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Governor Deal Pushes Medicaid Fix; Proposes $19.8B Budget

Mike Klein

Mike Klein

Governor Nathan Deal has proposed a $19.864 billion state dollars budget for the new fiscal year that starts in July, up about 2.7 percent from this year’s $19.341 billion budget.  The Fiscal 2014 proposed budget was released on the Governor’s Office of Planning and Budget website while Deal delivered his State of the State address at the Capitol.

Total state spending next year would be about $40.837 billion with the other $21 billion being anticipated federal funding.  The trend line here continues to be fiscal savings and a big emphasis on health care cost strategy.  Nearly all state agencies were asked to cut their next year budgets by 3 percent and some by higher percentages.

Governor Deal devoted the bulk of his address to four policy areas – public safety, education, health care and economic development – but he ended with comments on ethics, stating, “If there is to be an expansion of the code of ethical conduct for members of the General Assembly, it should apply equally to all elected officials at the state and local levels.”  The state Senate has passed one ethics bill and the House is expected to have a bill.  However, Deal’s statement was significant in that he said ethics state law should apply to local officials.

Medicaid costs again dominated his health care comments. The Governor urged passage of his legislation that would authorize the state Department of Community Health board to continue that hospital provider fee that would otherwise sunset this June.  “Unless this is done, there will be a shortfall in revenue to support the Medicaid program of nearly $700 million,” Deal said.

The so-called temporary fix to Medicaid expense was imposed by the 2010 General Assembly.  Deal’s bill would transfer responsibility for continuing that fee to DCH board members, giving legislators a free pass.  The fee would raise about $241 million next year, according to the Governor’s proposed budget.  The Senate passed the bill 46 – 9 later Thursday; the legislation now travels across the Capitol to the House.

2013 State of the State Address(Photo Courtesy Alana Joyner, Office of the Governor)

2013 State of the State Address
(Photo Courtesy Alana Joyner, Office of the Governor)

“Since we cannot adjust benefits, the reduction in reimbursements to hospitals would be the only way to keep the program solvent,” Deal told legislators.  “These reductions would be approximately 20 percent, which would seriously jeopardize many of our state’s hospitals.”  On Wednesday Deal said perhaps 12-to-14 hospitals would close if the fee is allowed to sunset.

The Governor’s address created no significant new policy sectors.  Deal recognized “times have been tough” economically but he vowed, “I will not lead our state with a Doomsday mindset.”  His proposed budget includes spending cuts of at least 3 percent for nearly all state agencies except K-12 public education.  Selected state agencies begin three days of public budget hearings next Tuesday.

“Just as Georgia is too big and too important to fall prey to Doomsayers’ pessimism, it is also too big and too important to be divided by race, geography or ideology,” Deal said.  “This year let’s concentrate on the things on which we can all agree.”

Three education announcements should encourage families:  The Pre-K school year would be restored to 180 days, a 10-day increase over this year’s funding level, in the governor’s budget and Deal proposed a 3 percent funding increase to $600 million for the HOPE program.  One year ago there were projections that HOPE was on a financial slide to insolvency.  And, $147.3 million will be added to the K-12 education budget for enrollment growth and teacher training.

The governor said the state’s 28-year-old public education funding formula “does not meet the needs of a Twenty First century classroom,” and he added, “Georgia has had too many school boards under the sanctions of potential loss of accreditation.”  Deal said reasons why school systems lose accreditation must be addressed by state legislation.  “Poor outcomes are most often not the result of lack of money, but lack of vision and leadership,” the governor said.

2013 State of the State Address(Photo Courtesy Alana Joyner, Office of the Governor)

2013 State of the State Address
(Photo Courtesy Alana Joyner, Office of the Governor)

Deal encouraged legislators to build on last year’s unanimous passage of adult corrections reforms and to adopt juvenile system reforms that would reduce incarceration expenses for non-violent youthful offenders.  The state spends $300 million per year on juvenile justice.  “Just as with last year, we stand to lower recidivism and save taxpayer dollars,” Deal said.

The governor said state economic development initiatives have produced 10,000 new jobs since his last State of the State address.  He also said state per capita spending is down 17 percent within the last decade and state government now employs 9,000 fewer people than five years ago.  “We have reduced the burden on Georgia taxpayers,” Deal said.

Deal said the  state “rainy day fund” now has $378 million in cash reserves, which is a 226 percent improvement since Deal took office, and that has enabled Georgia to retain its Triple AAA bond rating.  However the balance is well below pre-recession levels of about $1.6 billion.

