State Budgeting

The state of Georgia, like most other governments, operates under a financial plan called a budget. The budget is a document that describes how much money a particular government intends to spend during the upcoming year, for what purposes or programs the money is to be spent, and how much revenue is expected to be available. The Georgia Constitution requires that a state budget be developed each year and that the General Assembly pass legislation, called an appropriation, which will authorize spending from that budget. In fact, no state spending is allowed unless it is authorized in the appropriations bill approved by the General Assembly. In Georgia, the state budget is set for a fiscal year (FY), starting on July 1 and continuing through the next June 30. By tradition, the fiscal year is named for the year in which it ends. FY 2005, for example, begins on July 1, 2004, and continues until June 30, 2005.

Budget Participants

There are many participants in Georgia's state budgetary process:
—the governor, who by law is the state's budget director;
— the Office of Planning and Budget (OPB), a small agency of budget specialists who work for the governor and handle the technical and administrative aspects of the budget;
— a state economist who works as a consultant for the OPB and assists the agency and the governor in developing the official state revenue estimate;
— top executive officials in the state departments and agencies, such as the Department of Human Resources, the Board of Regents of the University System of Georgia, the Department of Transportation, and the Department of Education;
— Georgia's state legislature, the General Assembly, especially those legislators serving on the House Appropriations Committee and the Senate Appropriations Committee;
— representatives of interest groups (such as the Georgia Association of Educators, the Georgia Conservancy, various corporations doing business with the state, and local governments) who will lobby with every participant listed above to encourage spending decisions favorable to their interests (e.g., more money for schools, for conservation programs, for road construction);
— the state auditor, who conducts a detailed audit of all expenditures after the fiscal year is over to make sure that funds were spent only as authorized.

Budget Stages

From development to execution, the budget document goes through four stages:

Proposal

In the spring of each year (e.g., May 2003) state executive agencies are told by the governor's office to begin preparing their budget requests for the fiscal year that will start in July of the next year (e.g., July 2004, for FY 2005). An agency will ask for the amount of money it thinks it will need to carry out its programs in the forthcoming year. In the fall (e.g., September-October 2003) the requests from all agencies will be received by the OPB, whose budget examiners will take into account the governor's policy preferences and their evaluations of the quality of the work performed by the various agencies. The requests may be cut or changed in many ways by the OPB and the governor as they prepare in the late fall the final budget proposal.
The official revenue estimate developed by the state economist will set a ceiling on the total amount that can be spent. State law requires that the budget must be balanced, meaning that expenditures cannot exceed funds available. The governor will present to the General Assembly in January, within five days of the state legislature's coming into session, a large printed document (e.g., Governor's Budget Report—Fiscal Year 2005). This budget report will include the governor's spending recommendations for every program carried out by the state of Georgia.

Legislative Authorization

Once introduced into the General Assembly, the budget is transformed into an appropriations bill and must be passed just like any other bill in order to become law. The legislature examines the governor's proposed budget, bringing into consideration not only the governor's preferences but also those of the individual cities, counties, and voting groups that the legislators represent.
The General Assembly has two chambers, the house and the senate, and those two chambers may be controlled by different political parties. Appropriations bills, like all bills, must pass both chambers to become law. Because of the bill's importance and complexity, intensive legislative bargaining always takes place, both within each chamber (as different parties and factions fight for their favorite programs) and between the two chambers, as the legislators work to develop identical versions of the budget to be voted on by the house and senate. Those legislators serving on the house and senate appropriations committees tend to dominate the legislative examination stage, along with other top officials in the General Assembly, such as the house Speaker, the lieutenant governor (who serves as president of the senate), and party leaders in each chamber. The governor's staff also works intensely with the legislators to preserve the executive's top spending priorities.
Even though the appropriations bill is one of the first bills to be introduced at the opening of each legislative session in January, it is always one of the last bills passed in the closing days of the session in March or April. Once passed, it then goes to the governor, who can approve the budget bill in its entirety or can pick out individual expenditure items to veto. This, the line-item veto, is a major gubernatorial power, allowing the chief executive to strike particular spending items he considers wasteful or that may be important to the governor's uncooperative political opponents, while the rest of the budget bill is unaffected.

Implementation

Once the governor signs the appropriations bill, then the budget becomes law and must be followed as the new fiscal year begins in July. In the late spring before the new fiscal year begins, each executive agency must prepare for the OPB a detailed annual operating budget showing how exactly it will spend the appropriated funds. Once the annual operating budget is approved, funds are allocated to the agencies at the beginning of each quarter (i.e., July 1, October 1, January 1, and April 1) to be spent as authorized for salaries, equipment, supplies, telephones, and the like.

Evaluation

As agencies spend their money during the fiscal year, they must prepare a quarterly report detailing their actual expenditures. The OPB will use these reports to make sure agencies are spending only for those purposes previously authorized by law and are not spending more than they are authorized. At the end of the fiscal year, the state auditor will conduct a detailed examination of the spending practices of each agency and issue a report listing those expenditures.

Observations and Significance

At any given time, the state is actually working with as many as four budgets. For example, in the late spring of 2004, state agencies implemented (i.e., spent money for) the current budget for FY 2004. After the FY 2005 budget passed the General Assembly and was signed by the governor, the agencies drew up their detailed operating budgets for the new FY 2005 budget that began in July. At the same time, they may have received instructions from the OPB to begin developing their proposed budgets for the next fiscal year, 2006, and to have those proposals ready by the early fall. Moreover, the state legislature may have passed a supplementary budget for FY 2004, which would allow many agencies greater expenditures for some programs than had been originally approved. Finally, the OPB and the state auditor would be completing their audits and evaluations of spending under the previous, FY 2003, budget.
The budget is an intensely controversial process, because it is so important. Every program that people want the state government to operate—from universities to state parks to Medicaid to indigent legal defense to prisons—must have funds appropriated in the budget process in order to function. By influencing the budget—cutting funds or raising funds or changing how the funds may be spent—one can have a major impact on the substance of particular programs and thus on the welfare of the state as a whole.
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Further Reading
Irene S. Rubin, The Politics of Public Budgeting: Getting and Spending, Borrowing and Balancing, 4th ed. (New York: Chatham House, 2000).
Cite This Article
Digby, Michael F. "State Budgeting." New Georgia Encyclopedia. 20 August 2013. Web. 18 September 2014.
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