Agencies return $203 million

Facing a deficit that could reach $2.5 billion, state lawmakers got a little good news recently: Agencies ended last fiscal year with $203 million left over.

If Gov. Sonny Perdue decides to use it this year, the surplus could offset at least some of the budget cuts lawmakers will have to approve when they convene the 2009 legislative session Jan. 12.

State Auditor Russell Hinton audited each state agency to figure out how much money they had left over when the fiscal year ended June 30. According to a memo obtained by The Atlanta Journal-Constitution, most state agencies had leftover money.

In part because Perdue saw the need to start belt-tightening early on, the amount of surplus funds in fiscal 2008 was almost twice as much as in 2007.

“The lapses are a result of them cutting back —- hiring freezes, limiting non-essential travel, and holding other non-essential spending,” said Bert Brantley, the governor’s spokesman.

About half of the surplus came from savings in the state’s Medicaid health care program for the poor and disabled and PeachCare health insurance for children. Savings came from instituting stricter rules on eligibility and proof of citizenship for recipients, along with better management of chronic health conditions among recipients, according to a Department of Community Health spokeswoman.

By law the surplus goes into state reserves controlled by the governor.

Perdue has told state legislative leaders that about $2.2 billion will need to be cut this fiscal year, which ends June 30. And next fiscal year could be even worse.

So House Appropriations Chairman Ben Harbin (R-Evans) said the auditor’s news of $203 million in leftover funds comes at a good time.

“We know we’re going to have to cut, so we should go ahead and put that in the budget to offset some of those cuts,” Harbin said.

Using the $203 million would still leave the state with about $1 billion in reserves.

Lawmakers know they will face tough financial decisions when the Legislature starts. Many Georgians could be affected by spending cuts.

The state helps pay to educate about 2 million students, provides health care to 1.5 million people and employs or pays a large chunk of the salaries of 200,000 Georgians.

Alan Essig, executive director of the Atlanta-based Georgia Budget and Policy Institute, praised Perdue for maintaining strong reserves, often called the “rainy day” fund.

However, he said Perdue needs to spend some of that money to help get the state through this year because reserves are built as a cushion against financial downturns.

“If you’re not going to spend it now, why build it up at all?” said Essig, whose organization advocates increased spending on services such as children’s health insurance.

Perdue ordered cutbacks at the end of the last legislative session when it became clear the economy was sinking. That prevented some agencies from burning through their leftover money in June, the last month of the fiscal year.

“Historically, that’s been a strategy for some of the agencies … use it or lose it,” Hinton said. “They are not really rewarded for turning in money they don’t use.”

Perdue has made repeated pitches to the people who run state agencies to keep a close eye on their budgets.

Secretary of State Karen Handel said she goes line by line through her agency’s $40 million budget every month. Her budget had a $2.6 million surplus.

The secretary of state’s office handles elections, corporate registrations and professional licensing boards.

She has taken several steps to save money, including cutting the number of employees who can use state-backed purchase cards to buy supplies and other items. Those purchases have declined 98 percent in less than two years. Her agency’s office supply expenses have fallen from $1.4 million in fiscal 2006, the year before she took over, to $331,000 last year, Handel said.

She said her agency was spending thousands of dollars a year renting three storage facilities.

She said those facilities were storing more than a million clear-plastic name badges, reams of out-of-date forms and pamphlets and “I voted” stickers that were so old they didn’t stick anymore.

Handel said her agency wound up destroying 15 tons of old materials and will be renting only one storage facility in the future.

“It’s not tons of money, but in government, every little bit helps,” she said.

END OF THE YEAR SURPLUS FUNDS

Fiscal year ..Amount

2004……….$101.86 million

2005……….$33.65 million

2006……….$53.09 million

2007……….$115.59 million

2008……….$203.40 million

Source: Georgia Department of Audits