I have criticized President Obama for basing his budget projections on rosy economic scenarios, so it’s only fair to look at whether Gov. Sonny Perdue is doing the same thing here in Georgia.
That’s the charge leveled on Peach Pundit, and at least some of the budget figures questioned there do smell a little funny.
The governor’s 2011 budget (which covers July 1, 2010 to June 30, 2011) assumes a 4.5 percent increase in individual income tax revenue and 4.9 percent growth in funds from the general sales tax. Those two taxes account for about two-thirds of the state’s total revenues, and those two increases represent an addition of more than half a billion dollars.
Granted, we’re talking about rising from a fairly low trough — individual income tax revenues have fallen by more than 18 percent and sales tax receipts by almost 15 percent from their peaks earlier this decade. They are forecast to remain lower than they were even two years ago.
But with revenues continuing to fall sharply just last month — a fall of 8.7 percent from January 2009, and 21.7 percent from January 2008 — it doesn’t seem prudent for the state to count on any kind of rise in the year to come. Not with unemployment, which typically doesn’t ease until a recovery is well under way, continuing to linger above 10 percent.
Budgeting based on level revenues in fiscal 2011 would make an already difficult process even more politically perilous. You know what would be worse? Interrupting this year’s electoral campaigns for a special legislative session to deal with more shortfalls.
Better to be cautious and get a pleasant surprise than to scramble to fill a hole later on.