South Georgia at the State Capitol

The 2009 Fiscal Year – Problems and Possible Solutions

 

By State Sen. Greg Goggans

 

Policymakers and the public are becoming aware of the shortfall in the just completed fiscal year and have grasped the fact that substantial funds were used from the Shortfall Reserve Fund to balance the state’s books at the end of June.  They are also aware that a substantial amount remains in the fund ($902 million) as we begin the fiscal year.  Citizens do understand that the economy has rapidly slowed and consequently state revenues have declined even faster and more deeply than first believed. 

There is a feeling that revenues are flat going into this year and that the budget may have to be cut to keep expenditures on an even keel.  However, a common misconception is that a combination of state budget cuts (excluding education and Medicaid) and the use of funds from the State Reserve fund will be sufficient for the next year.

That scenario could play out exactly like the description above, but that is far from a certainty.  Here are some points to consider:

 

1. The trend line of revenues for the past few months is generally down and with no leveling – meaning that we do not know if the bottom of the slide has been reached.  In 2002-03, the state went through an entire year of negative revenue figures.

2. The 2009 budget contains about $700 million in new spending based on original adjusted year-long growth rate projections.  But, we start the Fiscal year $763 million short due to last year’s revenues not meeting the FY 2008 estimate.  So, the shortfall is really the total of those figures, approaching $1.5 billion.  Of course that figure would be reduced by any positive growth in the next 12 months.

This is where we stand today.  What could increase the shortfall would be ongoing negative revenue collections month by month.  These numbers, then, assume a flat or no growth rate in the coming year, which is certainly not a sure thing.

Governor Perdue has asked Executive Branch departments to begin formalizing 3.5 percent budget cuts in the FY ‘09 Budget.  But with education and Medicaid currently exempt from these reductions, these cuts will only accumulate about $250 million dollars.  For example, 3.5 percent is a $40 million cut to the Department of Corrections.  The Board of Regents’ 3.5 percent amounts to an $80.5 million cut.  These cuts are substantive but they may not be enough.

The public should be reassured that the state has weathered stormy weather before and survived by using reserves and judiciously but fairly cutting budgets.  Here are some points to consider in the weeks ahead:

1. The easiest cuts to be made are those cuts of new funds not yet expended.  The new funding added in the 2009 budget for whatever reason are easier cuts to make than those of existing programs.  Some growth areas of the 2009 budget are:  DHR $70 million plus, Department of Education, $420 plus million, Board of Regents, $150 million plus, Department of Corrections, $60 million, Department of Community Health, $110 million, just to name some of the top agencies in new funding.

2.  Is this a good time for a zero-based budgeting analysis of programs across state government to find non-productive or wasteful programs, and can departments be depended upon to make those decisions?

3. Another possible area of savings might be to delay or reduce capital outlay bonds for new construction of schools, colleges and state buildings.  While this totals over $112 million in cash, one negative impact would be the loss of stimulus to the economy from the construction expenditures.

4. Included in the new spending is, of course, pay increases totaling some $253 million for teachers, faculty and state employees.  These funds will go straight out into the community through expenditures, but, nevertheless, that is a large number included in new funding in the ‘09 budget.

There is plenty of evidence that Georgia will rebound strongly.  The question is just how soon.  Georgians should not fear the future because this state’s best days are ahead of us, even as we ponder difficult short-term decisions.  It’s just time to tighten the belt.

 

As always, I’d like to thank members of the Senate staff, who contribute regularly to my column.  Please contact me in my office at the Capitol with your questions, comments or concerns.

 

 

Sen. Greg Goggans represents the 7^th Senate District, which includes Atkinson, Bacon, Berrien, Clinch, Coffee, Echols, Lanier, Pierce and Ware counties and a  portion of Cook County.

Governor Perdue Announces New Certified 
Work Ready Community Commitments, Grants

Nearly 70 Percent of Georgia Communities Will Be Certified Work Ready

 

ATLANTA – Governor Sonny Perdue announced 34 additional Georgia counties have made a commitment to earning Certified Work Ready Community status as a means to drive the state's economic development and ensure citizens have the skills necessary to succeed. 

