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Monday, February 18, 2008

State House Update - Amended Budget

Friends and Neighbors-

The following highlights the budgeting process in the Georgia General Assembly, and more specifically, the Amended state budget.

It contains more detail than a normal person would want. Perhaps a quick skim (with your eyes half-squinted) will illuminate how your hard-earned state tax dollars are spent.

You can tell what's important to a family - and a state - by how it spends its money. To me, working on Appropriations means an opportunity to influence lower taxes so Georgians can meet their own needs at home and at work; provide a true safety net, but not a hammock; and create educational opportunities for Georgians and their children.

Later, I'll send out information putting historical state revenues into perspective with inflation, population growth, health care and public education expenditures. Thank you for the opportunity to serve House District 46.

Best-

Representative Jan Jones
Chair of Appropriations - Education, including Pre-K, K-12, state and teacher retirement and other related agencies


The 2008 Amended Budget

What is the Amended budget?

Every year, the Georgia General Assembly passes an Amended budget to revise the budget constructed the previous year. It also passes a second, "Big" budget for the upcoming fiscal year.

The Amended budget "trues" up cost projections made the previous year to what actually happened. By state constitution, budget and tax bills must originate in the House.

What time period does the budget cover?

The Georgia budget does not follow the standard calendar year (January to December), but rather a fiscal year. The Georgia fiscal year runs from July 1 to June 30.

What's behind finalizing the Amended budget?

The House recently passed the 2008 Amended budget to revise the "Big" budget it had approved last session. The 2008 budget ends June 30. As you can imagine, a number of projections made 12 months ago need adjusting to what actually happened and is needed. Now, the House is working on the Big 2009 budget, which entails more work.

In recessions, we make additional reductions in state agencies to adjust for lower income and sales tax collections. Georgia cannot run a deficit by state constitution (nor should it) unlike the federal government. The state's tax collections mimic the state's economy just as most citizens' wages do. That means tightening the state's belt when Georgians have done the same.

What happened with projected tax revenues and actual revenues in the Amended 2008 budget?

With only a few months remaining in the current fiscal year (ending June 30), Georgia is on target to bring in $330 million more, or 1.6 percent more than was allocated. That's pretty close when you consider all the factors in the state's economy that affect tax revenues.

Georgia derives most of its tax revenues from the 4 percent sales tax and 6 percent personal income tax. All other sources of tax revenue account for 10 percent of the state's budget (cigarette/liquor/fees/1/4 mill property/etc).

A 1.6 percent increase means that the total of income tax collections on the combined paychecks of every Georgian AND sales tax collections on all Kleenex, John Deere tractors and other items came really, really close to the budget that the Governor and the legislature cobbled together one year ago.

Sometimes, we best-guess incorrectly and citizens do not consume as much - or more - of a line item (service) that we thought they would. And sometimes, citizens do not spend as much or earn as much as we expected, which affects tax revenues.

Does the legislature make a lot of changes in the Amended budget?

Not a lot, or at least it shouldn't.

Most of the line items that were approved the previous year have been paid out, or will be shortly, for services already rendered. Most changes from the previous year reflect a disparity between what we thought would be consumed and what was actually consumed. For example, the Pre-K budget (paid for through lottery ticket purchases) may need adjusting upward or downward depending on how many 4-year-olds showed up for class in August.

More students took classes online through the state virtual school* than previous information indicated they would. The House version of the budget pays for 1165 additional class segments (as utilized currently by students statewide) for a cost of $722,999. Medicaid patients entitled by state law to services may have consumed more or less, and so on.

*The state virtual school is run by the Georgia Department of Education (DOE). It offers 78 different online classes to high school students. Oftentimes, the local school system does not offer particular classes. Public, private and homeschool students are eligible to take classes.

How does the House propose to spend the $330 million net revenues that exceed the original 2008 budget?

The House Appropriations Committee and the Governor proposed reducing, increasing and eliminating funding for a number of programs. Fewer changes were made than in previous years.