The Governor proposed stronger DUI alcohol laws for boaters to bring them into line with drunk driving laws and mandatory life jackets for all persons 13 years old or younger who are riding in a boat or using a personal watercraft.  Currently there is a great deal of national emphasis on gun control and public school safety, but Deal did not address either topic in his remarks.

Additional highlights from Governor Deal’s proposed budget:

  • Increase basic K-12 education funding by more than $156 million.
  • Increase Pre-K early care and learning funding by $12.9 million to $312 million.
  • Increase K-12 equalization grants by $41 million for the poorest school districts.
  • Increase university system funding by $84.6 million to fund growth.
  • Increase university and technical college system capital investments by $247 million.
  • Increase state funding by $50 million to $231 million for the Port of Savannah project.
  • Increase state funding by $2 million to train health care career professionals.
  • Commit $69.8 million to fully fund the state share of teacher retirement system.
  • Commit $60 million to fund new transportation projects in FY 2013 and FY 2014.
  • As promised earlier, end the user tolls paid by drivers on Georgia Route 400.
  • Proposed $25.2 million in bond sales for water supply projects.
  • Proposed $15 million in bond sales for Georgia World Congress Center upgrades.
  • Proposed $26.5 million in bond sales for state parks and lands improvements.

January 17, 2013 Posted by | Uncategorized | , , , , , | Leave a comment

Georgia Legislature Passes FY 2013 Budget by Wide Margins

Mike Klein

Georgia legislators overwhelmingly approved next year’s budget early Tuesday afternoon, just one day after they voted to pass significant pension investment reform.

Next year’s $19.342 billion budget that passed both chambers Tuesday is 5 percent higher than $18.2 billion current fiscal year funding.  Governor Nathan Deal’s office recently increased the revenue estimate by $177 million.  “While this is positive affirmation that we are recovering slowly, it should be understood that this growth does not begin to regain all the lost ground from our high water mark in Fiscal 2008,” said House appropriations chair Terry England.

“At that point (during fiscal year 2008) our budget was some $2 billion larger than it is today with a half million less people.  In fact, the fiscal year 2013 base budget proposes state operations at 20 percent lower per capita than one decade ago,” England said.

The fiscal year begins July 1.  The new budget has a strong economic development focus with $44 million in new One Georgia Authority funds and $67 million for REBA – Regional Economic Business Assistance – primarily from Georgia’s receipts from the national mortgage settlement.

Senate appropriations chair Jack Hill told the chamber those funds will “front-load our economic development efforts.  If we have the opportunity to bring in new industry nothing will stop us from the standpoint of a new rail spur or a new road, whatever is needed for that community and the state to bring new jobs to Georgia.”

The House voted 143 – 24 and the Senate voted 45 – 0.  The bill contains no across-the-board state employee salary increases, except for some increases for Georgia Bureau of Investigation agents and Department of Natural Resources rangers.  The bill fully funds pre-K salaries and operating expenses for 170 days; there was concern earlier in the session that pre-K teacher salaries were addressed but operating expenses were overlooked.

Significant public sector pension reform was approved on Monday when the House passed SB 402 by a 104 – 53 margin.  The bill allows for the allocation of up to 5 percent of Employee Retirement System assets into alternative investments such as venture capital funds. The state Teachers Retirement System is exempt.  The bill does not require any specific alternative investment; it merely establishes the framework and defines the investments.

The budget that will be sent by Governor Deal would restore funding to the Morehouse and Mercer University Schools of Medicine.  It would also expand new physician residency slots statewide, restore $4.3 million for substance abuse programs, add $1.2 million for GBI scientists who conduct drug tests and fund new judges in the Bell-Forsyth and Piedmont judicial circuits. Ten million dollars is provided to fund accountability courts as part of criminal justice reform.

Other highlights include funds to open a new trade office in China; $108 million in bonds for the Technical College System, $75 million for reservoir development, and $29.8 million to comply with the federal court agreement on behavioral health programs.  Autism treatment funds would be allocated for the Marcus Center, Emory University and a facility in Savannah.

The Plains and Sylvania welcome centers would remain open.  The budget also restores funds that were in jeopardy for cooperative extension county offices and 4-H programs.

Click here to read the budget legislation tracking sheet.

Click here to read the final budget legislation.

Click here to read the pension reform bill.

(Mike Klein is Editor at the Georgia Public Policy Foundation)

March 27, 2012 Posted by | Uncategorized | , , , | Leave a comment

Deal Eliminates Jobs, Cuts Budgets, Offers Harsh Words for Obamacare

Mike Klein

During his inaugural address this past Monday Georgia Governor Nathan Deal pledged, “We must justify every cent that government extracts from our society.”  On Wednesday afternoon the governor was back before the General Assembly with a few more eye-popping details.

