Georgia’s economic outlook brightest since the great recession

[private]The state’s top economist had almost nothing but positive outlooks for legislators as they got down to the task Tuesday of drafting the $25 billion state budget for the next fiscal year.

“I think it’s mostly good news,” said Ken Heaghney, the state’s fiscal economist, in an appearance before a joint hearing of the House and Senate appropriations committees.

Growth in state revenues is slightly ahead of what was projected, Georgia’s economy “is nearing full employment with solid job growth,” and there has also been improvement in wage growth, Heaghney said.

The one cautionary note Heaghney sounded was in the area of corporate income tax revenues, which crashed in December with collections that fell 18.6 percent — $37.3 million — from the $200.8 million collected in December 2015.

Aside from that, revenue growth has been so strong that the state’s shortfall reserve fund will exceed $2 billion after midyear adjustments are made to the current budget, Heaghney said.

Where Gov. Nathan Deal’s goal had originally been to build up that reserve fund to $2 billion by the time he left office in 2018, the goal has now been raised to $2.5 billion, Heaghney said.

Deal told legislators he’s hesitant to give in to critics who say that the legislature should start spending some of the money that is being diverted to the reserve fund since the fund now contains more than $2 billion.

“Under normal circumstances, that might be a legitimate conclusion,” Deal said. “But we know that reserves can disappear very quickly.”

Deal said that in the two years before he took office in 2011, more than $1.4 billion was drained from the reserve fund to bolster a state budget that had been torn apart by the great recession. By the time he was sworn in, Deal said there was only $116 million left in the reserve fund.

“I don’t think anyone would have predicted that to happen in such a short time frame,” he said.

Deal emphasized budget areas that pay for the state’s criminal justice reform efforts, including $656,000 in the budget for accountability courts that try to divert people from prisons by giving them a second chance on some minor offenses.

Some of the state’s judges have been resistant to the idea of creating these accountability courts, and Deal said, “I want us to continue to keep pressure on in that regard . . . I want more uniformity across the state in relation to these second chances.”

© 2017 by The Georgia Report

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Tags: Appropriations Committees , economic outlook , Ken Heaghney , Nathan Deal