Georgias Revenue Outlook Joint Appropriations Committees i i i i - - PowerPoint PPT Presentation

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Georgias Revenue Outlook Joint Appropriations Committees i i i i - - PowerPoint PPT Presentation

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Georgias Revenue Outlook Joint Appropriations Committees i i i i January 21, 2009 Ken Heaghney Ken Heaghney Office of Planning & Budget Georgia State University Fiscal Research Center Agenda Agenda FY 2009 YTD Revenue

slide-1
SLIDE 1

Georgia’s Revenue Outlook

i i i i Joint Appropriations Committees January 21, 2009

Ken Heaghney Ken Heaghney Office of Planning & Budget Georgia State University – Fiscal Research Center

slide-2
SLIDE 2

Agenda Agenda

  • FY 2009 YTD Revenue Performance

FY 2009 YTD Revenue Performance

  • Economic Outlook
  • Revenue Estimate – Amended FY 2009

& FY 2010 & FY 2010

slide-3
SLIDE 3

YTD DOR Revenue Growth Equals -2.7% YTD DOR Revenue Growth Equals 2.7%

15 0%

DOR Revenue Growth

10.0% 15.0% 4.5% ‐0.1% 1.4% 0.0% 5.0% ‐6.6% ‐7.0% ‐5.0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr* May* Jun ‐8.9% ‐10.0% FY08 FY09

*Apr/MayResults Averaged

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SLIDE 4

I mproving Performance Through November But December was Very

Growth in DOR Revenues

(Yr/Yr % Change - 3 Month Moving Average)

November But December was Very Weak

15.0% 20.0% 5.0% 10.0% 15.0%

  • 10.0%
  • 5.0%

0.0% Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08

  • 20.0%
  • 15.0%
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SLIDE 5

I ndividual I ncome Tax: YTD Growth E l 3 0% Equals -3.0%

Individual Income Tax Revenue Growth

40.0% 50.0% A) 20.0% 30.0% r Year (3 Month MA

  • 10.0%

0.0% 10.0% Jul-06 ug-06 ep-06 Oct-06

  • v-06

ec-06 an-07 eb-07 Mar-07 Apr-07 ay-07 un-07 Jul-07 ug-07 ep-07 Oct-07

  • v-07

ec-07 an-08 eb-08 Mar-08 Apr-08 ay-08 un-08 Jul-08 ug-08 ep-08 Oct-08

  • v-08

ec-08 Change Over Prio

  • 30.0%
  • 20.0%

J Au Se O No De Ja Fe M A Ma Ju J Au Se O No De Ja Fe M A Ma Ju J Au Se O No De %

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SLIDE 6

Sales Tax: YTD Growth Equals -0.9% Sales Tax: YTD Growth Equals 0.9%

Sales Tax Revenue Growth

15.0% 20.0%

3 Month Moving Average

5.0% 10.0% ‐10.0% ‐5.0% 0.0%

  • Sept. 2006
  • Oct. 2006
  • Nov. 2006
  • Dec. 2006
  • Jan. 2007

Feb 2007 Mar 2007 Apr 2007 May 2007 June 2007

  • Jul. 2007
  • Aug. 2007
  • Sept. 2007
  • Oct. 2007
  • Nov. 2007
  • Dec. 2007
  • Jan. 2008
  • Feb. 2008
  • Mar. 2008
  • Apr. 2008

May 2008 June 2008 July 2008 Aug 2008 Sep 2008 Oct 2008 Nov 2008 Dec 2008

‐15.0% Gross Net

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SLIDE 7

Corporate I ncome Tax: YTD Growth E l 18 4% Equals -18.4%

C t I T R G th

100.0% 120.0%

MA

Corporate Income Tax Revenue Growth

20.0% 40.0% 60.0% 80.0%

nge - 3 Month M

  • 60 0%
  • 40.0%
  • 20.0%

0.0%

  • 06
  • 06
  • 06
  • 07
  • 07
  • 07
  • 07
  • 07
  • 07
  • 08
  • 08
  • 08
  • 08
  • 08
  • 08

% Chan

60.0% Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov-

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SLIDE 8

Agenda Agenda

  • FY 2009 YTD Revenue Performance

FY 2009 YTD Revenue Performance

  • Economic Outlook
  • Revenue Estimate – Amended FY 2009

& FY 2010 & FY 2010

slide-9
SLIDE 9

US and Georgia are Mired in Deep E i R i Economic Recession

  • Housing correction led to massive losses on mortgage backed securities

d d i d l b l fi i l k t and undermined global financial markets

  • Unprecedented government intervention has improved conditions in

financial markets but markets remain unsettled

  • Labor markets weakened precipitously in late 2008

Labor markets weakened precipitously in late 2008

  • Consumers have pulled back sharply on spending, particularly on durables

such as autos

  • Global slowdown has harmed domestic manufacturing as exports have

fallen

  • Countervailing forces
  • Massive liquidity injection to free up financial markets and stimulate

investment and spending investment and spending

  • Massive fiscal stimulus expected early in the new administration
  • Commodity prices, including gasoline, have plummeted reducing

pressure on household budgets p g

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SLIDE 10

Median Home Price Down Over 23% f th P k

220 0

S&P / Case‐ Shiller Home Price Index

from the Peak

200.0 220.0 160.0 180.0 120.0 140.0 100.0 Jan‐04 Mar‐04 May‐04 Jul‐04 Sep‐04 Nov‐04 Jan‐05 Mar‐05 May‐05 Jul‐05 Sep‐05 Nov‐05 Jan‐06 Mar‐06 May‐06 Jul‐06 Sep‐06 Nov‐06 Jan‐07 Mar‐07 May‐07 Jul‐07 Sep‐07 Nov‐07 Jan‐08 Mar‐08 May‐08 Jul‐08 Sep‐08 Atlanta Composite‐20

