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State budget cuts will hurt

POSTED: June 12, 2009 10:13 a.m.
Last week, Gov. Sonny Perdue announced that Georgia’s revenue figures for May were down 14.4 percent from last year. With one month remaining in the current ‘09 fiscal year, collections are now well below 10 percent of last year’s levels.
Although the state still has $550 million remaining in the revenue shortfall reserve, this will not cover the shortfall this year and needs to be saved for next year. As is required by our state’s constitution, the budget must be balanced and therefore to achieve this Gov. Perdue has instructed state agencies to cut their June budgets by 25 percent.
When factoring in the increases from the FY08 budget, it now looks as if the original $21.2 billion FY09 budget will be somewhere around 15 percent short of what was estimated.
While this is certainly disturbing news, the fact that over the past six months revenue collections have been, on average, 20 percent less than they were in FY08 is perhaps most concerning as we head into the FY10 starting July 1. Already the $18.6 billion budgeted for FY10 looks to be a figure that will need to be adjusted immediately.
And while no one knows if we’ve hit the bottom of this current recession, we do know that state fiscal conditions historically lag behind national economic recovery and that typically the year after a recession ends is when state budgets are hit hardest.
Obviously, Georgia is not the only state in the nation with financial problems at this time. Comparatively, Georgia has handled the national recession pretty well.  While states like California, New York, Kentucky and Colorado have increased taxes or fees to help balance their budgets, Georgia has resisted this temptation and has actually passed tax incentives that will help create jobs and spur economic activity at a time when the state needs it most.
One example of such a tax incentive is HB 261, signed into law last week by Gov. Perdue. This new law will provide home-buyers with a $1,800 state tax credit spread over three years if they buy their home within the next six months. Intended to jump-start the housing industry that many suggest got us into this current economic crisis, this was one of more than a dozen tax incentives passed during the past session designed to stimulate the state’s economy.
Another tax incentive passed during the session that has already reaped huge benefits for our state is HB 438, a corporate tax incentive that provides tax credits for major economic development projects. Last week, Perdue officially welcomed NCR to Duluth in the metro Atlanta area, where they plan to move their headquarters. Along with the opening of a new factory in Columbus, NCR is expected to create 2,000 new jobs.
While this is certainly good news and proof that the tax incentives will work, the immediate budget crisis for FY10 still exists and must be addressed. With education and health care costs accounting for 53 percent and 25 percent respectfully of the total FY10 budget, little room is left for major cuts without impacting state programs.
While some cuts can be tolerated better than others, such as combining breakfast and lunch into brunch on weekends for prisoners or delaying the construction of the Georgia history museum in Atlanta, some fine programs will likely suffer.  
Everyone will agree that these are challenging times for our state budget and while a special session to address these challenges may lie ahead, Georgians can rest assured that the majority of our citizen legislature is committed to helping create jobs and spur economic activity while maintaining our status as one of the lowest tax and spend states in the nation. .

Carter, R-Pooler, represents District 159 in the Georgia House. His district does not come into Liberty County. He has announced a run for state Senate District 1, which does cover most of the county.
 

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