AMERICUS — Alan Essig, executive director of the Georgia Budget and Policy Institute, defended Georgia Gov. Sonny Perdue Thursday as he gave a grim report of the state’s 2010 FY budget. Essig told the audience at the Americus-Sumter County Chamber of Commerce’s Quarterly Membership Luncheon that budget cuts will have to be made whether taxes are raised or cut. Essig said that in spite of growth in the Gross Domestic Product (GDP) in the last quarter and moderate growth is projected to continue, budgetary issues will continue to be bleak. “There is no robust growth,” Essig said. He projected that the budget will continue to sag until jobs come back into the workforce.

Essig said that the State’s deficit is already up to $2 billion starting the next fiscal year even though several state agencies have made significant cuts. He emphasized that without the federal stimulus it could be much worse, and instead of education being cut by 13 percent it could have been cut in the neighborhood of 20 percent without the funds. “The State avoided a $1 billion cut from the budget with the federal stimulus,” he said.

Essig reminded that as of June 30, 2011, the stimulus will be gone. In a grim hypothesis Essig proposed that the State could lay off 13,000 state employees and that would still only bring $700 million back into the budget.

Essig commended Gov. Sonny Perdue’s efforts and tough decision making during the prolonged recession. “Gov. Perdue is very responsible fiscally,” Essig said, pointing to the governor’s order to state agencies to cut their budgets by four, six and even eight percent to give the newly elected governor options to deal with expected shortfalls next year. He said that the 2012 budget is estimated to be between $1.8 billion and $2 billion even with moderate revenue growth. In addition, the one-time stimulus funds will no longer be available to the State.

Essig expounded further on Perdue’s dilemma, saying that growth in education, health care, the prison system, mental health care and child protective services have to be dealt with by raising revenue, which means raising taxes or miraculous economic growth. He said that Perdue’s decision to rebuild budget reserves to $1.5 billion following the 2002 recession and to drain the reserves during the State’s budget crisis is admirable. He said that the next governor must begin growing reserve funds and planning for surplus, as the economy has a faint pulse and is “technically growing.” He said in order to sufficiently establish reserve funds, the State must begin saving $300-$500 million per year.

Essig spoke of a controversial way to ease the burden of the penal system on the State budget. He pointed to sentencing reform and “honestly and creatively” looking at reforming the Georgia tax system. Sentencing reform would be a way to reduce spending on health care for inmates. He said the longer the prisoners are in the penal system, they get older and have to be treated for illnesses and diseases which cost more and more as the number of inmates is expected to reach near 70,000 in the next few years.

On the issue of updating the tax system, Essig said that “taxes do not fund what we need them to fund.” He said that Gov. Perdue is currently working in a committee made up of economists, members of the state Chamber of Commerce and members of the business association to study the tax system.  “Taxes are there to fund a budget; that is the core reason,” Essig said. He said that the State needs adequate revenues to tie the tax structure to its long-term financial needs and the cost of government cannot shift from the wealthy, moderate and low-income Georgians.

Essig noted the present difficult political climate that often makes important discussions and debate all the more difficult. “We have the opportunity to make some good choices and the opportunity to make some bad choices,” he said.