Sen. Jack Hill: Georgia’s “Rainy Day Fund”

Your Georgia Desk

From Senator Jack Hill

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 NOTES FROM THE SENATE

GEORGIA’S “RAINY DAY FUND”
The Revenue Shortfall Reserve (RSR), or the “rainy day fund” serves important purposes in the state government.  It is a contributing factor in Georgia being able to maintain its perfect triple AAA bond rating, and it also has helped the state ride out declines in revenues from time to time.  Of course, the reserve was wiped out during the recent recession. .  As the economy has continued to improve, the State has begun to restore the RSR to its previous levels.  A State’s RSR goes a long way towards showing how good a steward a state is over its own money.  This week we will take a look at Georgia’s experience with its rainy day fund, as well other states’ struggles and successes with their versions of the RSR.
RSR HISTORY
The Georgia General Assembly passed legislation in 1976 creating the RSR, and establishing that it should be maintained at a level of at least 4% of the net revenue of the preceding fiscal year.  According to O.C.G.A. 45-12-93, the amount of all surplus state funds existing at the end of each fiscal year are reserved and added to the RSR.  The Governor may appropriate RSR funds up to 1% of net revenue collections of the preceding year for funding K-12 enrollment gains.  The Governor may also release a stated amount of RSR funds to be appropriated by the General Assembly, and RSR funds may also be used to cover contractually obligated deficits if the state’s obligations exceed net revenues.  Under recent changes to state law, the RSR’s limit was raised to   would be enough to fund the state government for about 15 days.
USE OF THE RSR
 
The RSR in Georgia has ranged over time from 1% as a total of net revenue in various years to a high of 8.58% in 2007.  In 2007, the RSR stood at an all-time high of almost $1.8 billion, but by 2010, as the recession raged on, the reserve fell to $268 million eventually to $50 million.  From 2007 to 2010 the state’s RSR decreased by almost 85%.  Georgia’s RSR has helped the state in multiple economic downturns, the most recent being the recession of 2008-2013.  The RSR was also utilized during a time of declining revenues in the early 1990s and the early 2000s.  However, after each downturn the state has been vigilant in building back its reserve.  The importance of this was borne out in the economic downturn.  If the state had not built up the RSR after the early 2000’s, its financial standing would have been even worse than it was.  From 2007 to 2008, the state used more of its RSR than it had in total in 2004. That alone shows how important it is for the state to maintain a viable rainy day fund.  Some other states were not as prepared as Georgia when revenues plummeted.  The PEW Research Center estimates that nationally, states had $59.9 billion in reserves in 2008, but the aggregate national budget shortfall was $117.3 billion in 2009.  Due in part to Georgia’s RSR, the state was able to help cover budget gaps without resorting to raising taxes, like other states.
OTHER STATES’ RESERVES
As of July 2014, 46 out of the 50 states have some sort of budget stabilization fund, and 20 other state’s funds are based on surpluses.  Other states use methods that range from an appropriation to funds linked to revenue growth; but the most popular model is the surplus-based fund used by Georgia. Some of the reasons other states use different types of funds can be chalked up to different economic realities.  Some states face more volatile revenue streams than Georgia, and so therefore try and find ways to model their version of the RSR to best fit their state’s revenue sources.  Georgia does not tie its RSR to revenue volatility.  PEW ranked Georgia as having the 21st most volatile revenue stream coming in at 6%, which compared to some other states such as Alaska which experiences revenue volatility over 34%, is somewhat predictable.

 

 

Rep. Rob Woodall – Washington Watch: Executive Overreach

Your Washington GA – 7 Desk

From Congressman Rob Woodall

wash wash

 

Washington Watch: Executive Overreach

Happy Thanksgiving

I want to begin this week wishing you and your family a very happy Thanksgiving.  Millions of people are travelling the country this week, returning home to share this uniquely American holiday with their friends and families and giving thanks for all of our blessings…READ MORE.

President Obama Proposes Unilateral Action on Immigration

Whether you identify yourself as a liberal Democrat, a conservative Republican, or anything in between, the President’s actions should trouble you as much as they trouble me…READ MORE.

