As we near the close of the 2016 fiscal year, we can breathe a sigh of relief. The bad days of the Great Recession are distant in the rear view mirror as revenue growth remained strong all year long. Georgia collected 9.9 percent more through the first 11 months of the current fiscal year than the same period a year earlier. The 9.9 percent increase comes with a caveat, since about 40 percent is due to a reworking of the state’s approach to transportation funding. The new revenue system aims to raise about $1 billion more a year for much needed road and bridge maintenance. Still, as Georgia closes out its 2016 fiscal year at the end of this month, it’s important to recall how far we’ve come as well as how much progress is left for us to make.
First, let’s take a walk through the numbers announced this week by the Georgia Department of Revenue.
The new transportation revenue system incorporates a new motor fuel tax structure, along with other changes in taxes and fees to support Georgia’s transportation network. In May alone, revenue collections of $1.56 billion reflect a $58.6 million increase over May 2015, or 9.2 percent. New transportation revenue amounts to $72.7 million for the month.
The steady revenue increases during the state’s 2016 fiscal year bode well for the governor’s goal of adding to the state’s reserves, or rainy day fund. Gov. Nathan Deal says he wants to build the fund up to $2 billion. At the end of the 2015 fiscal year it held $1.4 billion, which is as large as any year since the start of the Great Recession. Reserves would need to be about $2.7 billion to match 15 percent of last year’s revenues.
A healthy rainy day fund is a very good thing, as is boosting investment levels in education, health care and other assets key to quality of life in Georgia’s communities. Still, it’s important to remember that Georgia is a growing state with an aging population, so some of those new revenues are already obligated.
If the good trends continue, that holds promise that Georgia can finally shake off some of the setbacks the state suffered during the recession. Perhaps now we can consider ways to include better support for public schools, the health care system and social services.
As the economy recovered sluggishly, lawmakers shortchanged the state’s education funding formula by as much as $1 billion a year. Even with healthy revenue gains in the 2016 fiscal year, lawmakers are still relying on a $166 million austerity cut for K-12 schools to balance the 2017 budget. Next year lawmakers are likely to approve a new funding formula, but will it be enough to help students meet the state’s increasing expectations for them?
The primary argument opponents make against closing the health insurance coverage gap through Medicaid expansion is Georgia can’t afford it. At some point affordability shouldn’t be an issue (and we made the case a while ago that costliness is a flawed argument anyway).
Georgia made commendable progress in recent years beefing up its staff of child protection workers, but the end of the 2017 fiscal year marks the end of a three-year program to make that happen. It’s likely more staffing will be needed in the 2018 fiscal year. That budget is in the formative stages this summer.
All of these numbers are top of mind this month as the Georgia Budget and Policy Institute team works to update the budget primer. It’s a booklet we publish annually, with an eye toward delivery soon after July 1 when the fiscal year begins.
We appreciate all of you who pay attention to the state budget and our year-round analysis of it. The state budget is the most important piece of legislation that passes each year as it lays out our state’s priorities and tells us if our money is put where our mouth is. State spending touches the lives of people in every corner of the state and Georgia’s future prosperity depends on essential investments in education, health care, public safety and transportation.
These are the building blocks of good quality of life. They deserve more than lip service.