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Deal: Agenda trimmed back because of budget

Gov. Nathan Deal testifies before the House Appropriations Committee about his budget plan, Jan. 22, 2013, in Atlanta. Gov. Deal told Georgia lawmakers his legislative agenda will be less elaborate because a still-weak economy is curtailing state spending.  The Republican governor on Tuesday presented his changes to the state's current budget and a $40.8 billion spending plan for the coming fiscal year.

Gov. Nathan Deal testifies before the House Appropriations Committee about his budget plan, Jan. 22, 2013, in Atlanta. Gov. Deal told Georgia lawmakers his legislative agenda will be less elaborate because a still-weak economy is curtailing state spending. The Republican governor on Tuesday presented his changes to the state's current budget and a $40.8 billion spending plan for the coming fiscal year.

ATLANTA -- Gov. Nathan Deal said Tuesday that his legislative agenda will be pared back because a still-weak economy is limiting how much Georgia can spend, a problem likely to linger for several years.

The Republican has proposed a $40.8 billion spending plan for the financial year starting in July, along with amending the current budget to account for less-than-anticipated tax collections and growing health care costs. Since the recovery from the Great Recession has been weak, state leaders face hard constraints on what they can spend.

"We do not have as elaborate an agenda this year as we have had in previous years," Deal told a joint meeting of the House and Senate appropriation committees.

Lawmakers, who can change or reject Deal's budget plans, started their own reviews Tuesday of departments and agencies. Deal has ruled out raising taxes to deal with budget shortfalls.

Deal's primary budget problem is that Georgia is taking in less money than anticipated. While the current budget was pegged on state revenues growing 5.2 percent, those collections stood at 4.9 percent in December on a year-to-date basis.

Deal earlier instructed most agencies and departments to trim their budget to account for the shortfall. At the same time, Georgia has been forced to pay more than expected for Medicaid, a health insurance program for low-income residents, as more people join the program.

With budgets spread so thin, politicians have few resources for major new projects.

In his remarks, Deal asked lawmakers to approve roughly $13 million to restore 10 days of instruction that were eliminated from a pre-kindergarten education program in earlier rounds of budget cuts. The governor also proposed a modest 3 percent increase for recipients of the lottery funded HOPE scholarship. He requested $50 million to nearly complete the state's promised contribution toward a project to deepen the Port of Savannah.

The Republican also asked lawmakers to support legislation that would authorize the Board of Community Health to levy a tax on hospitals that is set to expire this year. The tax, which raises roughly $230 million annually, is used as state matching money to secure another $400 million-plus of federal support for the Medicaid program. The money is then paid back to the hospitals in the form a higher payment rate for treating Medicaid patients.

"We cannot afford to have a $700 million hole in our Medicaid budget," Deal said.

It may take until 2014 before Georgia receives as much tax revenue as it did before the Great Recession, which started in late 2007, said Kenneth Heaghney, a Georgia State University professor who serves as the state's fiscal economist.

Growth in Georgia's labor market has started outperforming the rest of the country, the housing market shows signs of improvement and some of the state's most important sectors -- information technology, professional and business services, and manufacturing -- are growing. But consumer spending is subdued and business investment has slowed.

He cautioned lawmakers that increasing federal taxes, a sluggish global growth and uncertainty over federal spending policy could constrain economic growth in Georgia.

"So all of this creates an environment in which there's still a lot of economic uncertainty," Heaghney said. "And so we try to plan for that, but there's a lot of different ways the economy could move depending on how these three areas play out over time."

Comments

FryarTuk 1 year, 11 months ago

"It may take until 2014 before Georgia receives as much tax revenue as it did before the Great Recession, which started in late 2007, said Kenneth Heaghney, a Georgia State University professor who serves as the state's fiscal economist." Prof. Heaghney wishes. If this state rebounds by 2018 we will be lucky. The handling of supertankers in the Port of Savannah will be a major help toward creating private company jobs and small businesses in South Georgia and Atlanta. The job market, wages and small business growth is very soft. Labor is available but it is unskilled for technology and information. There is going to be a short supply of math and science professors and technical entrepeneurs because after we educate them we kick them out. It's really strange because we continue to import more foreign trained healthcare professionals who are really poorly trained and their coming just creates more debt in health services. We need a leadership team to develop apart from politics that can appeal to the reason of US citizens and business leaders. I think a lot have been talking to Obama but it isn't evident who is talking and who is listening.

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