Deal used his first State of the State address to announce 14,000 mostly vacant state government positions will be eliminated and state employment will be frozen at current levels.  In addition, the governor’s first budget reveals that many programs will be curtailed and some will be entirely gone.

“Many politicians have long talked about reducing the size of government,” Deal said. “My friends, we are doing it.” The governor told agencies to reduce current spending by 4% and to expect 7% average budget cuts in the fiscal year that starts July 1.

Governor Deal proposed no new taxes or increases to existing taxes.  The former nine-term congressman did not mention proposals made last week by the Special Council on Tax Reform and Fairness.

The 4% current year budget reduction should be easy to achieve because the state has withheld funds from monthly payments made to agencies since last summer. Deal said 7% reductions next year would not be “uniform across agencies, but are designed to give priority funding to core responsibilities.” Some will be reduced more, such as 12.3% at Georgia Public Broadcasting, and some will receive budget increases.

Georgia Governor Nathan Deal

Deal presented the General Assembly with an $18.162 billion fiscal 2012 budget proposal that is 3.75% and $273 million more than fiscal 2011. The governor said teacher furloughs should end and HOPE scholarship grants cannot exceed funding available from the Georgia lottery. “We must act now to maintain the Georgia jewel known as HOPE,” Deal said.

Education would be 54% of state expenditures. “My budget will end teacher furloughs and keep students in school for a full year,” Deal said. “I view education as our number one economic development tool and there is no more forward – looking or strategic place to invest.”

The state Department of Education would be almost unchanged at $6.994 billion but other state education spending would decline $498 million. The largest cuts are $275 million at the Student Finance Commission because of anticipated lower lottery fund payments and $118 million at the Board of Regents which would have a $1.723 billion budget.

Reduced lottery dollars would trim Bright from the Start by $19.7 million. The Technical College System would be reduced by $18.9 million to $300 million. TCS has been under pressure during the recession because enrollments are going up and dollars are going down.

Health care spending would increase $747 million to $4 billion, a number that will continue to grow due to federal mandates that will eventually add 650,000 Georgians to the Medicaid program. “This mandated expansion of service will cost Georgia Medicaid an additional $2.5 billion in state funds alone over the next ten years,” Deal said. Health care costs are 22.5% of state expenditures.

The governor’s harshest words were directed toward Washington. “The (President Barack) Obama administration has placed onerous maintenance of effort requirements as well, which have severely tied our hands with respect to managing our state Medicaid program,” Deal said. He predicted that without more flexibility, “we expect to see patient access to care severely limited.”

The Department of Community Health would receive $642 million more to $2.715 billion, Behavior Health and Developmental Disabilities would receive $111 million more to $876 million, and Human Services would remain nearly unchanged at $469.8 million.

Corrections reform was a major theme of Deal’s inaugural address and that emphasis carried forward into his proposed budget. The state Department of Corrections would receive $64.6 million more to $1.036 billion. Juvenile justice would receive $13.2 million more to $279 million and Public Safety would receive $6.2 million more to $107 million.

Additional corrections dollars would fund many ideas. Deal favors expansion of day reporting centers along with the creation of new drug, DUI and mental health courts, along with new probation and treatment options. Some public safety programs would absorb cuts, but overall total public safety spending would increase $82.8 million to $1.542 billion.

State of Georgia Seal

The Department of Economic Development budget would increase 43%. It would receive $12.5 million more to $41 million. Deal would fund part of that increase with $9.288 million in tobacco settlement funds; the department received no tobacco settlement funds last year.

Statewide courts would be spared budget reductions. The Supreme Court budget would increase slightly to $8.055 million. There would be no reductions to the Superior Courts, the Court of Appeals and the Juvenile Courts. Prosecuting attorneys would receive $1.8 million more to $57.5 million.

A lengthy list of possible losers includes nothing for the sports, music and aviation halls of fame which have been budget drains for years. There would be no state funds for the Civil War Commission, the State Medical Education Board, the Council for the Arts and the State Properties Commission.

The biggest piece of a proposed bond package is $231 million for K-12 construction, equipment and school buses. Another $15 million would fund STEM charter schools that specialize in science, technology, engineering and mathematics. Deal proposed bond packages to fund reservoirs, deepen the Savannah harbor, make repairs to universities and upgrade technical colleges.

“My proposed bond package is less than $563 million which is approximately 50% less than bond packages in recent years,” Deal said. “I urge you to join me in keeping our borrowing at a lower level than the past. I believe that is the wise course of action.”

Mike Klein is Editor at the Georgia Public Policy Foundation.

January 12, 2011 Posted by | Uncategorized | , , , , , , | Leave a comment