Below for your review is a financial synopsis of where we are in Georgia as of the end of October:
FY16 Budget: Revenue growth enough for “must-do” items— not much else
The solid 5 percent growth being reported right now is good news and with four months completed of the fiscal year, a strong revenue growth year appears very possible. Obviously this fact has been noticed by state departments and while they were instructed by the Governor to submit “flat” budget requests, there are already meetings being held where new slides mysteriously appear with new initiatives that could happen “with new funding.”
To backtrack a little, state revenues have just regained the level they reached prior to the recession beginning in 2008 and so the state budget has just passed that “before the recession” level as well. As noted in earlier columns, Georgia’spopulation has continued to grow during and after the recession and there are some 350-400,000 more Georgians today than in 2008.
State agencies have continued to operate providing essential services during the lean times, but most have “needs or wants” that they have held back on in hope for better days and an increase in their budget. So their expectations are growing as they read, as everyone does, of the solid growth in state revenues.
Big dollar needs will soak up surplus revenues
If 5 percent revenue growth is the number the state grows in advance of the FY15 amended and FY16 general budgets, then itwon’t take a lot of imagination to see where those funds could go and pretty much use up these growth funds veryquickly.
First, of course, the Governor will draft the FY15 Amended Budget which would appropriate some of those surplus funds generated during this year. That budget will appropriate the Mid-Year Education Adjustment, around $150 million, to meet the enrollment growth from this past October head count and the teacher pay scale. The budget may also fund adjustments to the FY15 General Budget to true up numbers in other areas like Medicaid and any other critical mid-year needs.
The FY16 general budget
Based on a Revenue Estimate projected for the coming FY16 Fiscal Year, the governor will prepare a proposed general budget and present to the legislature in January. Of course the legislature will review, but with the total to be appropriated already set, any new spending by the House or Senate must generally be cut from some other program.
Here’s just my idea on where some spending might go in a budget we will see in January. It is readily apparent, though,that spending for mandatory or obligated formula funded areas will take the lion’s share of new spending.
Possible new FY 16 Budget Items:
• $140 million — K-12 Enrollment Growth
• $46.4 million— Request from Regents for Formula and Fringe Costs
• $1.2 million — Technical College System Formula and Request
• $146 million — Community Health Medicaid additions
• $135 million — Annual Required Contribution to state Retirement systems (TRS & ERS)
• $35.7 million — Dept. of Human Services Requests for DFCS, Elder Abuse, Out of Home Care
• $30.3 million — Behavioral Health/Developmental Disabilities- for Forensic evaluations, Intensive Support Coordination, etc.
• $15.6 million — Student Finance Commission for Accel Dual Enrollment
$550.2 million - Sub-total for all of the above
Other additions could be:
• $150 million — Other Post-Employment Benefits Liability (OPEB) - Georgia has “0” set aside presently
• $300 million — Pay raises for teachers - propose putting increase directly into salary increases
• $75 million — State employee pay raises
$1.07 billion - Sum total of possible FY16 budget items.
As you can see there aren’t a lot of areas for flexibility. I personally would like to see funding for transit versus pay raises but politics may prevail.
Your thoughts and comments are welcome. Have a happy holiday season and prosperous new year.
Senator Fran Millar