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.


# # # #


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.