The Georgia Budget and Policy Institute this week predicted the state could face a budget deficit of at least $2 billion if revenues continue to decline at the current pace due to the slowdown in the economy.
The report noted that trends worsened toward the close of fiscal 2008. Third-quarter revenue declined by 3.7% and fourth quarter revenue fell 7.3% compared to third and fourth quarter figures in fiscal 2007. Total general fund revenues were $17.6 billion, down 1.4% from the $17.9 billion received in fiscal 2007. Revenues for fiscal 2008 were $771 million less than the estimate.
Officials were forced to tap the state’s revenue shortfall reserve fund to make up the deficit. The reserve is expected to fall from $1.5 billion, the amount it held at the end of fiscal 2008, to $973 million at the end of fiscal 2009.
The revenue outlook for fiscal 2009 also looks grim. It is estimated that revenue will have to grow by about $1.5 billion, or 8.4%, to meet the 2009 fiscal year estimate.
Gov. Sonny Perdue has asked each state agency, department, and authority to identify ways to reduce costs. They must submit their plans to the governor’s planning and budget office by Sept. 2.