This morning Governor Perdue announced at a press conference that the revenue shortfall for the current fiscal year has grown to $3.3 billion. The most recent estimate had put the year-end revenue shortfall at $2.2 billion. In response, the governor is taking steps to make sure the state’s checkbook balances on June 30th. In a turn of course she is implementing a state furlough that will reduce state employees’ salaries (include teachers and council of state agencies) for the next two months by .5% and in turn will allow state employees to take additional time off. The governor is also planning to use $400 million of federal assistance that she had planned to use to balance the 2009-11 budget. Finally the governor will dip further into other funds, including the rainy day fund. All eyes will now turn to the House and Senate who now have to cope with a budget shortfall for next year that just grew by at least $1 billion (the $1 billion drop in revenues plus less federal funds available). To put that into perspective the Senate’s budget, which was widely criticized for its deep spending cuts including a proposed increase in k-12 class size, included $1.3 billion in spending reductions. So the House is now looking at roughly double the spending reductions proposed by the senate and/ or raising substantially more revenues.
If this announcement doesn’t stop the business-as-usual approach on Jones Street nothing will. State leaders need to follow the Senate Finance Committee’s lead and build a revenue system that creates a stable revenue stream that raises adequate funds to pay for necessary state services. This should also push state lawmakers to have more reform-minded discussions about the spending side of the equation as well including sentencing reforms that could save on prison costs and implementing best-practices in government-funded health care programs. To that end, the governor did say today that her BRAC-style budget commission is hard at work generating new recommendations.
When it comes to fixing the future, there is no time like the present.