Wednesday, July 8, 2009

Welfare Watch - July 07, 2009 - Budget Shortfalls Threaten Services

While Georgia is faring better in this economic crisis than most other states, we still face significant budgetary issues as we move forward into FY10 and FY11. The Governor has called for more cuts last month of more than $274 million for the 2009 fiscal year or 25% for the month of June in order to complete fiscal year without a deficit. He did not want to pull money from the reserve fund in order to balance the budget. This still may be a possibility because the shortfall in FY2009 may be greater than projected.

We enter a new fiscal year with not much hope for an improving picture for the economy or the State's budget. According to an estimate by Georgia State University, the 2010 budget shortfall may be as great as $800 million. If reserve funds from the State are not used, revenue estimates may be needed to be lowered by $1 billion. This picture gets even bleaker in FY2011. According to a report by the Georgia Budget and Policy Institute, as Georgia enters FY2011(which begins June 30, 2010), it may have to use the State Fiscal Stabilization Funds that have been set aside for FY 2011 to help close the FY 2010 deficit. If this happens, we could face a deficit of more than $1.5 billion.

The GBPI warns that to avoid crippling cuts over the next two years to state services, which include education, healthcare, public safety and social services (85% of the State's budget), the Legislature and Governor will need to take a hard look at not only expenses but revenue. Georgia is 49th in per capita spending by state governments and according to a recent study, the 8th best managed state in the county. Georgia is neither wasteful nor excessive in its spending. We have a revenue problem. Georgia just does not have enough money to cover the legitimate expenses of state government.

These are hard decisions that the Legislature and Governor will have to take up in the next session. They have been here before, made some very good decisions about enhanced revenue sources, tax cuts and elimination of tax breaks and incentives that mitigated some of the pain that all Georgians are experiencing today.

Welfare Watch, an email newsletter of the Georgia Association of Homes and Services for Childrenas a public service.

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