1. Senator Jack Hill 4 th District Georgia Moving Forward 1 Updated September 10, 2015

2. Department of Revenue Collections FY06-FY16 2 *Only compares revenues collected and reported by the Department of Revenue (primarily tax revenue). Other agency collections, such as insurance premium taxes, are not included.

3. Revenue Estimate Comparison FY2016 is built on approx. 1.7% TAX growth over FY15 and 8% over FY14 3

4. Trends in Dept. of Revenue Collections With tax collections unaudited, a few trends… 1.Total State tax revenues show $19.0 billion with a gain of over $1.1B YOY. 2.Individual Income taxes, half of state tax revenue, was strong with a 7.9% increase on revenues of $9.67 billion, or $711.8 million of the YOY gain. 3.Sales tax was consistent at 5% and followed the southern trend 4.Revenues were over budget $500M+ 4

5. 12 Month Trailing Growth Rate – through July 5

6. State Funds Budget Declines during the Recession 6 During the recession, nearly $3.5 Billion was reduced out of the state funds budget in 10 from the peak

7. Revenue Shortfall Reserve (RSR) 7 From 2002 to 2004 the State utilized $1.6 billion of the RSR From 2008 to 2010 the State utilized $1.5 billion of the RSR *Before K-12 RSR removed

8. Formula Funded Areas FY08-FY15 8 *Latest available – as of July 1, 2014 **Estimate based on Summer, Fall Spring enrollment ^Department estimates on actual through April 2015, projected through June 2008 2015 % Change 08-15Difference Georgia Population9,697,83810,097,343*4.12%399,505 Education K-12 FTEs1,627,6601,723,6635.90%96,003 Regents FTEs235,186276,56417.59%41,378 TCSG FTEs73,89770,906**-4.05%-2,991 Health Medicaid Enrollees1,268,6821,810,087^42.37% 448,070 PeachCare Enrollees252,068158,733^-37.03% Corrections Inmates59,79553,870-9.91%-5,925 Probationers142,663166,38016.62%23,717

9. Georgia vs Other States Georgia is doing very well in comparison to other SE states 9 *Based on only Department of Revenue collections except Florida, which has additional fees or adjustments outside of Department of Revenue.

10. Georgia’s Budget Process is Sound With the Senate, House and Governor Deal’s leadership, Georgia was one of the first in the SE to pass a budget Other SE states suffer from late budgets including Alabama, North Carolina, Florida 10 AL.com August 25, 2015 Tallahassee Democrat June 20, 2015 News & Observer August 30, 2015

11. Other States Fight Problems Alabama’s separate Education budget and Medicaid expenses taking a larger share of the General budget revenue sources Florida struggles with healthcare funding Louisiana budget impacted by oil price drop North Carolina revenue volatility, spending disagreements 11

12. North Carolina – from their May 6 Revenue Adjustment 12 North Carolina’s tax changes got news, but their Consensus Forecast points out the higher revenue was linked to business filings and possibly the repeal of an exemption.

13. Reason for Optimism July revenues were up 6.1% – Individual income taxes were up 9.0% or $69M, withholding payments were up $61.3M In July, the seasonally adjusted employment rate was lowest in 7 years Other AAA states: Alaska, Delaware, Iowa, Maryland, Missouri, North Carolina, Texas, Utah, Virginia KY downgraded for pension concerns 13

14. ISSUES: OPEB OPEB is the liability the state has for retiree medical and other post-employment benefits Currently financing generally on a Pay As You Go basis State OPEB Liability: $2.87 Billion School OPEB Liability: $8.51 Billion In AFY15 and FY16G, funds were instructed to be transferred to the OPEB trust ($187M and $115M) 14

15. Why OPEB? Covering long term liabilities key to strong bond ratings The most recent report has the annual required contribution for the liability at: – School: $669.9M – State: $202.1M 15

16. ISSUES Pay Raises Effects of the Transportation Bill Medicaid costs (Hepatitis C, enrollment) 16

17. Questions? 17