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Thursday, January 19, 2012 - 12:12pm

Budget Cuts Will Continue

Gov. Nathan Deal’s 2013 spending plan is about 4 percent larger than the revised 2012 budget. That reflects increased tax revenues. But state officials told lawmakers Thursday, there'll be no reprieve from budget cuts next year.

Georgia’s revenue collections have risen for 18 out of the past 19 months. That has allowed the state to recommend spending more money on enrollment growth at Georgia schools and universities.

The state is one of only eight to retain a triple-A bond rating. And the employment outlook is beginning to brighten.

But at a budget hearing with lawmakers, the state’s Chief Financial Officer Debbie Dlugolenski said Deal will be tightening expenses regardless of the economy.

“Going forward, the Governor reinforced with you that he intends to look for efficiencies and to exercise fiscal restraint in future budgets," she said. "You will see, going forward, we will always ask agencies for reduction plans – even when revenues improve.”

Like most other state agencies, the Governor’s office will cut expenses by 2 percent in fiscal 2013.

While a gradual recovery appears to be underway in Georgia, officials warn that obstacles remain.

Ken Heaghney, the state’s fiscal economist, says globally, Europe could easily fall into recession this year. And in Georgia, the housing sector remains an issue.

“When you think about the risks, for Georgia, I still think primarily of housing," he told lawmakers. "We are still seeing significant housing price declines. Foreclosures are still significantly high. And we do expect foreclosures to go back up.”

That's because he says banks are resolving the legal issues around some dubious foreclosures that took place earlier.

Heaghney says the state’s revenues won’t return to the 2007 peak until 2015. Gov. Deal set the budget estimate at $19.2 billion for fiscal 2013.

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