While our state’s finances have remained stable thanks to a balanced budget and tough cuts in spending, a national economic recession continues to impact all aspects of Georgia’s infrastructure. To say we have some “tough choices” ahead is a huge understatement.
As we consider budget proposals for the FY2013 Amended Budget, one of the main areas of concern revolves around Georgia’s Medicaid program. Due to revenue shortfalls and population growth, it is estimated that the Department of Community Health will need approximately $375 million in new funds to meet its annual Medicaid obligations.
In FY2014, the issues are much more formidable and include:
• Enrollment growth in K-12 education and the University System will require another $150 million.
• Increasing numbers of retirees and lower than expected stock market returns in the retirement system will require the state to add $150 million in state general funds in order to meet our annual required contribution.
• Medicaid will need approximately $400 million to fulfill its obligations.
Moving forward, it is hard to predict what type of revenue growth we will see in FY2013 and FY2014. The current FY2013 budget is built on approximately 5 percent in tax revenue growth; however, current revenues have only grown 4.6 percent. Unfortunately, these numbers are much lower than what is needed to fill Georgia’s revenue gaps.
According to recent estimates, Georgia’s September and first quarter revenues experienced a slight slowdown in revenue collections, with overall revenues totaling $1.53 billion. Individual income taxes only grew by 1.9 percent and produced just $15.2 million on revenues of $827.1 million. In addition, gross sales taxes grew by 1.4 percent, a net gain that was only enhanced by a reduced distribution to local governments.
Although these numbers show progress, the majority of the revenue growth came from corporate income tax collections, not income or sales taxes. This is an alarming trend because income and sales taxes are the state’s two largest tax contributors.
Strengthening Georgia’s financial outlook is imperative to our future prosperity. While our state is still undergoing many tough financial decisions and recovering from a stagnant economy, no area is exempt from finding better efficiencies and cost savings.
Sen. Cecil Staton serves as Senate Majority Whip. He represents the 18th Senate District, which includes portions of Bibb, Crawford, Houston, Monroe, Peach, and Upson counties.