Georgia's state government budget reserves swell to record $2.05 billion (Atlanta: 2015, credit)

[Born 2 Roll]

Georgia's economy continues to recover from the Great Recession as the state's budget reserves grew to a record $2.05 billion at the end of the 2016 fiscal year.

The $2.05 billion figure is an amount that is up from the $103 million that had in its budget reserves at the bottom of the Great Recession at the end of Fiscal Year 2009.

The State of Georgia has never had $2.05 billion in its budget reserves before and would have never been able to collect that amount were it not for a vastly state economy that has vastly improved from the ominous depths of the late 2000's-early 2010's Great Recession.

From the Atlanta Journal-Constitution:

(Georgia Governor) Nathan Deal’s goal of leaving his successor flush with $2 billion in the state’s savings account is way ahead of schedule, thanks to a strong economy and relatively tight spending plans.

A fiscal 2016 end-of-the-year report shows the state’s preliminary shortfall reserves at a record $2.05 billion. That’s up about 43 percent from the end of 2015.

The fiscal year ended June 30.

Reserves will drop a bit early next year when the state doles out money to fund increases in k-12 school enrollment, but it still marks a milestone for a governor determined to leave the state in much better financial shape when he retires in 2019 than it was when he took office after the Great Recession.

“It’s not politically very exciting,” said Kelly McCutchen, the president of the conservative Georgia Public Policy Foundation. “It’s like maintenance. If any Republican is in a tight race this fall, they are not going to run ads on the fact that there is a $2 billion state reserve. But it’s good fiscal management.”

Senate Appropriations Chairman Jack Hill, R-Reidsville, said while he’d like to see the state savings account continue to grow because the money can go quickly in an emergency, the current size of the reserves has some significance.

“You have to give the governor a lot of credit because there is always pressure to spend money and give pay raises,” Hill said, “but he has always been steadfast about building the reserves.”

State reserves are important for many reasons. High on the list is the fact that they help fund the essentials of state government — paying thousands of teachers, prison guards and state patrolmen, for instance — during recessions.

State reserves fell to $51 million in 2004 when Georgia’s government was going through a fiscal recession, climbed to $1.54 billion in 2007, then dropped back down to $103 million during the Great Recession.

That may sound like a lot of money, but it costs about $91 million a day to run state government. So during the Great Recession, the state had about a day’s worth of money in the bank.

Big reserves also are important in helping the state keep its AAA bond rating, which allows the government to borrow money at low interest rates. That saves the state millions of dollars a year in interest payments.

The good bond rating is particularly important because the state is in the midst of a spree of road-building and other construction projects. Lawmakers approved a record construction budget during the 2016 session.

The skyrocketing reserves are due largely to Deal and his staff making purposefully conservative estimates about how much tax money will be collected. Legislators can only budget to spend what the governor estimates the state will take in. The state collected a record amount of taxes in the past fiscal year, far above what the government spent.

Even with the record tax take, Deal’s budget director, Teresa MacCartney, sent out a memo to state agencies telling officials not to ask for an increase in their budgets next year.

Some extra spending is guaranteed. Schools will get a boost. The state Medicaid agency has already said it needs an extra $300 million. Deal announced Thursday plans to give state law enforcement officers a 20 percent raise.

In addition, the governor wants to change the formula for funding k-12 schools, which could cost money, and he wants to build an expensive state courts building down the street from the Capitol.

"Georgia's budget reserves swell to record $2.05 billion" (the Atlanta Journal-Constitution/MyAJC)
Georgia

Budget reserves

The state’s reserves, officially called the “revenue shortfall reserve,” is what the state has in the bank to help it run state government — from schools to prisons — when the economy tanks as it did during the Great Recession. Below is the annual end-of-the-fiscal year reserve for the past decade. The state fiscal year ends June 30.

2007: $1.54 billion

2008: $566 million

2009: $103 million

2010: $116 million

2011: $328 million

2012: $378 million

2013: $717 million

2014: $863 million

2015: $1.43 billion

*2016: $2.05 billion

*Preliminary

Source: Office of Planning and Budget

Governor's Office of Planning and Budget (OPB/Governor's Office of Planning and Budget)

[cqholt]

Good, how about funding education and transit?

[rcsteiner]

Originally Posted by cqholt

Good, how about funding education and transit?

Communist, socialist crap.

[CCATL]

Originally Posted by cqholt

Good, how about funding education and transit?

Add healthcare to that list. It would be nice to stop rural hospitals from closing...but alas, the voters in that area keep voting in people who destroy their quality of life (or for basic infrastructure that might, you know, enable them to continue having any quality of life)! I'm all for having some budget reserves for down times, but we can't say that this is such a fantastic thing when you look at what has been cut to make those reserves happen. We ignore the poor, the mentally ill, the homeless, and anybody else down on their luck. We live in a state well known for generational poverty and a resulting lack of educational achievement (and Deal's plan for education will only widen the existing gaps, which has been proven in numerous case studies during the past decade). We have no state funding for transit in urban areas, which can help the poor and rich alike have access to job centers. But yay for budget reserves!

[Gulch]

Originally Posted by CCATL

But yay for budget reserves!

Would you prefer the state have no reserves the next time the economy crashes and revenue plummets?

[glovenyc]

Originally Posted by cqholt

Good, how about funding education and transit?

I second that

[MikeHonchoATL]

Originally Posted by Gulch

Would you prefer the state have no reserves the next time the economy crashes and revenue plummets?

Why ask that question? You know you are asking that to an irrational, uneducated audience.

[AnsleyPark]

How about expanding the state healthcare system...

[Born 2 Roll]

Originally Posted by cqholt

Good, how about funding education and transit?

Originally Posted by glovenyc

I second that

Those are excellent questions and concerns.

While there is obviously still a very long ways to go to improve education in this state, from what I understand, the state's education budget is the largest that it has ever been over about the last couple of years or so (the '15 and '16 fiscal years). Education spending is reportedly currently the largest part of the state budget under Governor Deal that it has ever been since Carl Sanders was governor back in the early 1960's.

As for transit, the state seems to be slowly moving towards increasing transit funding in a much more comprehensive fashion.

The state just recently appeared to make a significant commitment to expanding GRTA Xpress regional commuter bus service, which may not sound like much but is a big development especially considering the state's history of severely underfunding transit.

[Born 2 Roll]

Originally Posted by AnsleyPark

How about expanding the state healthcare system...

The state's business community (which largely supports Medicaid expansion under Obamacare) looks to force a continuing and ongoing discussion about expanding the healthcare system in a state where many deeply conservative legislators and social and cultural interests are staunchly opposed to expanding healthcare, particularly if it is under Obamacare.