ATLANTA (May 15, 2009) – Economic indicators like unemployment stabilization and home and retail sales picking up are a good sign of things moving in a better direction. Our state revenues on the other hand had another tough month as we draw close to the end of the fiscal year.  Here is a quick look at April’s revenue figures compared to April 2008’s totals:

• April’s revenues were down 20.6 percent or some $362 million
• Individual Income Tax collections were down 16.9 percent or $159 million
• Sales tax collections overall were down 11.1 percent with the state portion down 24 percent
• Local sales tax distributions were actually up $34 million or 10 percent
• Corporate tax collections were down $39 million or 33.1 percent
• Motor fuel collections continue the slide downward winding up at $25 million down for the month or 29.4 percent

While these numbers are extremely discouraging, the General Assembly is hard at work preparing for the next steps to take if revenues continue to decline.  Governor Perdue just signed the Fiscal Year 2010 budget with only three line-item vetoes.  We worked very hard to produce a balanced, fiscally responsible budget that cut spending and did not raise taxes.  I am confident the state Senate will continue to lead the way in conservative fiscal policy and principles that will lead us through this recession.

YEAR-TO-DATE FIGURES POINT TO PROBLEMS NOW AND AHEAD

Year-to-date numbers are not encouraging either.  They show a sharp decline starting cumulatively in November at minus-1.5 percent with a decline of 3 to 4 percent monthly and now total a minus-9.5 percent decline from the Fiscal Year 2008 year-to-date.  Total revenues for the FY 2009 YTD are down $1.36 billion dollars over the same ten months on FY 2008 through.  The state stands at just under $13 billion in collections with just two months to go.

Individual Income taxes are down $704 million or minus-9.8 percent.  Sales tax collections are down overall $599 million or minus-6.7 percent, with state collections down 8.3 percent.  Corporate tax revenues YTD are down 26.3 percent or $261 million.  Motor fuel revenues of sales tax and excise taxes are down $103 million or minus-12.3 percent.  The general budget has to make up this difference at year’s end.

As of today, the budget is eating into the Shortfall Reserve Fund by some $90 million dollars.  If the last two months follow the trend of the last 6 months, the state could easily use up most of the remaining $562 million in reserves in the “Rainy Day” fund.

Not only is the cumulative minus-9.2% revenue line for FY 2009 under the revenue estimate for this fiscal year, the revenue level is also under the projected budget level that the 2010 budget is based upon.

SOBERING DECISIONS AHEAD IF TREND CONTINUES

If July rolls around and the rate of decline in revenues has not leveled off and if the state reserves are essentially gone, the FY 2010 budget as passed is almost surely to be up for review.  If our best guess is that we have reached a new equilibrium at a lower budget level of say $14 or $15 billion, then some very tough decisions will be required.  A revenue level at $14 or $15 billion would require a new review of the state’s priorities from top to bottom

Please remember to contact me in my office on the issues that are affecting you and your area.  I am here to represent you and it is an honor for me to work on your behalf.  As always, I’d like to thank members of the Senate staff, who contribute regularly to my column.

Sen. Greg Goggans represents the 7thSenate District, which includes Atkinson, Bacon, Berrien, Clinch, Coffee, Echols, Lanier, Pierce and Ware counties and a portion of Cook County.

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