Governor Nathan Deal said Georgia, one of eight states given top marks by the three major credit-rating companies, would be able to continue rebuilding its reserve fund this year.
The Republican elected in November said the state would add surplus funds from fiscal 2011 to the reserve, which fell to about $116 million at the end of June, net of typical mid-year appropriations, from a record $1.5 billion as of June 30, 2007. Deal said that fiscal 2012 revenue growth will likely exceed the “modest” 3.75 percent assumed in his proposed 2012 budget, and surplus receipts will be used to replenish the reserve, or rainy-day, fund.
“We think that we’re going to be able to rebuild that as the bonding rating agencies would like to have us do it,” Deal said today in a telephone interview from Atlanta.
Moody’s Investors Service’s stable outlook on the state’s debt derived from its “expectation Georgia will take appropriate steps to restore balanced financial operations and replenish reserves,” the rating company said Sept. 30.
The entire reserve, including money typically appropriated by the Legislature for mid-year education funding, was about $268.9 million as of June 30, according to Lee McElhannon, director of bond finance for the Georgia State Financing & Investment Commission. Of those funds, the Legislature has authority to appropriate about $152.2 million to education for this year, which the governor has proposed, McElhannon said.
Georgia’s rainy-day fund declined after the longest recession since World War II cut revenue 19 percent, from a record of almost $18.8 billion in fiscal 2007 to $15.2 billion in 2010, and the state used the reserve to balance spending, according to the governor’s amended 2011 budget report.
Deal, whose proposed fiscal 2012 budget included agency cuts averaging 7 percent, said the reductions would help bring spending in line with the “realities of our revenue stream.”
In addition to adding to the reserve fund, Deal’s 2012 budget would cut new bond issuance to $563 million from $901 million proposed for the current year to help maintain the state’s AAA debt rating.
“We want to make sure that we continue to not be stretched in order to meet our bond obligations,” Deal said. “We believe that that is the prudent thing to do.”
Deal, who campaigned in part on promises to reduce taxes, said he wouldn’t do the opposite to refill the reserve fund.
“I’ve made it clear we will not raise taxes,” he said. “I believe that’s the worst thing we could do in this downturned economy.”
Georgia’s jobless rate climbed to 10.2 percent last month from 10 percent in November. The national average was 9.4 percent in December, down from 9.8 percent a month earlier, according to U.S. Labor Department figures.