Georgia state budget (2011-2012)

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State tax collections for FY2012 were lower than they were in FY2006. They were 4.8 percent higher than in FY2011, however, and generated enough income to cover the FY2011 state budget.[1]

The state received $815 million from banks to settle foreclosure fraud claims, and Gov. Nathan Deal has said that he would put that money towards the state's Rainy Day Fund instead of its of to homeowners. When the governor's administration made this clear in March 2012, the Rainy Day Fund had approximately $320 million.[2]

Passed Budget

Gov. Deal signed the $18.3 billion FY2012 budget on May 17, 2011. The budget increased health insurance premiums for state employees and cuts funding for Georgia's college system. The governor used his line item veto power to strike funding for 11 $40 million bond projects in the university system.[3] The governor's veto statements can be found here.

On Feb. 3, 2012, the Georgia House passed an amended budget to increase state spending by $255 million over what was originally planned. The amended budget called for a $300 million for a toll road project along I-75 and I-575 in Cobb and Cherokee counties and for additional federal spending.[4]

The FY2012 budget contained no cost-of-living raises for 200,000 teachers and state employees and cuts university system funding. Public school funding will be about the same as it was this year, when many school districts furloughed employees and cut the number of school days to save money.[5]

The budget also included fee increases, including higher costs for day care licenses, fireworks permits and traveling circuses.[6]

Georgia's annual debt service was $1.2 billion, which was approximately seven percent of the state's budget. The state had $9.2 billion in outstanding bonds on its books as of Sept. 2011, and Gov. Deal had reduced state bonding to $563 million from $1 billion the prior year.[7]

Education spending

For FY2012, Georgia devoted 32.3 percent of its total spending to K-12 education, down from 34.0 percent in FY2009.[8]

Fiscal Year Total Spending[9] Education Spending[10] Percent Education Spending
2009 $76.4 billion $26.0 billion 34.0%
2010 $80.3 billion $26.2 billion 32.6%
2011 $79.2 billion $25.6 billion 32.3%
2012 $78.3 billion $25.3 billion 32.3%

Tobacco Settlement

The state received $138.4 million in FY2012 from a settlement fund with tobacco companies. The money was divided up among a variety of state agencies, including:[2]

  • $7.6 million to the Department of Economic Development
  • $6.1 million to the Department of Human Services, which handles programs such as child welfare and daycare licensing
  • $12 million to the Department of Public Health, which pays for epidemiology and other programs,
  • More than $100 million to Medicaid.

In other years, the tobacco settlement money has helped pay for 911 services, broadband communications and technical colleges.[2]

Governor's Proposed Budget

The governor had originally proposed a FY2012 budget totaling $18.16 billion, an increase of $273 million over FY2011.[11]

In order to focus more on K-12 education, state university programs would see their funding cut about $300 million, down to a total of $1.74 billion for FY2012, over the next 18 months under Deal’s amended 2011 and 2012 budgets.[11] In addition Deal's plan would not seek to fill more than 8,000 positions that are currently vacant. His proposal included $276 million less for HOPE scholarships, which paid for Georgia high school students with grade point averages of at least 3.0 to attend college. Rather, Deal wanted to divide the lottery money earmarked for scholarships equally among qualified students.[12]

Deal's spending plan eliminates dental and vision benefits for low-income Medicaid recipients and cuts the state's Medicaid reimbursement rate for physicians, dentists and pharmacies by one percent. His budget would also boost co-payments for children age 6 and up enrolled in the state's PeachCare program for low-income children Those copays would rise from 60 cents to $3.40 for outpatient services and $12.50 to a maximum of $55.45 for inpatient.[13]

Borrowing for capital projects would drop by about 50 percent to $563 million under Deal's proposal. His budget also cut allocations to the Georgia Research Alliance by $12.5 million.[14]

Highlights of the budget include:[11]

  • $46 million for reservoirs
  • $32 million for deepening Savannah harbor
  • $25 million for school buses
  • More than $200 million for k-12 school construction
  • Higher co-payments for many Georgians on the PeachCare health care program
  • $300 million in cuts to the University System funding over 18 months

Deal said that Georgia was in arrears to the federal government for $454 million in loans to its Unemployment Trust Fund and was due to repay those funds in November 2011.[15]

Legislative Budget

House and Senate negotiators approved an $18.3 billion state budget deal on April 12, 2011 and was approved by the General Assembly later that same day.[16][17] The deal was similar to the governor's proposed budget. Lawmakers agreed to raise premiums at least 10 percent and borrow from Medicaid to make up for a shortfall in the state health care plan for teachers, state employees and retirees. While higher education cuts would likely mean substantial tuition increases, funding for K-12 schools would remain the same as the prior year. Georgia would borrow about $675 million for construction projects next year.[16] The budget included approximately $18 million to pay the interest on federal government to loans to the state for unemployment claims during the recession. It also provided almost $4 million to pay for a special session lawmakers would hold later that year to draw congressional and legislative political boundaries based on the 2010 census.[17]

