Georgia Budget Process

         The State of Georgia's Constitution requires State Government to operate under a balanced budget; the state cannot incur a deficit and cannot borrow money for operating funds.  No expenses can be incurred for which funds are not available, and no state funds can be spent unless they are authorized in an appropriation bill approved by the General Assembly and signed by the governor.

          The state's budget laws, primarily passed in 1962, carefully delineate the responsibilities of the Executive and Legislative branches.  The budget process is orderly and carefully structured to protect the interests of the taxpayers.

          In general, the only borrowing permitted is for the funding of major capital outlay projects through the issuance of bonds.  To keep ensure the level of borrowing does not overburden the state’s ability to pay for the projects, the annual debt service payments cannot exceed 10 percent of prior year's treasury receipts.

There are Four General Phases in the Budget Process

          Initially, departments submit formal budget requests.  Second, the governor makes his spending recommendations to the General Assembly through a Budget Report, which is reviewed, adjusted, and ultimately passed as legislation by the General Assembly.  Finally, the appropriated funds are spent under the direct control and management of the Governor's Office of Planning and Budget.

          Since Georgia's budget must be balanced, the key to the size of the budget each year is the availability of funds to be spent.  Three components are involved in making this determination, and they are:

Revenue estimate.  This is a projection of the amount of tax receipts, fees and other revenues that will be collected by the state's general treasury during a twelve-month fiscal year period.  This official estimate becomes a part of the fund availability to be appropriated.

Surplus.  Part of the surplus comes from funds that have been appropriated but are not spent during a previous fiscal year.  These funds are lapsed and become available for re-appropriation.  The second part of a surplus comes from revenue collections that exceed the official revenue estimate.

Other funds.  Estimates for separately accounted funds (Lottery income, Indigent Care Trust Fund, Tobacco Settlement Fund, and Nursing Home Provider Fee) also play a role in the overall revenue estimate and size of the state budget.

          The governor, who is named by law as the State Budget Director, is responsible for finalizing the official revenue estimate.  He is assisted in this responsibility by a state economist, who operates under contract as a consultant with the Governor's Office of Planning and Budget, which is the budget management agency budget for the governor.

          The basis for making revenue projections is a computerized econometrics model.  From this model, a range of estimates is provided to the Governor by his economic consultant.  In early December, prior to finalizing his budget recommendations to the General Assembly, a final estimate is adopted by the Governor and the size of the forthcoming appropriation bill is determined.

Further Explanation of Surplus

         The surplus at the end of the fiscal year comes from two sources:  the excess of revenue collections over the official estimate, and funds appropriated to agencies which were not spent.  Surplus funds (exceeding a requisite four percent reserve) are usually appropriated in the following fiscal year; however, in special circumstances funds may be reserved or held over by order of the State Auditor.  

          Because actual revenues for a fiscal year are not collected until after the amended appropriation Bill is passed, it is possible for the revenue estimate to exceed actual collections creating a deficit.  When this (rarely) occurs, the Revenue Shortfall Reserve (RSR) may be used to balance the budget.  The RSR is funded from the prior year’s surpluses and is equal to up to 10% of the prior year’s net revenue collections.  These reserves are not appropriated, and are drawn only when expenditures exceeded the actual revenues collected.

The Development of Recommendations

          The first phase of the budget process involves the submission of official requests for funds made by each department or state agency to the governor.  These requests are usually required to be submitted to the governor by September 1 of each year for the upcoming fiscal year beginning the following July 1.  To be able to submit the requests by this deadline, many agencies begin working on their proposals in the spring for a budget year still some 14 to 15 months away.

          The budget requests from state departments and agencies go first to the Governor's Office of Planning and Budget (OPB), where the OPB budget analysts work with the departments and agencies on their submissions.   At this stage, the analysts are becoming familiar with the departments budget needs so that they can better understand and evaluate the requests before they are presented to the governor.  During this same time period, the House Budget Office (HBO) analysts are also reviewing the policy issues and working with state agencies’ budget personnel and staff about program and budgetary needs.

          After receiving the official department request, each analyst in OPB and HBO begins detailed analysis.  All proposed expenditures are evaluated for cost justification and/or consumer benefits.  If an analyst has questions, a meeting with agency personnel  is scheduled and additional information may be requested.

          A series of meetings between the governor and his staff are held in October and November, during which the OPB analysts brief the governor on agency requests and make preliminary recommendations based on his or her analysis of the requests.  The governor then formulates his tentative recommendations.

          In late November and early December, the governor may meet with department heads to review with them his tentative budget recommendations for their department and to reconcile any differences in funding priorities.

          During this period, the governor’s budget decisions have been loosely based on a preliminary revenue estimate.  Typically, the governor waits for the most current revenue information and economy reports before finalizing his revenue estimate in early December.  Final budget recommendations are then made.

The Legislative Appropriations Process

          Late in December, a Governor's Budget Report is printed.  It is a detailed source of information regarding the budget recommendations by Budget Unit to the General Assembly.  State law requires that the publication be presented to the General Assembly within five days after the legislature convenes in January.  Traditionally, the governor announces his recommendations in a joint meeting of the House and Senate Appropriations committees.  The governor also delivers a formal Budget Message to a joint session of the General Assembly during the first week of the legislative session.

          Sometimes, the Appropriations committees of the House and Senate hold joint hearings on the governor’s Amended General Budget proposal the week before the General Assembly convenes.  The two chambers may also hold a joint hearing for the General Appropriations Budget proposal after the first week of the session.  These meetings are discretionary at the call of the chairs.

          After the Appropriations hearings, the budget process in the General Assembly begins in earnest, with the six subcommittees of the House Appropriations Committee reviewing budget within their policy areas, which are:  Education, Higher Education, Economic Development, Health and Human Services, General Government, and Public Safety.  These   subcommittees make recommendations to a Budget Oversight Subcommittee, which is composed of the subcommittee vice-chairs and other leadership members of the House.  The House Budget Oversight Subcommittee considers all of the subcommittees’ changes and recommendations and blends those initiatives into a balanced proposal for approval by the full House Appropriations Committee.  The House Appropriations Committee passes its   recommended bill to the entire membership of the House of Representatives for passage, which upon approval, is then transmitted to the Senate where the process is similarly repeated. 

          Once the Senate has adopted their substitute to the House bill, they send the bill back to the House for acceptance or rejection.  When the House rejects the Senate proposal, a conference committee is appointed.  The Speaker of the House appoints three members from the House of Representatives, and the Senate President Pro-Tempore and Lieutenant Governor appoint three members from the Senate to serve as conferees.   The Conference Committee, through negotiation, agrees on a compromise proposal to be voted on by both chambers.  The vote is yea or nay; there can be no changes to the Conference Committee Report.  Once the bill has passed, it is sent to governor for his signature.  Georgia’s governor has 40 days to sign the legislation before it automatically passes into law, and line item veto is a power held by that office.

          Once an Appropriation Act has been passed by the General Assembly and signed into law, the Governor's Office of Planning and Budget is responsible for ensuring that all state expenditures conform to the legislative mandate and spending by Budget Unit programs do not exceed authorized amounts.