Prepared Remarks of Governor Sonny Perdue Supplemental Fy04 Budget Presentation

Monday, January 5, 2004

Contact: Office of Communications 404-651-7774

Atlanta, Georgia
January 5, 2004
(NOTE: The Governor Sometimes Deviates from Prepared Remarks)

Good afternoon, everyone. I hope you enjoyed your holidays and spending time with family and loved ones. Now you're all refreshed and ready for the new year, aren't you?

I want to welcome the Joint Appropriations Committee and other members of the General Assembly back to Atlanta . We've missed you.

Today we officially begin our work together for 2004. And I appreciate having this opportunity to get things started by presenting my Amended FY 2004 Budget.

I know we're all looking forward to a productive session this year. Productive-and shorter than last year! That's an efficiency in government goal I think we'll all agree on.

Actually, we begin this new year with a lot more common ground than the casual observer might expect. I believe everyone in this room recognizes that Georgia state government continues to be in a tough financial situation.

And we recognize the heightened responsibility placed on each of us to manage state resources wisely to meet the needs of our citizens.

Today, Georgia is still riding out the effects of a national recession. Hardworking Georgians are still hurting.

And they're still feeling the economic pinch in the family checkbook and in the business account books.

Whether it's business owners burning the midnight oil or families gathered around the kitchen table, Georgians still face tough choices about how to stretch a dollar, about what necessities they must fund, and what things they can do without until later.

As stewards of the public treasury, we face those same decisions. And we must approach our decisions with the same care that Georgians bring to their family finances.

Make no mistake, this will not be an easy task. We cut the fat last year and we've now reached the point of making tough budget choices between funding the good versus funding the also good.

You all know that tough times hit state government with a one-two punch. First, the jab of a troubled economy means less revenue coming in.

Then comes the left hook. Tough times mean more demand for state services in areas from education to health care to corrections.

Unfortunately, I learned last week that a late jab has been added to the one-two punch - leaving us with a three punch combination as we leave 2003 behind us. Revenues, which had been beating last year for a few months now, were up in December, but not as much as we hoped. They ran only 3.2% ahead of last year.

I see this as a blip in our path to recovery, but it highlights the need to budget very conservatively for FY 2004 and FY 2005.

I have read the words of some legislators in the papers over the past few weeks. Some have said that we may not need to cut so much, things are better now. The December revenue numbers serve as a strong warning that that is not the prudent course.

I do see better days ahead - and soon -- but I am not willing to bet on that course by spending money now that we hope to have later.

I won't do it and I won't allow it to happen. And I hope you know that anyone game to test me on this resolve will be disappointed with the outcome. If, as I hope, our revenues picture improves, we will address that possibility when it becomes a reality . We will address it this time next year in the mid-year budget period.

This means further cuts in FY '04 and for the big budget we will be addressing January 14 when I present my 2005 budget.

So as decision-makers, we're in the unenviable position of having to do more with less. "Doing more with less" is not just a catch phrase here. It's a hard reality we must face.

Our total budget has essentially remained flat over the last two fiscal years. But our needs have grown since 2002. School enrollments have grown, at the K-12, college and technical college levels. Medicaid costs have grown dramatically and continue to do so. Other basic needs have expanded as well.

Whether you call it doing more with less or meeting more needs with the same amount of resources, the result is the same. We've got some hard decisions ahead.

But I'm confident that we will carry out our responsibility. We will pass a balanced budget that meets the real human needs of Georgians.

And we will succeed in this task by doing three simple things.

One, we must stay focused on our most important priorities-children, education and job creation.

Two, we must actively and aggressively seek greater efficiency and effectiveness by changing the way we do business in state government. Frankly, ladies and gentlemen, that is the only way to do more with less.

And three, I believe the citizens of Georgia expect us to live within our means. That means simply no tax increases.

These simple principles are embedded in the Amended FY 2004 Budget I present to you today.

After last year's session and during the summer, it became clear that projected revenues for this 2004 budget would not keep pace with our final revenue projection on which the original 2004 budget was based.

In fact, we have lowered the revenue estimate for FY04 from $15.1 billion to $14.6 billion, a reduction of $552 million. There's that jab I was talking about.

That blow was softened some because we received approximately $278 million from the Federal government in Job and Growth Tax Relief or Federal Flexible Assistance. We realized another $210 million through the federal government reducing our match requirement for Medicaid.

