BRADENTON, Fla. - The Georgia General Assembly begins its annual session today facing more than $2 billion of budget cuts this fiscal year because of falling revenues and possibly a bigger deficit next year.
Gov. Sonny Perdue on Wednesday will unveil an amended budget for fiscal 2009, a proposed budget, and bond package for fiscal 2010, and he will deliver his state of the state address.
It is not clear exactly how much debt Perdue is proposing the Legislature authorize, but in speeches late last year he indicated he would propose a debt-financed stimulus package in excess of $1 billion.
The state typically sells between $800 million and $1 billion of debt, said Alan Essig, executive director of the Atlanta-based Georgia Budget and Policy Institute, a nonprofit public policy research organization.
Essig said he has heard rumors that the governor may propose a bond package as high as $1.2 billion for fiscal 2010.
"We don't know what the actual number is ... but with hundreds of millions of dollars in cuts coming down, there would be some pressure on the governor to increase the [annual] bond package," Essig said. "I think his approach is a better approach than not bonding."
Of more importance, Essig said, is how the governor deals with a projected budget shortfall of between $2 billion and $2.5 billion.
"Our hope is that the governor's approach to balancing the budget is a combination of strategic budget cuts, strategic use of the reserves, and the use of new revenue," Essig said.
He said his organization supports a push by some lawmakers to increase the tobacco tax to $1 per pack from the current 37-cents a pack. Some lawmakers are talking about a temporary tax on food purchased in grocery stores.
Theoretically, the Legislature could pass a cigarette tax increase early in the session and order it to go into effect as soon as April 1, which would raise about $100 million of revenue for the current fiscal year. If the tax increase goes into effect at the beginning of the fiscal year on July 1, collections would raise about $400 million in fiscal 2010.
"We think that is a very good option," Essig said.
Rating agency analysts have praised triple-A rated Georgia because of its prompt response to budgetary problems.
On Friday, Perdue announced that net revenue collections for December totaled $1.48 billion compared to $1.63 billion in December 2007, a decrease of 8.9%. Fiscal 2009 year-to-date revenues are 2.7% less than those collected in the same period in fiscal 2008.