State agencies are being told to cut spending in July by 3 percent as prospects for tax revenue continue to slide.
In a letter sent Monday to agency heads, Trey Childress, Gov. Sonny Perdue’s budget director warns that more difficult times could be ahead.
Out of an abundance of caution, “we encourage you to reduce expenditures by at least 3 percent for the month of July.”
Childress said given the uncertainty of the coming fiscal year, which begins a week from today, agencies will receive their 2010 appropriations in monthly allotments. Each agency will receive a full share in July, Childress said, but that could change in future months if revenues continue to fall.
Perdue communications director Bert Brantley said the move is necessary as the governor expects that the state will end up in the red when the 2009 books are closed June 30.
“We’re going to be short of what we expect for revenue,” Brantley said. “We don’t know how short.”
It will be mid-July before it’s clear, once June tax revenues are tallied. Any shortage will be made up from state reserves to maintain a balanced budget.
The budget is down about $3 billion from 2008.
If the 2009 final numbers show a deficit, “which looks like it will happen,” Brantley said, “it means you have to grow just to meet the 2010 budget.”
The message to agencies, Brantley said, was “you need to think about cuts you’re going to make if we’re short and if we have to start the (2010) year cutting the budget.”
Revenues for fiscal 2008 were down about 1.1 percent from 2007. The final 2009 revenues, however, are expected to be about 10 percent lower than 2008.
“Unfortunately,” Brantley said, “we’re getting pretty experienced at this.”
The move comes after the governor ordered agencies to eliminate 25 percent of their June 2009 spending.
The development does not necessarily make a special session of the General Assembly more or less likely, Brantley said. The governor has coordinated and consulted with legislative leaders on what cuts he might make early in 2010 if it becomes necessary. He’s done the same about cuts he’s made in 2009.
However, he said, if top lawmakers from the House and Senate “come to some consensus that they want to come back in, that’s a conversation the governor will have. As an equal branch of government, he owes it to them to have that conversation.”
But, Brantley said, there would need to be a concensus not only to return, but about a course of action if they did.