That's $488 million that we've got to help to offset the loss in other state revenues. But we've got to remember that this is one time money. It does not relieve the need to balance our budget by making further spending cuts.

Not only must we make additional cuts, we can only do so wisely by making changes in our budgeting process.

In my budget instructions to agencies, I directed early on in the summer that they identify 2.5% of their budgets for reduction.

I also asked the agencies to reformat their budgets into a new prioritized program based budget that will help us make state government a more streamlined, more effective, more transparent operation.

I asked each agency to identify programs that they provide and how much those programs cost.

Looking at the budget program by program provided the agency heads a tool to assess priorities and find efficiencies. And I hope it will provide a useful tool for your decisions.

My AFY 2004 Budget does not fully reflect this program approach due to the format of the appropriation. But the process did help agencies to better identify where their proposed cuts would be made.

I want to take this opportunity to publicly compliment our department and agency heads for the good work they have done to implement priority program based budgeting. It took a lot of new effort and new thinking to meet their revised budget targets for FY 2004.

Together, my budget and policy staff, along with agency staff, spent countless hours preparing for and conducting budget briefings.

Well, countless may be the wrong word. Being numbers people, they counted. And they tell me our 32 OPB staffers have spent a combined 35,840 people hours preparing the budget over the last four months.

That's 4.125 years of people hours. Believe me, at times it seemed much longer than that. But however you count, they've done a lot of hard work and I want them and the department heads to know how much I appreciate it.

As we gathered around the state's "kitchen table" at OPB we carefully considered the impact that reducing expenditures will have on our citizens, particularly those who are in most need of state services.

We have applied the principles of prioritized program budgeting and looked into expenditures at program and subprogram levels.

We have searched every corner of state government to find efficiencies while maintaining quality services throughout Georgia .

It has been at times a grueling task. But I believe and hope that you will find the recommendations in this Amended AFY 2004 Budget are wise and provide good stewardship of our state finances.

I know each of you will study this document with great care, as you should, so I'm not going to recite every detail for you. I know you'll want to spend a lot of time examining it.

I do want to give you an overview of how we have sought greater efficiency and effectiveness while taking care of our priorities of children, education and job creation.

Every agency identified their 2.5% cuts. My final recommendation includes most of those cuts for the vast majority of the agencies.

Through our Prioritized Program Budgeting process, agencies identified numerous reductions in programs.

I am recommending less than the full 2.5% reduction for a handful of agencies. In each case this decision was driven by growth in the populations served or it reflects my priorities of children and education.

It is no surprise to anyone here that growth in Medicaid and Peachcare and our employee health care continue to be major cost drivers in our budget. These are costly programs, but they are also essential to serving the health needs of many Georgia children, as well as adults.

For Peachcare, you will find, as promised, a transfer of $18.1 million.

We are also making the needs of children a priority in the DFACS budget by adding $12.9 million to FY'04 to implement a new Levels of Care placement system that will be more focused on the unique needs of children in the child protection system. The Levels of Care system will place children in an appropriate level of care based on their individual needs and will reimburse providers for the actual level of care delivered to each child.

Education is another priority area in which we recommend a less than 2.5% reduction. This includes a midterm adjustment to the QBE formula of $118 million. This reflects a 1.75% growth in enrollment.

In the education budget we are also adding $8.8 million for a mid-term adjustment to equalization grants for poorer schools; $1.8 million of additional funding for Criterion Reference Competency testing in support of our education accountability system; and $9 million in lottery funding to the Office of School Readiness to meet increased enrollments in the Pre-K program.

Most of our program for economic recovery and jobs creation will be reflected in the FY'05 budget. But I do want to mention that for FY'04 you will notice we are maintaining the QuickStart, Equity and Edge programs at the current funding level.

As I said, the principles that should guide our budget decisions are simple - but that still doesn't make our decisions easy .

But our job as leaders is to face up to the situation we find ourselves in, find the best course of action available and move forward. And I trust that we will do that.

By taking a prioritized approach, we have not subjected state government to massive layoffs and major reductions in services.

I am confident that my AFY 2004 Budget recommendation meets those principles of caring for children, education and jobs, bringing greater efficiency to government, and living within our means.

I want you to know how sincerely I look forward to working with you on this AFY 2004 Budget to meet Georgia 's needs, spur economic recovery and continue to build the New Georgia we desire.

Thank you for your hard work and have a great session.