The Union Recorder

Local News

January 16, 2013

Weaker-than-expected recovery hampers Ga. budget

(Continued)

ATLANTA —

Apart from the hospital tax issue, Georgia also must fix a roughly $750 million shortfall in its Medicaid program, according to the most recent state estimates. The bulk of those shortfalls have been driven by an increase in the number of people signing up for the program.

State spending may increase in limited areas. Deal has said he will propose a 3 percent increase in the value of lottery-funded scholarships for college students and promised to restore 10 days of instruction that were previously cut from the state's pre-kindergarten program. Deal's administration said in December regulatory filings that it expects modest growth in education spending and continued state funding to build water reservoirs and to deepen the harbor in the Port of Savannah.

The state's budget problems would be less severe if the economy grew steadily

Money has flowed unevenly into the state's coffers. In November, revenue had grown 3.7 percent on a year-to-date basis, well below the target needed to make the current budget work. Better collections in December saw 4.9 percent growth of state revenues on the same basis, much closer to the Deal administration's target.

State tax collections, largely driven by the personal income and sales tax, are viewed as rough indicators of economic vitality. The more money that people earn and spend, the more income the state receives from tax collections.

"The good December was just in the nick of time," said state Sen. Jack Hill, the Republican chairman of the Senate Appropriations Committee. "And January a year ago was a pretty poor month. So hopefully we get a couple of really good, solid months under our belt."

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