Governor's Budget Letter

While revenues continue to grow moderately, we must continue to focus on meeting the basic needs of a growing state. My proposed budget continues to streamline state services by consolidating and realigning agencies and programs to find efficiencies. At the same time it strategically invests funds in activities that will strengthen our economy and the core business of state government.

The Georgia State Senate
The Honorable Casey Cagle, Lieutenant Governor
The Georgia House of Representatives
The Honorable David Ralston, Speaker
The Citizens and Families of Georgia

Dear Lieutenant Governor, Mr. Speaker, Members of the Georgia General Assembly, and Fellow Georgians,

After several difficult years for both Georgia and its citizens, we are now seeing slow but steady progress in the state’s economic and fiscal condition, and we are guardedly optimistic. Our long history of conservative fiscal management has served us well. Georgia remains one of only eight states with a Triple-A bond rating by all three rating agencies. We have grown our rainy day fund from $116 million last year to $328 million today, and for the past two years, I have submitted balanced budgets without any new tax increases.

In developing the Amended FY 2012 and FY 2013 budget, we have applied a zero-based budget approach to approximately 10% of our programs. This is an important tool that can help all of us better manage state spending to ensure that taxpayer dollars are used in the most efficient and effective way. It is my intent to continue this approach throughout my administration. Additionally, all agencies were asked to look for efficiencies and prioritize their spending requests. In most cases, agencies have reduced their base spending levels over the prior year.

Competing in a world economy requires us to give our children the best learning opportunities possible. This begins in pre-kindergarten (Pre-K) and continues through post-secondary education in our colleges and universities. My budget increases the school year for Pre-K by 10 days, bringing the Pre-K school year to 170 days and increasing Pre-K teacher salaries accordingly, and funds 84,000 slots for children. The amended budget adds $87.9 million to fund enrollment growth for Quality Basic Education and in FY 2013 provides $58.7 million for additional enrollment growth and $55.8 million in pay increases for Georgia’s teachers based on training and experience. Further, my proposal includes no reduction to QBE, Equalization Grants, State Schools, or other enrollment driven programs. With the goal of increasing the percentage of children in Georgia reading at grade level by the completion of 3rd grade, my budget also includes $1.6 million for a reading mentor’s program. I am also recommending $8.7 million in both budget years for supplemental grants to state special charter schools that were affected by the Georgia Supreme Court ruling. Charter schools are a key to Georgia’s educational success and without these additional dollars affected charter schools would be forced to operate on approximately half of the funds of other public schools.

Last year, working with the legislature, we made necessary changes to preserve HOPE for future generations. For those students eligible for HOPE awards, my FY 2013 budget provides the same award amount received in FY 2012.

In both the Technical College System and the University System of Georgia we have added $16.8 million and $94.5 million respectively to fund enrollment growth. To provide for needed renovations, equipment and new building construction, I am recommending $55.5 million in bonds for the Technical College System and $235.6 million for the University System.

Last April, I launched my Competitiveness Initiative which brought together state government and the business community to develop a long-term strategy for economic development. I look forward to working with the General Assembly during the 2012 legislative session to implement many proposals from this Initiative to improve Georgia’s business climate and grow our economy. Proposals such as moving towards the elimination of the energy sales tax on select segments of the economy will encourage small and new businesses to develop in our state while at the same time maximizing the assets we have already established in Georgia. My budget proposal also includes an investment to encourage economic growth in rural areas. The OneGeorgia Authority has awarded over $300 million in the last decade to jump start project developments and create new jobs. I am recommending $10 million in both Amended FY 2012 and FY 2013 ($20 million total) for rural economic development.

Our state’s future prosperity also requires a world class infrastructure. My budget for FY 2013 provides the second of four years of funding, $45.7 million, for water supply projects. Further, to improve the competitiveness of the port of Savannah, my FY 2013 budget includes $46.7 million in bonds to continue deepening the harbor. This investment builds on the over $136 million already invested for harbor deepening between FY 2010 to FY 2012.

Georgia has the fourth largest prison system in the nation with a cost that has grown to $1.1 billion annually. My budget reflects investments toward some of the key findings of the Criminal Justice Reform Council which focused on increasing public safety while decreasing the burden on Georgia taxpayers. I am recommending $10 million in FY 2013 for the creation of Accountability Courts that can better address prison admissions, especially of lower risk offenders. I am also adding $1.4 million to fund additional parole officers at the State Board of Pardons and Paroles to implement mandatory supervision of offenders who otherwise would serve their maximum sentence and be released in our communities without any supervision. I am also recommending $35.2 million for additional beds in two private prisons and $5.7 million to convert three Pre-Release Centers (PRC) to Residential Substance Abuse Treatment (RSAT) centers. In our Juvenile Justice system, we are seeing an increased need for resources to work with the most violent youth offenders. My budget includes funds to open a new Youth Detention Center as well as funds for two security management and response teams. While there is the need for an initial investment to implement these reforms, the reforms will result in a safer Georgia and ultimately save money as these reforms will reduce recidivism.

Healthcare continues to be a leading cost driver in the state budget. We are continuing to implement steps to control costs. However, slow economic growth has increased enrollment in the Medicaid and PeachCare programs. My budget shores up the funding for our Medicaid programs which now serves more than 1.6 million adults and children with an expected growth rate of 2.5 percent in FY 2013. My budget also increases the nursing home reimbursement rates from the 2006 to the 2009 cost report funded through an increase in the nursing home provider fee. My recommendation for FY 2013 also includes $29.8 million to fund the third year of the Settlement Agreement with the U.S. Department of Justice for funding improvements to mental health and developmental disabilities programs and $6 million to address the waitlist for forensic services. The budget also includes more than $54 million in Amended FY 2012 and $45.9 million in FY 2013 to fund the employer’s contribution for state employee health benefits.

Cancer is a major public health issue in Georgia with an annual death rate that exceeds the national average. Despite being the ninth most populous state in the nation, Georgia is home to only one of the nation’s National Cancer Institute designated Cancer Centers, the Winship Cancer Center at Emory. To support the goal of having a second National Cancer Institute (NCI) Cancer Center designation, my proposal includes an investment of $5 million for cancer-related research at Georgia Health Sciences University. Among other benefits, NCI designation means greater access to research dollars, greater ability to recruit top cancer specialists, insures Georgia patients will be the first in line for the newest, most promising therapies and clinical trials not available elsewhere, and serves as a catalyst for economic growth. In order to address the need for additional health professionals practicing in the state, my recommendation provides $4.2 million to address graduate medical and graduate nursing education.

I believe Georgia’s best years are yet to come. Despite temporary setbacks, our path to a brighter future remains. We are funding the key building blocks that will lead to economic development and jobs for the people of Georgia. Working together we will give all our people the opportunity they deserve for a better life for themselves and especially for their children. I would like to thank the members of the General Assembly for working together with me during the last year to meet the needs of our state, and I look forward to the upcoming legislative session.

Sincerely,

Nathan Deal