Georgia has slashed some $3 billion in state funds from the budget over the last three years.[18]

The budget that legislators passed last week has a $200 million to $300 million hole that needs to be filled to fund two health care plans.[19]

Lawmakers plan to review spending on K-12 education, higher education and correction, which together account for approximately 60% of the budget, over the summer.[19]

Negotiations

Prior to passage of the agreed upon bill, there were competing legislative proposals. The legislature did not pass a 25 percent reduction in the state income tax rate.[19]

The House had proposed a 20 percent jump in insurance premiums for state employees. The 20 percent increase would mean employees had to pay an additional $15 to $80 a month, depending on the plan the employee is enrolled in.[20] The House also restored more than $7 million for vision, dental and podiatry care for low-income Medicaid recipients that were eliminated in Deal's budget proposal.[21]

Highlights of the House budget plan include:[22]

  • Restores vision, dental and podiatry coverage for Medicaid recipients that Deal had proposed eliminating.
  • Scales back a planned cut in reimbursement rates to physicians who treat Medicaid patients.
  • Reduces a proposed cut to school nurses from 10 percent to 4 percent.
  • Restores money for 138,000 meals for senior citizens through the Meals on Wheels program.
  • Boosts health-insurance premiums for state employees, teachers, state retirees and their dependents by 20 percent to help fill a $250 million shortfall.

After shifting to the state Senate, on March 28 the Senate Appropriations Committee unanimously approved their own version of an $18.3 billion spending plan. The committee added $22.6 million to the Department of Revenue’s fiscal 2012 budget and much smaller amounts to the Secretary of State’s office and Department of Driver Services.[23] The Senate budget plan would spend about $23.4 million on auditors, field and fraud officers, collection officials and others at the Department of Revenue to increase tax collections and improve customer service. The Senate plan borrows from Medicaid to fill a gap in the state employee and retirees health care plan.[24]

References

  1. The Atlanta Journal Constitution "More budget cuts ahead for state health care, universities" Aug. 3, 2012
  2. 2.0 2.1 2.2 [The Atlanta Journal Constitution "Funds for defrauded homeowners diverted by state" March 11, 2012]
  3. Businessweek.com "Ga. Governor signs $18.3B budget, vetoes 9 bills" May 18, 2011
  4. The Atlanta Journal Constitution "Georgia House passes amended budget" Feb. 3, 2012
  5. The Atlanta Journal Constitution "Governor signs $18.3 billion budget, vetoes college construction projects" May 17, 2011
  6. CBSNews.com "States eye fee increases as alternative to taxes" July 23, 2011 (dead link)
  7. The Houston Chronicle "Georgia borrowing dips under Gov. Deal's tenure" Sept. 4, 2011
  8. State Budget Solutions "Throwing Money At Education Isn't Working" Sept. 12, 2012
  9. USGovernmentSpending.com "Georgia Government Spending Chart - Total Spending" Aug. 4, 2012
  10. http://www.usgovernmentspending.com/spending_chart_1997_2017ALb_13s1li111mcn_20t USGovernmentSpending.com "Georgia Government Spending Chart - Education Spending"Aug. 4, 2012
  11. 11.0 11.1 11.2 The Atlanta Journal Constitution "Deal warns of cuts, promises progress in first State of the State" Jan. 12, 2011
  12. OnlineAthens.com, Lawmakers to Dig into Deal's Proposed Cuts, Jan. 17, 2011
  13. Gwinnet Daily Post, Preaching Austerity, Gov. Deal Unveils Lean Budget, Jan. 13, 2011
  14. GPB News, Research Alliance Funding Cut..., Jan. 28, 2011
  15. The Atlanta Journal Constitution "Deal: State government workforce too big" Dec. 16, 2010
  16. 16.0 16.1 The Atlanta Journal Constitution "Lawmakers come to state budget deal" April 12, 2011
  17. 17.0 17.1 The Atlanta Journal Constitution "Lawmakers pass $18 billion state budget" April 12, 2011
  18. Business Week, State House Panel OKs $18.25 Bn. Budget, March 10, 2011
  19. 19.0 19.1 19.2 The Atlanta Journal Constitution "Smaller state government in sight" April 16, 2011
  20. Business Week, State House Panel OKs $18.25 Bn. Budget, March 10, 2011
  21. Business Week, State House Panel OKs $18.25 Bn. Budget, March 10, 2011
  22. Macon News, Ga. House Passes $18.25 Bn. Budget, March 11, 2011 (dead link)
  23. Business Journal, Senate Budget Targets Customers, Cheaters, March 28, 2011 (dead link)
  24. Atlanta Journal Constitution, Senate Wants to Spend More to Go After Tax Cheats, March 28, 2011