It was like a classroom in reverse Nov. 19 as Georgia Senate Majority Whip Mitch Seabaugh (R-Sharpsburg) presented information on the reality of the current and upcoming state budgets to nearly three dozen Coweta County educators.
Seabaugh in the data-heavy presentation said he wanted teachers to understand the challenges ahead and asked that they consider potential cost-saving measures and forward those ideas to him.
In reality, the figures he presented from the Senate Budget and Evaluation Office are pertinent to every school system and every resident of the state.
“These are unprecedented times with unprecedented challenges. There are things we need to do and we need your input,” Seabaugh said as the meeting began. “Across-the-board cuts don’t make any sense. They need to be strategic.”
Seabaugh continued with a review of the budget process, adding that the House and Senate would look at those challenges and Gov. Sonny Perdue would provide a revenue estimate for next year’s budget. He noted that no decisions on the upcoming budget have been made and cautioned educators not to listen to rumors.
Addressing the current budget that took effect July 1, Seabaugh said Perdue’s initial estimate was that revenues would increase by 1.95 percent. Meantime, figures released Nov. 19 showed revenues down 7.2 percent, Seabaugh said.
And that translates into a task for legislators in January when they will have to cut $348 million from the current budget that ends June 30. That figure is in addition to the cuts already made this year.
“I want to cut whatever is hindering job creation,” Seabaugh noted.
State law requires that the budget be balanced. And in terms of the current budget, not to mention the one that takes effect next July, there is no easy way out for legislators.
And that, said Seabaugh, is the reason he came to teachers to have them brainstorm anything that could impact education and forward other ideas to him.
Reviewing the cuts to various state departments this year, Seabaugh presented a chart showing that, among others, the Dept. of Transportation was cut 17.81 percent, the Dept. of Economic Development was cut 16.25 percent and the Dept. of Community Affairs saw a 73.21 percent cut.
Other reductions came in the form of an 11.20 percent cut to Veteran’s Services, 14.95 percent to Public Safety, 14.95 percent to the Dept. of Labor, 15.02 percent to the Governor’s office and 10.67 percent to the Georgia Bureau of Investigation.
The Dept. of Education saw only a 3.0 percent cut. Meanwhile, 58.2 percent of all state budget dollars go to education.
Those figures dispel the myth that the budget is being balanced on the back of education, Seabaugh said. “We tried to do everything we could to balance the budget without hurting education,” he added.
Looking at Georgia in total, Seabaugh cited a Wall Street Journal article from July showing a projected budget shortfall of 23.8 percent.
The situation with the current FY 2010 state budget looked bleak enough, but unless conditions improve dramatically the situation in 2011 and 2012 could be even worse.
Georgia State University economist Dr. Rajiv Daiwan is forecasting an 11 percent state unemployment rate in 2010, a decline in personal income of 1 percent in 2009 and an increase of .04 percent in 2010. For 2011, Daiwan said personal income should increase by 2.8 percent. And as for state tax collections, Daiwan projected a 7.2 percent decline in 2010 followed by a 2 percent increase in 2011.
Looking nationwide, Seabaugh said Economy.com is predicting job growth of around 2 percent in 2011 and 4-5 percent in 2012 and 2013. But this growth might run into problems due to the unsustainable federal debt, Seabaugh said, citing a Congressional Budget Office projection that by 2012 the federal debt-to-Gross Domestic Product ratio will be 70 percent.
“According to bankers, by definition this is bankruptcy,” Seabaugh said.
A look at the past, present and future in terms of dollars allocated to fund state operations presented nothing less than a potentially troubling picture for every Georgia taxpayer.
Noting the FY 2009 budget (July 2008-June 2009), Seabaugh presented a chart that showed a total $3.365 billion shortfall that was made up by $1.313 billion in state cuts, $623 million in one-time funds, $672 million in federal stimulus funds and $757 million from reserves.
For the current FY 2010 budget year, Seabaugh said the shortfall is projected to be $4.398 billion. The legislature continued the $1.313 billion in state cuts along with $967 million in new cuts, $238 million in one-time funds, more than doubled the amount of federal stimulus dollars to $1.403 billion and allocated remaining reserves of $476 million.
As it stands now and unless the state economy changes significantly, projections for FY 2011 and 2012 look even less settling. And, under those conditions, Seabaugh said the Senate Budget & Evaluation Office projections show a continued total shortfall for FY 2011 of $4.398 billion, and making that up with $2.28 billion in ongoing state reductions, $1.027 billion in new cuts and $1.09 billion in federal stimulus funds. Reserves and one-time funds will have been depleted.
And in FY 2012 and assuming the economy has not recovered, the continued $4.398 billion total shortfall will have to be made up by $3.307 billion in ongoing cuts and $1.09 billion in new cuts since, by that time, federal stimulus dollars will have been used.
“Without reserves, savings and stimulus money there is nothing left to fall back on,” Seabaugh explained. “So if you know you are going to have to cut a billion in 2012 why would you spend it in 2011?”
Responding to questions from teachers about how other states are handling reduced revenues, Seabaugh said some were laying off teachers while others are reducing school days.
One teacher said the salaries of both her and her husband come from state funds.
”When will the governor consider raising taxes,” she asked, indicating that it should not be the task of state employees to carry the load for the state.
“We’re entering into an unprecedented property tax situation. Who will you tax?” Seabaugh asked in response. His question to the teacher was straightforward. “Nineteen out of 20 people I know are making substantially less than they were a year ago.”
Another teacher suggested that frills such as the occasional free lunches for teachers could be cut out.
Still another educator asked how long it would be before they have an idea what type of cuts are coming.
The unfortunate answer is that we have to go through the process with the governor and the House and Senate, Seabaugh said. That process starts the second Monday in January, he added.
Another teacher suggested eliminating duplicate testing, questioning the amount of money spent statewide on those efforts.
Seabaugh suggested again that educators contact their colleagues and have them email other ideas to him.
As for the Coweta County School System specifically, Superintendent Blake Bass at the end of the meeting told teachers it was in good financial shape, adding that Coweta pays higher wages than any other system in metro Atlanta except Fulton County. Coweta currently has reserves totaling approximately $18 million.
