News

State revenues are down again

State revenues continued their downward trend last month, making continued state budget cuts ever more likely.

The state took in about $167 million less last month than it did in March 2008, according to figures from the state revenue department. That’s a decrease of 14.5 percent, which is an improvement over February’s decrease.

But the trend isn’t promising, making more unpaid furlough days, or even layoffs, more likely for state employees. This largely depends on whether the economy improves in the next several months. And with record unemployment, optimism is not in large supply.

For the fiscal year to date, state revenues are down 8 percent compared to this time last year. If that trend holds, the state will have to dig even deeper into its reserve funds to balance the budget once fiscal 2009 ends June 30.

That would only deepen problems with the fiscal 2010 budget, which relies on federal stimulus money and state reserves as well as significant cuts to all state departments. Even school systems aren’t immune, and teachers will be finding out in the next month whether they’ll still have a job next year.

The state has extended the deadline for systems to offer teachers new contracts to May 15. By then, April’s revenue figures will be available and perhaps some recovery will be in sight. But systems currently are looking at layoffs or furloughs due to state budget cuts, their own local budget problems, a slowdown in population growth and a state-approved increase in maximum class sizes.

“We’re hearing that we could lose as much as 9 percent of the teaching force statewide,” Jeff Hubbard, president of the Georgia Association of Educators, said Wednesday. “I literally have heard stories from every corner of the state.”

Lagging sales taxes took a big chunk out of the state’s bottom line last month and are down 6.3 percent so far this year. Corporate income taxes are off 25 percent this year. Individual income tax collections were still down in March, but bounced back significantly after plummeting in February.

Officials said that was because more people who were owed income tax refunds by the state filed early this year.

Analysts said the situation is simple: The economy needs to improve.

“I tell you what, it’s a lot better than February, but it’s still a very sobering number,” said Kelly McCutchen, executive vice president of the Georgia Public Policy Foundation, a think tank that focuses on state policy.

“The only good news is we do have three more months left in the fiscal year,” McCutchen said.

The Georgia Budget and Policy Institute, a similar independent group, used the March revenue report to call on Gov. Sonny Perdue to veto tax breaks passed last week by the Georgia General Assembly. House Bill 261 would give home buyers a tax credit in an attempt to spur the housing market. House Bill 481 includes several tax credits for employers who hire an unemployed person, as well as cuts to the state’s capital gains tax in 2010 and 2011.

Supporters say the tax breaks will help the economy. The institute says they will take too much revenue out of an ailing state budget. With fiscal 2010 predicted to be a worse year for state revenues than 2009 already is, that revenue is going to be key, said Alan Essig, the institute’s executive director.

The governor’s office said it has not yet begun reviewing most bills passed this session and couldn’t comment on whether Perdue will sign the tax cuts into law. Perdue himself expressed some concern about the tax breaks Friday night, the last night of the 2009 legislative session, and promised to study them carefully before making a decision.

To contact writer Travis Fain, call 744-4213.

  Comments