Senator Jack Hill4th District

Georgia Moving Forward

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Updated September 10, 2015

Department of Revenue Collections FY06-FY16

2*Only compares revenues collected and reported by the Department of Revenue (primarily tax revenue). Other agency collections, such as insurance premium taxes, are not included.

FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 Gen Est.

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$16,247,043

$17,639,827 $17,497,748

$15,625,305

$14,317,390 $15,332,989

$16,079,762 $17,024,135

$17,883,554 $19,028,524 $19,368,075

Revenue Estimate ComparisonFY2016 is built on approx. 1.7% TAX growth over FY15 and 8% over FY14

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FY11 Actuals FY12 Actuals FY13 Actuals FY14 Actuals FY 15 Actuals* FY 16 Gen Est. $-

$5,000

$10,000

$15,000

$20,000

$25,000

$15,333 $16,080 $17,024 $17,884 $19,029 $19,368

$2,747 $2,470 $2,731

$2,582 $2,644 $2,461

DOR Tax Revenue All Other Collections (Lottery, Insurance Premium Taxes, Tobacco, etc)

Mill

ions

*FY15 is based on unaudited numbers and subject to change

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Trends in Dept. of Revenue Collections

• With tax collections unaudited, a few trends…1. Total State tax revenues show $19.0 billion with

a gain of over $1.1B YOY.2. Individual Income taxes, half of state tax

revenue, was strong with a 7.9% increase on revenues of $9.67 billion, or $711.8 million of the YOY gain.

3. Sales tax was consistent at 5% and followed the southern trend

4. Revenues were over budget $500M+

12 Month Trailing Growth Rate – through July

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-17.0%

-12.0%

-7.0%

-2.0%

3.0%

8.0%7.8%

-1.1%

-4.3%

-10.5%

-15.9%

-9.1%

2.2%

7.8%

3.6%

5.9% 6.4%

State Funds Budget Declines during the Recession

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $15,000,000,000

$16,000,000,000

$17,000,000,000

$18,000,000,000

$19,000,000,000

$20,000,000,000

$21,000,000,000

$22,000,000,000 During the recession, nearly $3.5 Billion was reduced out of the state funds budget in 10 from the peak

20002001

20022003

20042005

20062007

20082009

20102011

20122013

2014

2015 Estimated

$-

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

$2,000,000,000

Revenue Shortfall Reserve (RSR)

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From 2002 to

2004 the State

utilized $1.6

billion of the RSR

From 2008 to

2010 the State

utilized $1.5

billion of the RSR

*Before K-12 RSR removed

Formula Funded Areas FY08-FY15

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*Latest available – as of July 1, 2014**Estimate based on Summer, Fall Spring enrollment^Department estimates on actual through April 2015, projected through June

2008

2015% Change

08-15 Difference

Georgia Population 9,697,838 10,097,343* 4.12% 399,505 Education

K-12 FTEs 1,627,660 1,723,663 5.90% 96,003 Regents FTEs 235,186 276,564 17.59% 41,378 TCSG FTEs 73,897 70,906** -4.05% -2,991 Health Medicaid Enrollees 1,268,682 1,810,087^ 42.37% 448,070 PeachCare Enrollees 252,068 158,733^ -37.03% Corrections Inmates 59,795 53,870 -9.91% -5,925 Probationers 142,663 166,380 16.62% 23,717

Georgia vs Other States

• Georgia is doing very well in comparison to other SE states

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FY20

15 F

inal

July

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

6.4% 6.4%

3.7%4.3%

7.8% 8.2%

3.1%2.3%

0.0728777429367466

5.7% 5.3%

2.9%1.8%

-0.1%-1.0%

12 Month Trailing Growth Rate: Selected Southeastern States

Georgia Alabama Tennessee TexasSouth Carolina Florida Mississippi Louisiana

GA

AL TN TX SC FL MS LA GA AL TN TX SC FL MS LA

*Based on only Department of Revenue collections except Florida, which has additional fees or adjustments outside of Department of Revenue.

Georgia’s Budget Process is Sound

• With the Senate, House and Governor Deal’s leadership, Georgia was one of the first in the SE to pass a budget

• Other SE states suffer from late budgets including Alabama, North Carolina, Florida

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AL.com August 25, 2015

Tallahassee Democrat June 20, 2015

News & Observer August 30, 2015

Other States Fight Problems

• Alabama’s separate Education budget and Medicaid expenses taking a larger share of the General budget revenue sources

• Florida struggles with healthcare funding• Louisiana budget impacted by oil price drop• North Carolina revenue volatility, spending

disagreements

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North Carolina – from their May 6 Revenue Adjustment

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North Carolina’s tax changes got news, but their Consensus Forecast points out the higher revenue was linked to business filings and possibly the repeal of an exemption.

Reason for Optimism

• July revenues were up 6.1%– Individual income taxes were up 9.0% or $69M,

withholding payments were up $61.3M• In July, the seasonally adjusted employment

rate was lowest in 7 years

• Other AAA states: Alaska, Delaware, Iowa, Maryland, Missouri, North Carolina, Texas, Utah, Virginia

• KY downgraded for pension concerns13

ISSUES: OPEB

• OPEB is the liability the state has for retiree medical and other post-employment benefits

• Currently financing generally on a Pay As You Go basis

• State OPEB Liability: $2.87 Billion• School OPEB Liability: $8.51 Billion

• In AFY15 and FY16G, funds were instructed to be transferred to the OPEB trust ($187M and $115M)

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Why OPEB?

• Covering long term liabilities key to strong bond ratings

• The most recent report has the annual required contribution for the liability at:– School: $669.9M– State: $202.1M

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ISSUES

• Pay Raises • Effects of the Transportation Bill• Medicaid costs (Hepatitis C, enrollment)

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Questions?

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