State revenue falls again; 6 percent drop in May

AJC:

Though May's tax collection figures gave the state another dose of bad news, there are signs that Georgians are spending more.

On Friday, Gov. Sonny Perdue's office said state revenue collections for the month were down more than 6 percent over May 2009, the second consecutive month of decline and the 17th time in the past 18 months the state has seen revenue fall.

Whether May's downturn will affect the state budget that ends June 30 wasn't immediately clear.

For the first 11 months of the current fiscal year, state revenues are down 10.3 percent compared with fiscal 2009, which ended last June 30. The revenue collections in the current fiscal year are used to set a budget for fiscal 2011, which begins July 1, and if the numbers drop again this month, more cuts will likely be needed.

State law requires the government to end the fiscal year with balanced books, but the lingering recession has depleted state reserve funds to the point that there isn't enough left in the state's savings accounts to cover the shortfall. In July, just a few weeks into the 2010 fiscal year, Perdue ordered cuts to agency spending as it became clear revenue estimates were overly rosy. Similar cuts could come next month as well.

"Obviously it's not good," Brantley said. "It's $75 million under [in May]. But, at the same time, we're fine making it through the end of the year, balancing the year-end budget and moving into 2011. The decision point will be what are we projecting for that year and do we have to cut what the Legislature just passed."

Lawmakers this spring lowered the current 2010 budget to $17.1 billion, and the budget that takes effect July 1 is for $17.9 billion, which assumes that revenues will grow over the next 12 months. But that 2011 budget was also built without hundreds of millions in federal stimulus funds, making the state's hole that much deeper. 

Posted via email from Jim Nichols for Senate Blog