Originally created 01/19/00

Economic slowdown forecast for Georgia

ATLANTA -- An expected slowdown in Georgia's phenomenal economic growth is behind the conservative revenue estimate in Gov. Roy Barnes' 2001 budget, the governor's economic adviser told lawmakers Tuesday.

"There's no issue whether we're slowing down," Hank Thomassen testified during the first of four days of hearings on the $14.4 billion spending plan before the House and Senate appropriations committees. "It's whether we slow down comfortably or uncomfortably."

The governor's budget predicts that $13.4 billion will be collected in state taxes and fees during the fiscal year that starts July 1, up 7.3 percent from the $12.5 billion projected for this year. Last year, state revenues grew by 8.3 percent.

Mr. Thomassen pointed to several factors as indicators that Georgia's superheated economy is starting to cool, including the state's work force, which is expected to grow by 2 percent to 2.5 percent during the coming fiscal year. Georgia's labor force has been expanding at a rate of 3 percent per year, he said.

Less growth in the work force will mean slower growth in wages and salaries, which, in turn, will result in lower income-tax collections than would have occurred otherwise, he said.

To guard against the effects of slower growth, Mr. Barnes said he wants to continue building the state's budget surplus, a strategy that has drawn criticism from legislative Republicans.

Senate Minority Leader Eric Johnson, R-Savannah, said the state's Democratic governors historically have piled up surpluses to plow into pork projects sought by lawmakers in good graces with the executive branch.

"When it's free money, it's Katie bar the door," Mr. Johnson said. "There needs to be more bipartisan cooperation on what the state's needs are and less one-party rule that spreads money around and rewards friends."

But Mr. Thomassen said the purpose of the surplus is to protect state programs from the potential impact of sluggish tax collections.

"If you're going to maintain programs, you have to carry money forward," he said.

Republicans are vowing to introduce legislation aimed at reforming the budget process to provide tighter control over state surpluses.

Reach Dave Williams at (404) 589-8424.


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