There is growing sentiment that predictions of a $1.6 billion shortfall in Georgia’s budget are too low and the gap could exceed $2 billion or more.
Gov. Sonny Perdue in August projected the state would encounter a $1.6 billion deficit and ordered most state agencies to reduce their budgets by 6%. He also asked agencies for ideas to reduce budgets up to 10%.
Recognizing the national financial market crisis, lawmakers last week put funding for special projects on hold.
“As we face a significant budget shortfall in our state, the Senate is working to identify essential government spending, prioritize that spending, and find further efficiencies,” Lieut. Gov. Casey Cagle told the Atlanta Journal-Constitution. “Local assistance grants should not be exempt from consideration.”
Alan Essig, director of the Georgia Budget and Policy Institute, told the newspaper last week that a projected shortfall of $2 billion would be conservative.
In a report last week, the institute said that the state’s revenue shortfall reserve, or RSR, has $259.3 million available for appropriation.
“With [fiscal year] 2009 deficits likely to exceed $2 billion, it would be fiscally irresponsible not to release for appropriation all RSR funds in excess of the statutorily minimum amount required in the RSR,” the report said. “The $259 million … should be appropriated for K-12 student growth and other vital government services whose budgets would otherwise be reduced.”