BRADENTON, Fla. - Georgia Gov. Sonny Perdue yesterday became one of few Southeastern governors to offer a bond package as part of his fiscal 2010 budget recommendations - a $1.2 billion plan focusing on capital projects to create jobs that would increase the state's debt issuance 20% over the current year.
But like some of his colleagues in the region, Perdue also recommended dipping into state reserves and increasing some fees to help offset declining revenue now projected to be $2.2 billion less than anticipated in the current fiscal year.
Perdue proposed reducing the current $21 billion budget to $19.2 billion, in part with $50 million from reserves and using an additional $187 million in reserves for mid-year adjustment for education. He also recommended a $20.2 billion budget for fiscal 2010, which includes using $408 million from reserves.
Noting that Georgia remains one of seven states with triple-A bond ratings, Perdue said his government would invest in projects that would be of long-term value to Georgia residents.
"This year's bond package, totaling over $1.2 billion in new investment, will put Georgians to work and build critical infrastructure," the governor said. "These projects touch every corner of the state and include new construction at our universities, technical schools, local school systems and libraries, harbor deepening at the Savannah port, and needed improvements at state facilities."
While Perdue said debt-financed projects would take advantage of low construction costs and create an estimated 20,000 new jobs, he did not mention finance plans for the transportation sector in yesterday's speech.
Perdue said he would continue to concentrate on reforming the Georgia Department of Transportation.
"Like most government programs, the money available is short of what our needs are, so we must guard every dollar that is spent to make sure we maximize its value," he said. "Once I feel certain that we can deliver transportation value to Georgia citizens, I will support responsible measures to raise additional revenues."
Perdue said he would attend President-elect Barack Obama's inauguration next week, and hoped the state would receive additional federal funds under the new administration's stimulus program.
"However, we cannot plan by relying on the unknown, and the budgets I present to you today are balanced and do not assume money from Washington," Perdue said.
Georgia's General Assembly began its legislative session on Monday. It is set to run through April 3.
In Florida, where lawmakers were in special session to cut $2.3 billion from the current state budget because of declining revenues, Gov. Charlie Crist on Tuesday requested approval to submit his fiscal 2010 budget on Feb. 20 instead of Feb. 2. Further cuts may come during the regular legislative session that will run from March 3 to May 1.
"The additional time will enable staff to properly account for all budget and substantive actions taken by the Legislature during Special Session A," Crist wrote to House and Senate leaders. "More importantly, this additional time will allow continued work with the congressional delegation to maximize economic stimulus funds for the state of Florida."
Crist said the "ability to incorporate these prospective funds" would avoid unnecessary reductions to valuable state programs, such as education and services to the most vulnerable.
The Florida Legislature yesterday was posed to address an estimated $2.3 billion deficit by reducing general-revenue fund spending by $978.3 million and using $1.62 billion from various reserves.
While Florida lawmakers have been praised by rating analysts for swift action to address falling revenues, the state's plummeting economy has taken a toll on its rating outlook.
Standard & Poor's yesterday became the third major credit agency to place a negative outlook on Florida's general obligation equivalency rating, although the agency affirmed its AAA rating on the state's $13.4 billion of full faith and credit debt.
"State revenues have declined over the past two years and continue to decline in fiscal 2009, which has necessitated reliance on substantial reserves together with spending reductions to manage through the downturn," Standard & Poor's analyst said John Sugden in a release. "Higher unemployment, significant housing inventory even after substantial price depreciation, high foreclosure rates, and rising Medicaid rolls all contribute to our expectation of a slow economic recovery."
However, due to reliance on one-time revenues to cure budget shortfalls in fiscal 2008 and 2009, Sugden said Florida has reduced revenues available to address shortfalls in 2010 and 2011.
"We believe the decline in reserves, a weaker economic and revenue environment, and the tightening of the capital markets could now leave the state more vulnerable to a major hurricane," he said.
Last month, Fitch Ratings changed its outlook on the state's credit to negative while Moody's Investors Service changed its outlook to negative last March. Fitch and Moody's have maintained their GO equivalency ratings of AA-plus and Aa1, respectively.
Meanwhile, although the economy has slowed in Mississippi, Gov. Haley Barbour Tuesday night renewed a request he made last year in his state of the state speech and asked lawmakers to once again abstain from approving new debt, except for bond packages that create jobs.
The annual Mississippi legislative session began Jan. 6 and runs through April 5.
"Just as you were very prudent about authorizing bonds last year, I ask you not to authorize any bonds except for job creation until we have seen the federal stimulus package," Barbour said. "I am glad to tell you that early in this session we will be asking you for bonding authority for protecting and increasing jobs."
Barbour offered no specifics on his bond package, but he said lawmakers should prepare for a recession that is likely to be long and deep.
While Mississippi's economy has not plummeted as much as some other Southeastern states, the governor said revenue supporting the current $5 billion state budget "nosedived far below the predicted levels" in December.
The state's Department of Finance and Administration now estimates that revenue for the current fiscal year ending June 30 could fall as much as $310 million below the budgeted level, Barbour said.