Perdue: Corrective steps needed for budget

By Aaron Gould Sheinin

The Atlanta Journal-Constitution

Much of Gov. Sonny Perdue’s second term has been dominated by a deteriorating economy that has seen $3 billion gouged out of the state’s coffers.

Much of the burden of dealing with those shortfalls — delivering the bad news, identifying cuts and holding (or smacking) the hands of upset state agencies — has fallen to him.

Much of what the public knows about how Perdue is dealing with the budget and economic crisis has come via statements from his office, the release of periodic economic news, or the occasional press conference.

The governor has done few one-on-one interviews with journalists in his second term in office, and none with The Atlanta Journal-Constitution in the past several years. But last week, Perdue agreed to a sit-down interview with the AJC from his office at the Capitol, where the governor discussed the state of the economy and the road forward.

Battling a summer cold he thinks he caught from one of his grandchildren, Perdue, in a dark blue suit and yellow tie, sits in one of the wing chairs in the rear of his office, his huge wooden desk yards behind him. He keeps a bottle of water nearby. His office is spotless, tidy, and a few pictures of him and his wife, Mary, or their grandchildren, are framed and sit on side tables.

The office is quiet save for the questions and answers. Two staffers sit nearby, silent.

Through the conversation, Perdue was measured but became more animated the more he spoke.

When the allotted 15 minutes for the interview were up, Perdue had another pressing appointment: A photo op with the actor and Republican activist Stephen Baldwin, who was waiting in the outer office.

Here are excerpts from the interview.

ON GEORGIA’S FINANCIAL HEALTH

AJC: Tell me whether you think Georgia is doing better than other states and maybe why you think that is.

Perdue: My focus is on the state of Georgia. It's not constructive for me to overly compare Georgia to other states. Every state’s budgeting laws, revenue sources are somewhat different and unique to that state. However, what I read in the national press is Georgia seems to be undergoing this global recession in a more managed fashion than many states. That appears to be the case for me, although I have not done any in-depth studies with any other states. We track a few sister states. I noticed North Carolina seemed to have a little edge on us and around the first of the year they seem to have fallen off a cliff. They have lagged us significantly in the Carolinas.

AJC: Is that important for you? That we manage the decline and not fall off a cliff?

Perdue: Absolutely. I look at it as walking down steps, rather than jumping off the cliff. That’s what we’ve tried to do both ways, in the ascension up, building the reserves back up and in stepping down. I find that people can tolerate smaller momentum changes than they can drastic catastrophic kinds of changes. We’ve tried to make a series of steps that eased up and eased down into this economic tide of which we’re all floating. We just had no control from a state’s perspective over the macro global economic situations.

ON THE DIFFICULT FINANCIAL ROAD AHEAD

AJC: We’re heading into the 2010 fiscal year with down around $200 million in the reserve fund. Where do you see 2010 taking us? Do you have a feel for how the numbers will trend?

Perdue: I can tell you where we are today. We have to do a revenue estimate for 2010 based on where we are still estimating ’09 to be. When ’09 revenues don’t equal what we thought they would be, the percentage factor affects 2010 as well. We’re going to start out with a $800 million-plus hole in the ’10 budget that was passed. We have to take corrective steps to do that. I met with legislative leadership this morning to discuss various options about doing that, and we’ll try to do that in a consensual fashion. Whether we need a special session to affirm that or whether we can do that administratively through the budget remains to be seen.

THE ROLE OF THE LEGISLATURE DURING THESE TIMES

AJC: As a former legislator and now as governor, the Legislature is supposed to appropriate money. Should they come back and do this? Is it not their responsibility, even though you have the ability and the power and you’ve done it before?

Perdue: Well let’s be clear of what the budget law is. It’s a budget bill that is passed. It is essentially an authorization. You can spend up to that amount of money, but you do not have to spend all that money. And that’s the theory upon which the executive branch can manage within the reality.

Yes, it’s absolutely the Legislature’s responsibility to either come in and affirm those administrative cuts, to participate in a consensual type of discussion about that. I’m going to be asking all legislators to give us their ideas of areas they think can afford more cuts and those areas they feel like services have been impeded to a point that we need to protect them.

AJC: You were criticized in May for vetoing Rep. Tom Graves’ bill that they slipped the capital gains tax cut into ... had you signed that bill it would have cost $1.5 billion in tax cuts. Given the current shortfalls, which would project to be worse had that bill become law, does that ...

Perdue: I take no joy in validation of those kinds of things. The fact is, I wish our economy was growing so we could afford supply-side cuts. The time to make supply-side cuts, we did as we were building up, we made supply-side cuts with permanent tax changes that decreased the revenues of Georgia. But the time, in a balanced-budget state, you have a constitutional requirement to balance the budget and plummeting revenue, plummeting reserves, with no real determination of when it would bottom out was not the time to make supply-side revenue cuts.