The following list includes the more significant items in the Amended budget recently approved by the House:

- $111 million - pay for 19,811 additional public school students that showed up for school in classes K through 12. The money will be distributed according to existing state law through a per-student funding formula to 180 school systems. The rise in public education students was lower than in recent years.

- $68 million - funding for roads and bridges. The legislature must expend these revenues in this manner. The state constitution requires revenues generated by the state gasoline taxes to be appropriated to the Department of Transportation (DOT). These revenues increased because of higher gasoline prices. The funds are allocated equally to the 13 congressional districts per current state law.

- $40 million - In the budget offered to the legislature, Governor Perdue proposed to plan for and begin construction of reservoirs to allow the state to prepare for future water needs as highlighted by the 2007 drought.

- $30 million - Governor Perdue proposed to allocate $24 per public education student for technology needs in the classroom. In the 90s, public schools received regular funding for technology upgrades through the lottery proceeds. In more recent years, rising Pre-K enrollment and increased HOPE scholarship usage have crowded out technology for public schools. The funding will partially offset costs to local school systems to integrate technology into the classroom as the Internet has become more relevant and necessary.

- $53 million - Governor Perdue proposed shoring up the statewide trauma care network with a one-time injection of funding.

- $30 million - The House chose to fund a 2009 Budget shortfall in the Equalization grant formula for the 2009 fiscal year as spelled out in existing state law. The Equalization grant allocates funds to school systems that cannot fund students adequately due to relatively lower property digests and higher student populations. All 16 school systems that will receive extra funds in this appropriation rank below the state average in overall per student funding.

- $3.5 million - Governor Perdue proposed funding a limited number of new school buses for local school systems. The House agreed, although it tweaked the manner in which the buses would be funded. The House substituted 10-year bonds for $25 million in cash. This will give school systems more time to come up with the $15,000 balance required for each new bus. The 500 school buses (partially funded at $50,000 each) would be allocated according to a House-generated formula using property wealth and route miles as factors. Identified school systems that do not need new buses would not receive them. Higher gasoline costs have eaten up a greater share of transportation funding resulting in aging, and less safe, school buses.

Some other items in the Amended budget approved by the House (proposed by the Governor or House) include:

- Reduce Medicaid funding to reflect actual expenditures ($81 million)

- Eliminate funding for items previously line-item vetoed by the Governor ($5.6 million)

- Various other reductions to agencies ($ millions)

- Increase Homeowner Tax Relief grant funding to reflect actual homeowners' claims - $2.6 million

- Increase funding to address deficit in Child Welfare Services for actual services rendered - $14 million

- Replace 34 high mileage state trooper vehicles (over 135,000 miles) - $1.2 million

- Maintenance funding for 20 watershed dams highlighted because of the 2007 drought - $500,000

- Fund actual obligations for institutional foster care for children with special needs - $5.3 million

- Additional funding for state mental hospitals to improve less-than-acceptable conditions - $13.1 million

- Pay state's share for indigent care for 38 private hospitals to facilitate 60/40 federal match - $6 million

What's next?

The Senate is further editing the Amended budget. A conference committee of three House and three Senate members will be appointed by the Speaker of the House and the Lt. Governor of the Senate to finalize the Amended budget before session ends in (hopefully) late March. Sometimes the Amended budget gains final passage quickly, and sometimes it's passed in the last minutes of the last day of session (whew). The latter occurred in 2003 when I first was elected.

Georgia is fortunate to have a rigorous budget process that includes the Governor (providing a statewide perspective), a 180-member House (of the common folk) elected closest to the People and the 56-member Senate. Perfect? Not at all. It can and should continue to be honed and improved.

Almost half of the House serves on the Appropriations Committee comprised of 8 subcommittees. It's an awesome responsibility - and one that reflects our state's policy priorities.

2009 Big Budget

The real Appropriations work has begun in the House as the subcommittees refine the Governor's proposed 2009 budget. We will utilize more recent or different information and consider legislative priorities. This is where I will spend the bulk of my time and efforts for the remainder of the legislative session.

1 comment:

Anonymous said...

Proves the theory that it is a poor frog who will not praise his/her own pond.

Maybe we can extend the legislature to full time so JJ can spend all her time there.