SENATE BUDGET AND EVALUATION OFFICE

Overview of the Georgia State Revenues and Budget

Slides are up to date as of 4/29/10. Please note that numbers are subject to change and more information become available.

FY10 Revenue Story

In March 2008, the General Assembly passed HB990, the FY09 General Budget, that assumed $20.1 billion in revenue collections. Final FY09 revenues were actually $16.77 billion.

In January, the Governor proposed a FY10 budget based on $18.5 billion in revenues (3.23% over the original FY09 Amended revenue estimate and 8.20% below HB990). However, this revenue estimate would have been 10.23% over the final FY09 revenues.

In February, the Governor lowered the estimate to $16.99 billion, and this estimate formed the basis of HB119, the FY10 General budget (2.64% below a reduced FY09 Amended revenue estimate and 15.6% below HB990). This revenue estimate was 1.36% over the final FY09 revenues.

In November 2009, the state bond documents show a revised draft revenue estimate of $15.7 billion, a $4.4 billion shortfall from the original HB990 (6.2% below FY09 actual revenues and a 22% decline from HB990)

In January 2010, the Governor’s revenue estimate for the FY10 Amended Budget was $15.5 billion, a $4.6 billion shortfall from the original HB990 (7.3% below FY09 actual revenues and a 23% decline from HB990)

In March 2010, the Governor revised his revenue estimate for the FY10 Amended by $340 million to $15.2 billion. This is a $4.9 billion shortfall from the original HB990 (9.3% below FY09 actual revenues and a 24.4% decline from HB990)

FY10 Amended Revenue Estimate

Dept of Revenue Tracked

All State General Funds (Incl. MFT)

FY09 Actual $15,625,304,936 $16,766,661,804

FY10 Budget (HB119) $15,929,421,600 $16,994,247,194FY10 Amd. Governor Rec. $14,232,013,123 $15,213,903,846Difference from FY09 Actual ($1,393,291,813) ($1,552,757,958)% Change from FY09 Actual -8.92% -9.26%Difference from FY10 Budget - "Shortfall" ($1,697,408,477) ($1,780,343,348)

FY11 Gen. Governor Rec. 14,920,462,261$ 16,537,174,156$ Difference from FY10 Amd. Governor Rec. $1,323,270,310% Change from FY10 Amd. Governor Rec. 8.70%

FY2010

FY2011

FY11 Budget – As Passed

The FY11 revenue estimate reflects a 17.9% decline from the original FY09 General budget of $20.1 billion or a $3.6 billion shortfall.

The FY11 budget recognizes several sources of new revenue including: $288 million in funds from the securitization of funds in GEFA $96 million in funds from user fees $229 million in funds from the hospital provider payment $23.5 million in funds from passing legislation on the streamlined

sales tax $40 million in funds from increases in tax compliance and fraud

prevention The FY11 budget is based on 4% growth over FY10

Reductions in FY11

The median cut to agencies in the Conference Committee version of the budget is 7% from FY10, with a cumulative cut of 18% from FY09.

Spending overall has declined by 12.5% from FY09 and is projected to decline by 16.6% by 2012.

Reserves at $103.7 million

Dynamic Items in the State Fiscal Outlook

Revenues are likely to start turning positive in the months to come By recognizing new revenues (fees, hospital fees, deferral

of sales tax exemptions, streamlined sales tax changes), the General Assembly has expanded the base over which revenues can grow.

The General Assembly also passed tax cuts which will off set growth in revenues.

Budget contains funding for tax compliance officers/fraud detection staff projected to bring in around $141 million in the coming year ($64 million was budgeted in FY11)

Other forms of federal stimulus being discussed/problems passing stimulus that FY11 budget requires

Future “Holes” in the Budget

State Health Benefit PlanMedicaid

Difficulty predicting the ABD shortfalls because of backlogs of SSI applications at the federal level

State Employees Retirement SystemGrowth in K-12 and Higher EducationBehavioral Health