February 26 , 2010

Budget hearings continue; lawmakers dealing with possible $1 billion deficit for FY 2011

Members of the House and Senate Appropriations Committees met last week for the first half of a two-week round of hearings on the annual state budget for fiscal year 2011.

State department heads met with the committee members for discussions on more cuts to the $18.2 billion spending plan proposed by Gov. Perdue, who is forecasting a 4.2 percent growth in revenue for next year, despite the fact that state tax collections have fallen 14 months in a row and are down by 13 percent so far in fiscal year 2010.

Georgia Budget & Policy Institute Director Alan Essig contends that the decline in revenues is so steep that the current year's budget, already cut by $1.2 billion, will have to be reduced by another $210 million. He said lawmakers will have to transfer federal stimulus funds budgeted in FY 2011 into the 2010 budget to make up for that shortfall between now and the end of the current fiscal year, which is June 30. According to Essig, that transfer will set the stage for a $1 billion shortfall in the 2011 budget.

Legislative budget writers have indicated they are considering more personnel cuts. Department heads are being asked for lists of employees who are fully vested in state pension benefits, with the thinking being they could be encouraged to retire early.

The budget meetings are continuing this week before the full legislature reconvenes on Monday, March 8.