"In less than two years, Work Ready has helped transform our state and make our workforce our number one competitive advantage," said Governor Perdue. "This initiative is creating new opportunities for Georgia workers and ensuring our state's employers have a stable, talented workforce to help them succeed."

The state's newest Certified Work Ready Communities in-progress include: Berrien, Bleckley, Bryan, Camden, Candler, Cherokee, Colquitt, Crawford, DeKalb, Dodge, Early, Effingham, Emanuel, Habersham, Henry, Jeff Davis, Johnson, Liberty, Lincoln, McDuffie, Morgan, Pulaski, Rabun, Randolph, Screven, Taylor, Telfair, Terrell, Treutlen, Turner, Wheeler, White, Wilkinson and Worth counties.

To be designated a Certified Work Ready Community, counties must drive current workers and the available workforce to earn Work Ready Certificates, demonstrate a commitment to improving public high school graduation rates and build community commitment for meeting these goals. Each community must create a team of economic development, workforce, education and community partners to work together to meet the certification criteria.

South Georgia at the State Capitol

June revenue figures show continued economic slump

 

By State Sen. Greg Goggans

 

Evidence of the nation’s economic problems could be seen in the Fiscal Year 2008 state revenues, which were release last week.  Revenue numbers fell into negative territory for the first time in five years, as the June figures closed out the fiscal year.  While it recently became apparent 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.  Thus, Georgia will be forced to draw down reserves of $590 million out of the $1.5 billion total to balance the books for FY ‘08.

 

There are some positive things about this result news:

• Unlike the federal government, Georgia must balance its books yearly and cannot just continue spending or printing money.  So, the state faces its problems head on and takes the action necessary to balance its budget.
• Due to the foresight of Governor Sonny Perdue and legislative leadership, Georgia has a robust revenue shortfall reserve and the $590 million will not present a problem.
• The Legislature did not listen last session to those who proposed huge tax cuts funded out of the Reserve fund.

June revenue report

June revenues were down from June 2007 by $168 million.  For the first time, it seems individual income taxes did not drive the month’s revenue.  A small increase of 1.7 percent was recorded in that area, but the $13 million gain was washed away by a $97 million reduction in sales tax revenues.  Another oddity was that the 15 percent of the budget made up of other revenues, including corporate income taxes, tobacco taxes, alcohol taxes and motor vehicle fees, combined for a negative total of some $82 million.  This caused a substantial increase in the deficit for the month.  So, FY ‘08 went out with a whimper ($1.68 billion in total revenues), compared to 2007 when the fiscal year closed with a huge month of almost $1.8 billion in revenues.

 

FY 2008 revenue report

FY 2008 total revenues showed a drop of -$189,975 over 2007.  If the Governor’s revenue estimate had been met, total revenues would have shown an increase of $703,147,357.  And this was after a $245 million reduction in the revenue estimate during the 2008 Session.

 

Personal Income taxes were up only marginally at 0.3 percent or only $24 million.  Every other revenue category was negative for the year.  For example, sales taxes were down by -$134,652 when the payout to local governments was calculated.

 

Incidentally, local governments are the beneficiary of rising food prices.  The 3 percent sales tax that the state collects and distributes to local governments rose by $74 million in FY 2008 and this is most likely tied to food sales tax collection.

 

Other sales tax categories showed decreases over 2007 including automotive at -0.7 percent, home furnishings at -1.0 percent, lumber at -13.4 percent and manufacturing at -2.7 percent.  Recent years had shown high, single-digit increases in these categories.  Tobacco and alcohol taxes also showed decreases for the year.

 

Corporate income taxes, a growing category in the past few years, slumped to a decrease of $76 million or -7.5 percent.  This total of $943 million fell below the $1 billion total in 2007.

 

Fuel taxes reflected decreasing tax collections for the excise tax on per gallon sales, going down by 4.1 percent or -$20 million for the year.  As the price for fuel rose, the sales tax (now capped) rose also.  This amounted to a $92 million increase over 2007 for a net total going to the roads and bridges budget of $72 million or $1.01 billion for the year.

 

In all, FY ’09 has begun with the state in an unenviable position.  If the 2009 budget were being written today, there would be no new funds appropriated and the budget would be flat.  But the 2009 budget actually contains expected new funds that will likely not be there.  One thing is clear, it will be necessary to make some difficult decisions over the next 12 months without an upturn in the economy.  However, because of the fiscal stewardship of state leaders, Georgia is in a much better position than other states in the nation, and ready to bounce back when the time is right.

