Support for creation of the database

The National Taxpayers Union and the Council for Citizens Against Government Waste sent a letter to legislators in Georgia on April 16, 2007, urging them to support Georgia Senate Bill 300 (2008).^[45] The Americans for Tax Reform also supported Georgia Senate Bill 300 (2008).^[46]

[edit] Independent transparency sites

The Georgia Public Policy Foundation has launched a transparency website, the Georgia Report Card for Parents, that focuses on school spending. This site helps place the Foundation on the cutting edge of the transparency movement.

[edit] Public employee salary information

• The Georgia Department of Audits and Accounts has posted public employee salaries and travel expenses. It is broken down by organization type, then specific organization, then specific title or position.

• Open Georgia is a gateway for obtaining information about how the State of Georgia spends tax dollars, and includes payroll information.

[edit] See Also

Georgia taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• Gov. Perdue,"Governor Perdue Signs Amended FY09 Budget," March 13,2009
• Gov. Perdue,"FY 2010 budget," retrieved June 3,2009

[edit] References

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