Cagle: Expect a 'Painful Session' Over Recession

Show us the money.

That'll be the refrain when Georgia's Legislature returns to Atlanta on Monday and lawmakers will grapple with a massive budget shortfall that will color nearly every decision that's made under the Gold Dome.

Gov. Sonny Perdue has already ordered most state agencies to slash their budgets by 8 percent. State workers have been furloughed. Fees at public colleges are rising. Health benefits for the poor are being scaled back.

And the cuts could go deeper if the economy continues to worsen. Tumbling state revenues have ripped a deficit in the budget that's expected to top $2 billion for the current fiscal year. It comes as the recession pumps up the demand for government services like Medicaid, food stamps and unemployment benefits.

At the same time, Georgia is wrestling with vexing - and costly - infrastructure needs to keep up with booming growth in metro Atlanta. Roadways are clogged with traffic. Additional reservoirs are needed to quench the region's fast-growing thirst.

"It's going to be a painful session," predicted Lt. Gov. Casey Cagle.

Tax increases to fill the budget gap appear to be off the table. Republican legislative leaders have been cool to proposals that would slap new levies on strip club patrons, cigarettes or groceries.

Instead, they're talking about capping the rate at which home assessments can rise, a move that would hobble the ability of cash-strapped local governments to raise revenue.

Conservative Republicans cast the budget woes as an opportunity to "right-size" state government and get back to basics.

"It gives us the chance to really prioritize and figure out what government is here for," said Kelly McCutchen, vice president of the Georgia Public Policy Foundation, an Atlanta-based conservative think tank.

The first salvo in the budget battle will come Wednesday when Perdue unveils his spending plan. He's pledged to include an aggressive bond package to kick start the state's economy by borrowing to fund road projects and school construction.

Legislators will be able to tinker with how the money is spent. But they won't be able to change the overall amount the state may spend. The governor has the sole authority to set that figure and the state is constitutionally prohibited from running a deficit.

The latest news from state money managers was bleak. On Friday, they reported that tax collections plunged 8.9 percent for December from the same month the year before. For the fiscal year that began July 1 revenues slumped by 2.7 percent, dragged down by sluggish sales and income taxes.

Already, advocates are jockeying to shield their pet issues.

"We are extremely concerned about how these budget cuts will affect Georgia's children," said Pat Willis, executive director of Voices for Georgia's Children.

David Blanchard, who lobbies for Georgians with developmental disabilities, summed it up this way: "We're bracing for the worst."

"The state is not meeting the needs (of the developmentally disabled) today. The idea that we would go backward really does make so many people nervous," Blanchard said.

The focus on the budget meltdown is likely to mean other legislation will take a back seat this session.

"I think everyone is so focused on the budget, that I really don't expect this to be a banner year for new legislation," said state Sen. Cecil Staton, a Macon Republican. "I don't hear a lot of people talking about lots of new bills."

Of course, there will be some exceptions.

A plan to fund transportation improvements could move quickly this session after falling just short of the needed votes last year. The plan would likely allow local governments to band together to assess a one-cent sales tax to fund road improvements.

School vouchers could also emerge as a politically charged brawl. State Sen. Eric Johnson, a Savannah Republican, has said he wants to give parents in failing school districts more options.

But the top Democrat in the state Senate predicted "the nuclear fight over universal vouchers will be more explosive than the Republican budget crisis."

"After years of deliberate underfunding, Republicans have severely weakened our public schools," said state Sen. Robert Brown, of Macon. "Now, they are aiming to drive a stake in the heart of our children's future with universal vouchers."

But for the most part, it will be a session focused on the state's pocketbook.

"It's going to be a legislative session of making cuts where it hurts the least," said state Sen. Don Thomas, a Dalton Republican.

Click here for more GPB News coverage about the Georgia Legislature.

(AP)

GA colleges helping Albany tire co. workers

Several schools in the Technical College System of Georgia are offering to waive application fees for the some 1,300 employees at Albany's Cooper Tire plant, set to close this year.

Officials estimate that, including secondary suppliers, the closure will affect an estimated 5,000 jobs in south Georgia.

South Georgia Technical College in Americus is offering free enrollment for their winter quarter, commencing Jan. 7 to workers who want to learn new professions and trades, in the wake of the shutdown.

Financial aid and scholarships are available, according to the Cordele Dispatch.

Click here for more GPB News coverage of the plant closure.

Albany tire plant closing down

Cooper Tire and Rubber Co. says it will close its plant in Albany, Ga., the result of a capacity study of its four plants.

The Findlay, Ohio-based company will keep open plants in Findlay; Texarkana, Ark.; and Tupelo, Miss. The company announced the decision in a conference call Wednesday.

Workers were told in October that the company was facing higher costs and shrinking demand, and that Cooper had to make a dramatic cut. The company embarked on a study of each of its plants while the factories and their communities worked to provide Cooper with reasons to keep operating.

In Findlay, union workers voted to accept a pay cut. In Texarkana, the union voted to scuttle its current contract in favor of one in which workers would freeze salaries.