 

As always, I’d like to thank members of the Senate staff, who contribute regularly to my column.  Please contact me in my office at the Capitol with your questions, comments or concerns.

 

 

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Sen. Greg Goggans represents the 7^th Senate District, which includes Atkinson, Bacon, Berrien, Clinch, Coffee, Echols, Lanier, Pierce and Ware counties and a  portion of Cook County

Governor Perdue Announces 112 High Performance Principals

Please see the announcement below from the Governor's Weekly Report.  We had 6 principals in Region 11 receive this designation of excellence.  Congratulations to these outstanding educators! 

ATLANTA – Governor Sonny Perdue and State Superintendent of Schools Kathy Cox announced the names of 112 High Performance Principals that have overseen dramatic improvements in student achievement in Georgia public schools.

"These outstanding educators have fostered school environments that are conducive to student achievement," said Governor Perdue. "As I have often said, it is important to keep score, measure results and then recognize success. These principals have excelled in their efforts, and I am pleased to honor them with the designation of High Performance Principal."

Governor Perdue introduced the High Performance Principal program in 2006 to recognize excellent school leaders.

"As a teacher for 15 years, I know the huge impact a great principal can have on a school," said Superintendent Cox. "Year after year, our High Performance Principals have been getting the job done by empowering teachers, engaging parents and inspiring students."

Three criteria were used to identify possible High Performance Principals:

- Data: The data must show that a principal led improvement at a low-performing school or brought a good school to a higher level

- Longevity: The principal must have been assigned to his or her school for at least three consecutive years

- Recommendation: The principal must be recommended for the designation by his or her school system.

Below are the names of the principals earning the "High Performance Principal" designation for 2008:

PRINCIPAL NAME, SYSTEM NAME, SCHOOL NAME

Proctor, Dennis Lewis, Berrien County, Berrien Middle School

Evans, Bernadette G., Coffee County, Ambrose Elementary School

Davis, Bainard M., Coffee County, Eastside Elementary School

Harper, Sue S., Coffee County, Satilla Elementary School

Smith, Harry Anthony, Pierce County, Pierce County High School

Tanner, Darlene C., Ware County, Ware Magnet School

-- 
Marion Curry
GA Family Connection Partnership
Community Facilitator, Region 11

South Georgia at the State Capitol

Southeastern states feel the economic pinch

By State Sen. Greg Goggans

As the 2008 fiscal year closed June 30, one thing is certain, the economists predicting Georgia’s growth for this fiscal year have been wrong, even as recently as March when the Governor lowered the revenue estimate for FY ‘09 by $245 million. The economists were confident FY ‘08 revenue growth would be within distance of balancing with maybe a $100 million shortfall. The final FY ‘08 figures will be released soon, and the state will likely have to dip into its reserves for FY ‘09. This continued decline in revenues means the 2009 budget could be overspent by $600 million.

Governor Perdue has directed state agencies to make significant budget reductions in their 2010 annual budget requests due in September. Additionally, the Governor has asked state agencies to reduce spending in the amended FY ‘09 budget by 3.5 percent of the amount budgeted for FY ‘09. Agencies have also been directed to make additional cuts in the FY ‘10 general budget.

Georgia is not alone in having to cut government spending. States across the nation are feeling the effects of the economic slowdown. The Center for Budget and Policy Priorities in Washington, DC reports that 29 states and the District of Columbia are facing revenue shortfalls in FY ‘09. They also reported that three additional states will face budget shortfalls in FY ‘10.

This week, we’ll take a look at some of the other Southeastern states, and how their budgets compare to that of the state of Georgia.

North Carolina ($21.4 billion total budget)
North Carolina uses a two-year budget system. Recently, the North Carolina Legislature reached an agreement on its FY ‘08-‘09 budget. Though the adjustments still await the Governor’s signature, the version passed by the Legislature indicates rough financial times. Tax collections were $63 million short of estimates.

