Forum Fact: Georgia Rainy Day Reserves See Brighter Forecast

April 15th, 2014 by Leave a Comment

By Mike Klein

MIKE KLEIN Editor, Georgia Public Policy Foundation
MIKE KLEIN
Editor, Georgia Public Policy Foundation

Georgia’s rainy day fund – Revenue Shortfall Reserve in government speak – could approach the $1 billion mark this year – a long way back from where the account found itself during recession when rainy day funds paid real bills and nearly exhausted the state’s operating surplus.  The high water mark was $1.544 billion in Fiscal 2007.

Georgia’s reserve account took a shocking almost $1 billion hit from Fiscal 2007 – 2008 which coincided with the second recession of the decade.  Most economists generally place the second recession as early 2008 through mid-2009 and the federal government maintains the economy has been in an upturn for almost five years, albeit a slow upturn.

Governor Sonny Perdue’s administration had $1.544 billion in state reserves before recession caused mandatory budget cuts, hiring freezes and in some locations, state employee layoffs.  Those prudent measures did not safeguard state reserves enough however as available cash dropped to $565.9 billion in Fiscal 2008 and then took another plunge to about $103.7 billion one year later.

Governor Nathan Deal has added $600 million since his 2011 inauguration. The fund held $717.3 million when Fiscal Year 2013 ended last June.  Last year alone the administration added $360 million.  This helped the state retain its AAA credit rating.  Governor’s Office spokesman Brian Robinson said the next decision on whether and by how much to increase the fund balance again will be made in November.

One other financial footnote: State government general fund revenue from taxes and all other sources continues to climb.  Year-to-date state revenue for the first nine months of Fiscal 2014 was up $705 million or 5.7 percent through March.

Georgia Revenue Shortfall Reserve Balances

(Annual Totals Shown in Millions of Dollars Unless Noted Below)

1976    $30.00M                         1981    $93.28M                         1986    $150.62M

1977    $57.77M                         1982    $637,376                        1987    $162.63M

1978    $66.54M                         1983    $0                                   1988    $176.72M

1979    $75.22M                         1984    $38.24M                         1989    $194.0M

1980    $84.29M                         1985    $138.23M                       1990    $0

                                                                                   

1991    $0                                  1996    $313.38M                       2001    $734.44M

1992    $0                                  1997    $334.94M                       2002    $700.27M

1993    $122.64M                       1998    $351.54M                       2003    $260.60M

1994    $267.19M                       1999    $380.88M                       2004    $51.57M

1995    $288.76M                       2000    $555.27M                       2005    $256.66M

                                                                                   

2006    $792.49M                       2011    $328.38M                                  

2007    $1.544.59M                    2012    $377.97M                                  

2008    $565.90M                       2013    $717.32M                                  

2009    $103.69M                                                                     

2010    $116.02M                                                                                                                                                    

(Note:  1982 Shown in Hundreds of Thousands of Dollars)

(Source: Governor’s Office of Planning and Budget)

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