Tax revenue collections were off a total of more than $1.9 billion in the 2009 fiscal year that ended June 30, Gov. Sonny Perdue’s office announced Friday.
Collections of state personal income, corporate income and sales taxes were off 11.1 percent for 2009, compared to 2008. In June alone, tax collections fell 17.8 percent from the same 30 days in 2008.
For the year as a whole, corporate income tax collections fell most dramatically, as the state took in 26.3 percent less from businesses in 2009 than in 2008. Personal income taxes fell by 12.2 percent while sales taxes were off 8.8 percent.
“It means it’s pretty much status quo, and that’s not a good thing,” said Alan Essig, executive director of the Georgia Budget and Policy Institute, a private think tank. “With reserve funds and some savings the governor has prepared, we’ll pay our bills.”
Indeed, when the final books are closed on fiscal year 2009 in the next few weeks, Perdue will likely have to transfer around $350 million from the state’s rainy day fund to cover the budget shortfall, his press secretary Chris Schrimpf said Friday.
When fiscal 2009 began, the state was sitting on $1.02 billion in that reserve account. But about $200 million was spent already this year. By the time 2009’s books are closed, the state will have around $460 million in reserve. Of that, however, $259 million has been budgeted to spent in 2010, leaving just $200 million from the rest of the year.
This month’s news was not unexpected, as state revenue collections have fallen for seven consecutive months now. But Perdue has been hopeful 2010 will be different.
The governor and state lawmakers wrote a 2010 state budget assuming little to no revenue growth over 2009 as prospects for the state’s economy remain bleak. Still, the governor has already asked — not demanded, but suggested — state agencies set aside 3 percent of their July monthly budget to prepare for further cuts.
“We’re trying to take precautions,” Schrimpf said.
The day next month when July’s revenue figures come in will be an important moment for the state, he said. If revenue figures in the first month of the new fiscal year are down again, the governor and lawmakers could be forced to enact even deeper cuts to state agencies.
“Next month will probably be more meaningful,” Schrimpf said. “The governor is meeting with leadership next week and it will be an important discussion.”
Answers are not going to be easy, Essig said.
“Two hundred million in rainy day funds doesn’t leave you much leeway,” he said.
He expects the first half of fiscal 2010 to continue to be difficult, as the state economy didn’t really begin to tank until about January. That means July’s through December’s revenue figures could continue to be in the red.
“In the second half of the year you can expect us to start catching up,” Essig predicted.