Florida ($66 Billion total budget)
In June, Florida passed its budget for FY ’09, which overall is $4 billion less than FY ‘08. Florida does not have a personal income tax, and the state has seen a downturn in general sales and corporate income taxes. Overall, $1 billion was cut from public education. Tuition to Florida’s public universities and community colleges will increase by 6 percent. Spending per public school pupil will fall by $131 per student, following a decrease of $185 per pupil in the previous budget. The state prison system is reducing staff by 400 employees, including probation officers, prison teachers and chaplains.

Alabama ($11.4 billion general budget, $12.6 billion education budget)
Though Alabama’s fiscal year does not start until October 1, state leaders are already preparing for some difficult decisions. Alabama’s Legislative Fiscal Office anticipates that revenues for the state’s two main funds will drop by approximately $800 million. In addition, the Governor may have to utilize $428 million from the rainy day fund to avoid current year budget cuts between now and September 30.

Tennessee is also facing tough financial times. The state’s Finance Commissioner described Memphis and Chattanooga as being some of the “hardest hit in the nation” by the sub-prime mortgage crisis. Anticipated revenues are down $494 million for FY ‘08. Mississippi passed a 2009 budget with a decrease of one percent. Virginia amended its FY ‘08 budget and reduced spending by 2.2 percent.

We can see from these numbers that Georgia is in a good financial situation when compared to some of our neighbors. Much of this is because of fiscally responsible decision-making by Governor Perdue and other leaders. However, it is clear that uncertain times lie ahead. Until the economic slide reverses itself and an upward trend is established, state leadership may be forced to operate on a “pay as you go” basis.

As always, I’d like to thank members of the Senate staff, who contribute regularly to my column. Please contact me in my office at the Capitol with your questions, comments or concerns.


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Sen. Greg Goggans represents the 7th Senate District, which includes Atkinson, Bacon, Berrien, Clinch, Coffee, Echols, Lanier, Pierce and Ware counties and a portion of Cook County.

Interesting Stuff!

Georgia schools gain 'No Child Left Behind' freedom

By NANCY ZUCKERBROD
The Associated Press
Published on: 07/01/08

Washington — Six states are getting the OK to write their own prescriptions for ailing schools under the Bush administration's signature education law.

It's a softening from how No Child Left Behind currently works — with schools having to take certain steps at specific times for missing math and reading testing goals. Critics have complained that the approach is too rigid and treats schools the same regardless of whether they miss the mark by a little or a lot.

The states getting more freedom under a pilot program are Florida, Georgia, Indiana, Illinois, Maryland and Ohio. Education Secretary Margaret Spellings plans to make the announcement during a speech Tuesday in Austin, Texas.

The states that won approval have come up with plans to more closely tailor solutions to individual schools' problems and focus resources on schools in the worst shape.

"We expect to see a closer fit between the causes of school underperformance and a focused attention at repairing those sources of failure," said Margaret Raymond, director of an education think tank at Stanford University and the chair of a panel that reviewed the state proposals.

Examples of changes the states plan to make include requiring schools to offer tutoring earlier than is currently called for and a greater reliance, in Indiana for example, on testing throughout the year to catch academic weak spots.

In Georgia, schools will be able to become charter schools, which are public but operate with broad independence, earlier than is currently called for, said the state's superintendent of schools, Kathy Cox.

Maryland is placing more emphasis on training principals. It's common under the law for failing schools to replace their principals. "We think principal leadership is key. It's not just changing a principal, it's ensuring principals have the necessary skill sets," said Maryland schools superintendent Nancy Grasmick.

Some critics worry the changes, specifically the focus on the worst-performing schools, will take the pressure off schools that are generally doing well but having trouble with one group of students — such as a minority group or kids with disabilities.

"I don't think it's taking the pressure off. I think it's allowing focus," Cox said.

Spellings has said up to 10 states will be allowed to try to participate in the pilot program. The Education Department plans to review additional state proposals this fall.

The six states that won approval were among 17 that sought it.

The states that didn't win approval were Alaska, Arkansas, Louisiana, New Jersey, New York, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee and Virginia.

Spellings said in an interview that the efforts by the states that won approval to try new approaches will be closely watched and will shape any future rewrite of the six-year-old No Child law.

"We're trying to set the table for a strong and sensible reauthorization," Spellings said. "We're going to learn some things."