BTC REPORTS: The Governor's Proposed 2012-13 Budget

By Brenna Burch
Public Policy Analyst, Budget & Tax Center
May 2012

Executive Summary

  • On May 10, Governor Perdue released her recommended $20.9 billion FY2012-13 state budget. It includes a ¾-cent extension of the state sales tax, which would raise a projected $760 million in revenue. While the governor’s proposal represents a 4.9-percent increase over the $19.7 billion FY2012-13 continuation budget, it would nonetheless spend 8.2 percent less than the last state budget approved before the onset of the Great Recession (FY2007-08) when adjusted for inflation.
  • Revenue availability for FY2012-13 increased as a result of stronger-than expected personal income tax collections, resulting in a projected revenue surplus of $232.5 million. Combined with an unappropriated balance of $41 million, $122.5 million in agency reversions, $9.6 million in General Fund restitution from the National Mortgage Settlement, and $757 million in net new revenue, the governor’s budget is predicated on $1.16 billion in revenue in excess of the continuation forecast of $19.94 billion.
  • State investment in almost every area of the budget is far below pre-recession levels under both the governor’s proposal and the continuation budget. When compared to the pre-recession inflation-adjusted FY2007-08 state budget, the governor’s proposal spends $1.88 billion less and the continuation budget spends $2.85 billion less.
  • The governor’s budget would restore $562 million in funding to public schools—an amount greater than the current budget’s largest single recurring cut to public education, the $503.1 million “LEA Adjustment.” While her proposal calls for a 7.6-percent increase to total state funding for public schools, it would still spend 5.9 percent less than the pre-recession budget.
  • The governor’s budget includes $200 million in one-time money to address the current year’s shortfall in funding to pay Medicaid claims. While this amount fully addresses the FY2011-12 Medicaid shortfall as estimated by the Office of State Budget and Management and the Department of Health and Human Services, the governor’s suggested funding increase for Medicaid in FY 2012-13 falls $143 million short of the $243 million needed to meet program obligations.

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