House Supports Quality Scientific Research at the EPA

During a recent visit with my friends at the Georgia EMC, they shared that one of their biggest concerns about new Environmental Protection Agency (EPA) regulations is the detrimental effect they will have on ratepayers’ energy bills…READ MORE.

Supporting the FairTax in Washington, D.C.

On Monday, I had the privilege of advocating on behalf of the FairTax at the Heritage Foundation’s tax reform roundtableREAD MORE(more…)

Sen. Johnny Isakson: Presses Army Secretary on “Grave Concern” Over Retirement Benefits

Your Washington Desk

From Senator Johnny Isakson

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Isakson, Murray Lead Bipartisan Letter Pressing Army Secretary on “Grave Concern” Over Retirement Benefits

 In letter to Army Secretary McHugh, senators call for immediate reversal of policy forcing officers to retire at highest enlisted rank

 Current policy results in significant decrease in lifetime retirement benefits, for some as much as $1,000 per month or more

This week, U.S. Senators Johnny Isakson, R-Ga., and Patty Murray, D-Wash., led a bipartisan group of colleagues in sending a letter to U.S. Army Secretary John McHugh over the Army’s treatment of a significant number of captains and majors who are former non-commissioned officers and are being forced to retire at their highest previous enlisted rank.

The senators are seeking answers about the Army’s use of Enhanced-Selective Early Retirement Boards (E-SERB), which will result in a significant decrease in lifetime retirement benefits for the impacted soldiers, for some as much as $1,000 per month or more, or just over $1 million over a 40 year retirement in the case of a captain forced to retire as a sergeant first class.

“These former non-commissioned officers answered the Army’s call for volunteers to attend Officer Candidate School as the Army expanded its officer corps to fight the wars in Iraq and Afghanistan. Now, despite having served for years as commissioned officers and rising through the ranks to become captains and majors, these dedicated soldiers will soon be forced to retire at their highest previous enlisted rank,” the senators wrote in their letter. “To demote these soldiers in retirement is an injustice that devalues their service and will materially disadvantage them and their families for the rest of their lives… We strongly urge you to take the necessary steps to rectify this situation in order to allow these soldiers to retire at the rank they have earned and appropriately honor their service to our nation.” (more…)

Sen. Johnny Isakson: Statement on Resignation of Defense Secretary Hagel

Your Washington Desk

From Senator Johnny Isakson 

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Isakson Statement on Resignation of Defense Secretary Hagel

U.S. Senator Johnny Isakson, R-Ga., issued the following statement regarding the resignation of U.S. Secretary of Defense Chuck Hagel:

“Whether a resignation or a firing of Secretary Hagel, this decision reflects the uncertainty of this administration as it relates to foreign policy in general, and in particular the destruction of ISIS. Given the crisis with ISIS, along with situations of unrest in the Ukraine, Iran, and west Africa, this president and his administration need to send a clear message of strength and commitment.”

Rep Doug Collins: Unacceptable.

Your Washington – GA 9 – Desk

From Congressman Doug Collins

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Unacceptable.

I’ve heard from a lot of Northeast Georgians who are outraged about what President Obama is doing with his executive action on immigration.

Executive action granting amnesty to millions of illegals is President Obama taking out his anger on the American people for rejecting his agenda through the due process of elections two weeks ago. He’s had six years to work with Congress, two of those years with his party in total control of Washington, on constructive, compassionate, and fair immigration reform.

His singular action defies all three of those principles.

Those who are in the United States illegally should be deeply concerned about the president’s intentions.  So many immigrants come to this country from places where the rule of law and the will of the people are defied.  That President Obama has taken it upon himself to do the same thing with his executive order should be as troubling to them as it is for the millions of law-abiding citizens who have trusted this man to uphold the Constitution.

The majority of the People’s House will fight this because it is wrong. It is political retribution under the false guise of compassion, and it is yet another abuse of power the branch of government closest to the people will have to resolve.

To make sure I’ve heard your views on this, please feel free to e-mail me here.

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