In the General Assembly’s first attempt at a virtual committee meeting, House Appropriations Committee Chairman Terry England (R-Auburn) and newly minted Senate Appropriations Committee Chairman Blake Tillery (R-Vidalia) called a joint meeting of the House and Senate Appropriations Committees this morning to discuss the impending budget crunch resulting from the coronavirus and the ensuing economic slowdown. Opening the meeting, both Chairmen offered words of remembrance for the late Senate Appropriations Committee Chairman Jack Hill, expressing their grief that the experienced budget leader would not be able to help steer the ship through another stormy economy.

Chairman England called on State Fiscal Economist Dr. Jeffery Dorfman to provide members with an update on economic projections that will be crucial as the legislature works to create a budget for the upcoming fiscal year amidst drastic revenue shortfalls. Dr. Dorfman began by noting that his traditional charts and data will not provide an accurate economic picture. These data are collected on a lag and do not shed light on how the economy has reacted to the rapid changes resulting from a shuttering of economic activity. Dr. Dorfman explained that he is relying on consumer confidence as a primary indicator of when the economy might “return to normal.” According to Dr. Dorfman, until consumers feel secure enough to participate in in-person economic activity, the state will continue to see large revenue shortfalls.

While unemployment numbers are high, Dr. Dorfman noted that the majority of valid claims were partial claims. In the data presented, there have been 725,00 claims processed by the Georgia Department of Labor and of these 540,000 are partial unemployment claims. He explained that this indicates many of the unemployed are still receiving some form of income while working reduced hours. Dr. Dorfman concluded by explaining that he hopes that, because the impending slowdown is mandate-driven rather than economic-driven, Georgia’s economy will “bounce back” more quickly.

Dr. Dorfman also addressed a reduction in the state’s income tax collections. He said it is down -3 percent. However, he was quick to explain that part of this is due to the federal extension for filing income taxes until July 15. 

In responding to a question from Chairman Tillery, Dr. Dorfman estimated the newly passed marketplace facilitator tax could bring an additional $12-$15 million per month in state revenue, up from his initial estimate of $10 million per month from earlier this year.

Dr. Dorfman also noted changes in cars on the roads. On non-interstate roads, cars have been down 35-60 percent and on interstate roads down 40-50 percent. This information is relevant as it impacts Georgia’s gasoline/motor fuel tax. Another area he touched upon was providing a quick update on Georgians’ access to the federal “PPP” loans through the banks. Georgians have accessed, in the first tranche of federal funds, more than 48,000 loans with an average of $196,000 per loan, and in the second tranche of funding more than 65,000 loans with an average of $72,000 per loan. Dr. Dorfman did remark that very few banks have opened their lobby areas, but many are slated to open May 18 with new protocols such as imposing temperature checks or requiring appointments.

In total, revenues are approximately $19.23 billion year-to-date. That number is down roughly 3.4 percent (approximately $680 million) from the prior year.

Kelly Farr, Director of the Governor’s Office of Planning and Budget, provided what he described as a “very sobering” update of Georgia’s operating revenue. Farr emphasized that, like Dr. Dorfman’s economic data, the numbers he is presenting update on a lag and thus do not yet paint the full picture of the state’s budget status. Farr indicated that the largest impact to state revenue resulted from the delaying of individual income tax filings but that the state hopes to make this up in the coming months. State sales tax collections were down but could have been worse due to a lower local share disbursement according to Farr. Meanwhile both tobacco and alcohol taxes saw modest increases. Overall state revenue was down 36% or a little over $1 billion.

The Chairmen requested that members with questions submit them via email to be asked of Dr. Dorfman and Director Farr at the next Joint Appropriations meeting on May 13.