(AP)

Plant shutters doors to keep afloat

The recession is hitting a south Georgia wood paneling manufacturer. Norbord Inc. in Cordele says it's shuttering operations for three weeks to help slow production. The factory began its shut down Monday. It will begin production again Jan. 5. A spokesperson says none of the plant's 200 employees will lose their jobs once it reopens.

(Associated Press)

Recession not slowing economic development push

Georgia like the rest of the nation is suffering through the recession. But a group of state economic development leaders on Tuesday said Georgia is well positioned to weather the storm while still expanding its global reach.

That’s because they say key ingredients remain strong in Georgia. They point to workforce training, ability to attract a young population, and Georgia’s transportation infrastructure.

Ken Stewart with Georgia’s Department of Economic Development acknowledges the state’s construction and textile sectors have taken hard hits in the ailing economy. But he says for the past six months, the state has been pushing its aerospace, life-science and agriculture industries worldwide.

"What we do is we go sell what we know is sustainable. We’re selling our strategic industries in a proactive and focused way. It’s a simple process. We say which industry segments to we want to grow--where are the companies throughout the world within those industry segments that are leaders and need to have access to this marketplace."

In their trips to bring new business to Georgia, officials say it’s what they cannot control that’s been the problem--the general global economic malaise postponing company expansion plans. Sam Williams is president of metro Atlanta’s Chamber of Commerce:

"They’re not saying we don’t want to come to metro Atlanta or Georgia...they’re saying we still want to come, but we’re having problems borrowing money and arranging our capital financing to accommodate growth and expansion there. So they’re saying ‘let’s keep in touch, we still want to do this, but let’s talk in March, let’s talk in June’."

Williams is hopeful that a proposed economic stimulus package by the incoming Obama-administration to target the nation’s infrastructure might benefit Georgia. Williams says investment in the state’s transportation grid can quickly open the door to new jobs.

Economic development officials plan to push Georgia lawmakers in January on issues such as transportation funding and rolling back tax rates on businesses.

Georgia ports traffic hit by economy

The Georgia Ports Authority is reporting a seventh consecutive month of declines in imports while exports declined for the first time in the current economic slump.

The November import-export numbers underscore the deepening recession and its impact on global shipping, a big driver of economic activity in Georgia. Total tonnage for November was down by about two-percent. A Georgia Ports spokesman, however, is stressing calendar year figures, which are up by 1.6 percent for 2008. Projections have most other major U-S ports down by an overage of seven-percent in tonnage this year.

The spokesman says, that difference between Georgia and other major ports represents an increase in market share, which will be critical for when the recession ends.

Experts, officials weigh-in on state economy

The recession in Georgia will last a year and a half, with a recovery not arriving until late next year--so says a top state economic forecaster. Robert Sumichrast, Dean of the University of Georgia’s Terry College of Business forecasts the state’s economy as "dreadful" for the first half of 2009. He says there will be a doubling of unemployment, and continued falling housing prices.

Meanwhile, Governor Sonny Perdue tried to sound the optimistic tone for the state. He told a gathering in Atlanta at the Annual Georgia Economic Outlook luncheon that he will take the lead in reducing the state’s budget, while growing business in Georgia.

Georgia economic forecast not so rosy

A leading economic forecaster says Georgia’s economy will continue to misfire just like the rest of the nation for the near future.

Rising gas prices...the credit crunch...the housing downturn...it’s all part of the lethal mix of factors in what Rajeev Dhawan is calling a recession for Georgia and the nation.

The director of Georgia State University’s Economic Forecasting Center compares where the state is hurting to other areas of the country:

"If you look at the job losses, they’re not terrible like the national. The loss in home prices is not as terrible as in Florida and California. But when you look at the revenue growth turnaround…that’s been a drastic one. It’s gone from a positive 5-6 percent to a negative 5-6 percent in a span of 6-8 months".

And the state’s revenue drain is being felt in university towns. Dhawan says as schools experience cutbacks, the trickle-down seeps into the communities.

Dhawan says only west Georgia is feeling an upswing in its local economy, given the construction of the KIA plant and its related business. Other regions of the state are in a holding pattern, such as ports and tourism along the coast.

Augusta in recession?

A new report from an economic analyst group says Georgia is at risk for going into a recession.

But analysts say the state’s second largest city is already there.

The report from Moody’s Economy.com says Augusta is in a recession.

Analysts have used statistics on employment, income, industrial production and retail sales to support their findings.

But not everyone in Augusta agrees.

Mark Thompson is an economist at Augusta State University.

He says Augusta has experienced an economic slowdown, but not a recession.

"We’re still seeing solid employment growth. Real wages actually picked up a little bit. The unemployment rate has fluctuated around five or five and a half percent," says Thompson.

The report says Rome and Dalton are also in a recession.

The Moody’s report, meanwhile, says Atlanta, Athens and Savannah are among seven metro areas in Georgia showing expansion.

Recession likely in Georgia

A recession is in the cards for Georgia according to the state fiscal economist. Kenneth Heaghney cited the housing slump, rising unemployment and a declining growth in tax receipts. However he downplayed fears an economic decline would last long. He says the economy could start to rebound later this year.