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SLIDE 11

Financial Markets are I mproving But R i St d Remain Stressed

Spread Between LIBOR and 90 Day Treasury Bill Rate

3.00 3.50 4.00

Spread Between LIBOR and 90 Day Treasury Bill Rate

1 50 2.00 2.50 0.50 1.00 1.50 0.00

1990M1 1990M6 1990M11 1991M4 1991M9 1992M2 1992M7 1992M12 1993M5 1993M10 1994M3 1994M8 1995M1 1995M6 1995M11 1996M4 1996M9 1997M2 1997M7 1997M12 1998M5 1998M10 1999M3 1999M8 2000M1 2000M6 2000M11 2001M4 2001M9 2002M2 2002M7 2002M12 2003M5 2003M10 2004M3 2004M8 2005M1 2005M6 2005M11 2006M4 2006M9 2007M2 2007M7 2007M12 2008M5 2008M10

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SLIDE 12

Job Markets have Plunged Job Markets have Plunged

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SLIDE 13

Unemployment has Risen Rapidly Unemployment has Risen Rapidly

slide-14
SLIDE 14

Consumer Expenditures are Growing Very Sl l Slowly

slide-15
SLIDE 15

Durables are Bearing the Brunt of the Sl d Slowdown

slide-16
SLIDE 16

Exports have Dropped as Global E i h Sl d Economies have Slowed

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SLIDE 17

Countervailing Forces: Monetary Policy Countervailing Forces: Monetary Policy

  • Fed Funds target rate reduced to a range of 0 to 25 basis points
  • Created new lending facilities to provide short-term liquidity to

g p q y sound financial institutions

  • Term Auction Facility, Term Securities Lending Facility,

Primary Dealer Credit Facility

  • Currency Swap Agreements with foreign central banks
  • Provision of credit directly to borrowers and investors in key

credit markets

  • Purchase high quality commercial paper
  • Lend against AAA-rated asset-backed securities

h l i i

  • Purchase longer-term securities
  • $100 billion in government sponsored entity (GSE) debt
  • $500 billion in GSE mortgage-backed securities

$ g g

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SLIDE 18

Countervailing Forces: Fiscal Stimulus Countervailing Forces: Fiscal Stimulus

  • Large fiscal stimulus effort expected from the new

administration – press reports suggest $750+ billion d 2 spread over 2 years.

  • Details are uncertain, speculation is that the stimulus will

consist of tax cuts, aid to state & local governments, direct g spending on infrastructure and other programs

  • On a per capita basis, Georgia’s share would be on the
  • rder of $11.9 billion per year – or about 3% of Georgia’s
  • rder of $11.9 billion per year
  • r about 3% of Georgia s

GDP

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SLIDE 19

Countervailing Forces: Falling C dit P i Commodity Prices

At Current Levels, the Decrease in Gasoline Prices will Free Up about $10.7 Billion in Annual Spending Power in Georgia $ p g g

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SLIDE 20

Economic Scenario

1. Recession will continue through end of fiscal year 2. Job losses will continue but should moderate and consumer expenditures will grow slowly 3. Global downturn will harm manufacturing 3. Global downturn will harm manufacturing 4. Economy should begin to recover in second half of calendar 2009 but recovery will be slow 5. Risks to the outlook are large. Policy makers continue to wrestle to calm financial markets. Size, timing and composition of fiscal stimulus is g p

  • uncertain. Oil prices are very low but could spike on

geopolitical concerns.

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SLIDE 21

Agenda Agenda

  • FY 2008 YTD Revenue Performance

FY 2008 YTD Revenue Performance

  • Economic Outlook
  • Revenue Estimate – Amended FY

2009 & FY 2010 2009 & FY 2010

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SLIDE 22

Amended FY 2009

% Growth % Growth Amended versus versus FY 2008 FY2009 FY2009 FY 2008 FY 2009 FY 2008 FY2009 FY2009 FY 2008 FY 2009 Reported Estimated Estimated Reported Estimated Total Taxes $17,695,117,754 $19,144,419,118 $16,920,041,585

  • 4.4%
  • 11.6%

Total Regulatory Fees $1,032,694,869 $973,169,321 $983,955,258

  • 4.7%

1.1% Total General Fund $18,727,812,623 $20,117,588,439 $17,903,996,843

  • 4.4%
  • 11.0%

Other Funds Available $1,061,990,695 $1,048,294,077 $1,299,249,167 22.3% 23.9% Total Funds Available $19,789,803,318 $21,165,882,516 $19,203,246,010

  • 3.0%
  • 9.3%

Key Points 1 Revenue estimate includes $50 million from RSR 1. Revenue estimate includes $50 million from RSR 2. Revenue growth of -5.3% is required over January through June to reach revenue estimate

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SLIDE 23

FY 2010

% Growth versus Amended Amended FY2009 FY 2010 FY 2009 Estimated Estimated Estimated Total Taxes $16,920,041,585 $17,288,273,764 2.2% Total Regulatory Fees $983,955,258 $1,193,351,799 21.3% Total General Fund $17,903,996,843 $18,481,625,563 3.2% Other Funds Available $1,299,249,167 $1,712,349,327 31.8% Total Funds Available $19,203,246,010 $20,193,974,890 5.2%

Key Points 1. Revenue estimate includes $408 million from RSR 2 Mild economic recovery to begin in second half of 2009 is projected to add 2. Mild economic recovery to begin in second half of 2009 is projected to add about $368 million in revenue growth 3. Health care provider fee strategy and super speeder fine add about $240.7 million to funds available