By Beau Evans
Capitol Beat News Service
Georgia may need to dip deep in its reserve fund to balance the budget during the remaining month and a half in the state’s fiscal year amid huge revenue shortfalls prompted by coronavirus, the state’s chief economist said Wednesday.
Between $1 billion and $1.5 billion in reserves may be needed to plug the gap in the fiscal 2020 budget, close to half of the $2.7 billion total in Georgia’s “rainy-day” reserve fund, said State Economist Jeffrey Dorfman.
Speaking with state lawmakers Wednesday, Dorfman cautioned that it’s still early in the ballgame to say precisely how much emergency reserve spending may be necessary. The state last month saw a drop in revenue of nearly $1 billion compared to April 2019, and that shortfall is expected to plunge further in the coming months.
“We expect that we’re sort of near the bottom now,” Dorfman said. “But it will take a little while for us to get back to normal.”
With many businesses now reopening, Dorfman said sales tax collections should rebound back close to normal by later this fall. But the first three months of the 2021 fiscal year, starting July 1, could see a brutal 10% drop in revenues, he added.
Dorfman also said the state is likely short about $1.35 billion in income tax receipts delayed until July 15 due to coronavirus. Those revenues should be recouped once collections roll in after the delayed filing deadline, he said.
Members of the Georgia House and Senate Appropriations committees met jointly Wednesday in their second online meeting since the 2020 legislative session was suspended in mid-March as concerns mounted over coronavirus.
Their top priority upon resuming the session in about a month is to pass a dramatically reshaped budget for the 2021 fiscal year, before the June 30 deadline to do so.
Already, top budget-writing lawmakers have asked state agencies to start preparing for 14% cuts across the board in next year’s budget, with revenue forecasters expecting a decline of between $3 billion and $4 billion in tax collections in the coming months. Those cuts will almost certainly lead to scaled-back services and furloughs for teachers, social workers and more.
On Wednesday, House Appropriations Committee Chairman Terry England, R-Auburn, said the agency cuts will be stiff but that Georgia will bounce back.
“It’s going be a little bit different and still be a little bit difficult for a little bit,” England said. “But we’re going to get through it.”
In-person legislative meetings are scheduled to resume next month ahead of an expected mid-June resumption of the 2020 session. Leaders in the state House and Senate still need to agree on whether they will reconvene on June 11 or June 15.