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Crawford: State budget crunch pinches local governments
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Georgia's recession has put state government in the same position as a penny-pinching old geezer, the kind who searches under the sofa cushions for lost dimes and quarters or cashes in that jar of pennies he's been hoarding.

The state's search for loose change has intensified in recent weeks because the end of the fiscal year is approaching and Gov. Sonny Perdue is constitutionally required to make sure that the books balance on June 30.

Perdue can use the $500 million or so that remains in reserves. He also ordered state agencies to spend only 75 percent of the money available to them for the month of June.

Those are the actions you would expect from a chief executive who's trying to cope with hard times. Perdue may have to cut spending even more or call a special session of the legislature to make deeper reductions in the budget.

The state, however, is also resorting to financial actions that appear to be downright mean-spirited towards cities, counties and local school systems. Local government officials charge that the state is holding back or delaying the payment of funds that belongs to their jurisdictions.

"I understand they're grabbing at every last straw they can, but it's our money," said Jerry Griffin, executive director of the Association County Commissioners of Georgia.

The state revenue department collects sales tax proceeds from retailers and distributes the funds back to local governments on a monthly basis. There is a lot of money involved here; during fiscal year 2008, the revenue department collected and sent back to local governments $4.83 billion.

The revenue department formerly distributed these revenues to local governments by the 20th of each month. This meant the department would have sent out by June 20 the $367.9 million it collected for them during April.

Several weeks ago, however, local government officials were informed that the checks they normally would have received in June would not be sent to them until sometime in July.

That delay would have allowed the state to keep the $367.9 million on its books through the end of the fiscal year on June 30 — thus making it easier for Georgia to meet its constitutional obligation of not running a budget deficit.

The delay would have wreaked havoc with the accounts of local governments, who also have to balance their books at the end of the fiscal year.

After local governments protested, the revenue department told cities and counties they would receive their June payment by the end of the month, in time for fiscal year 2009.

Reg Lansberry, a revenue spokesman, said there was a misunderstanding caused by a letter the department sent to local governments three weeks ago.

"The letter on June 8 was poorly written ... inelegantly phrased," Lansberry said. "There was never any intention to give them their money in July. They're going to have it in June."

Cities and counties are also tangled up in a dispute with Perdue over a separate aspect of local sales tax collections.

Of the more than $4 billion in local sales taxes collected by the state each year, technical glitches and processing errors make it impossible to identify which local government should receive a portion of the revenues. For 2008, these "unidentifiable" sales tax funds totaled about $18 million.

That portion of the sales tax proceeds would normally be distributed to local governments under a formula that all parties had agreed to. But this year, local officials said the state decided to keep that $18 million rather than distribute it to local governments.

"That's money that local voters approved for local projects like building schools, paving roads, and building water and sewer lines," said Amy Henderson, a spokesperson for the Georgia Municipal Association.

Perdue spokesman Bert Brantley said the problem was caused by a temporary gap in the state law, but added, "From here forward, the unidentifiable sales taxes will be distributed based on the law that was passed this year and signed by the governor."

Things haven't gotten as bad here as in California, where the state is on the edge of bankruptcy, but you know times are tough when the state government is chiseling its local governments. It is not an encouraging sign for Georgia.

Tom Crawford is the editor of Capitol Impact's Georgia Report, an Internet news service at www.gareport.com  that covers government and politics in Georgia. His column appears Wednesdays.

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