Georgia Government Revenue & Expenditures

1. Georgia Government Revenue & Expenditures How the state provides services to residents

2. Important Terms to Know • Revenue—source of income for the government • Expenditure—plan for spending revenue • Fiscal year—the budgetary spending year; this is typically not a traditional calendar year • Scarcity—occurs when wants & needs are unlimited but resources are limited • Surplus—tax collections exceed the state’s spending needs • Deficit—when expenditures exceed revenue collections

3. The State Budget • Each year a state budget is created that allows GA to use collected revenues to meet the needs of GA’s residents • The budget can be changed due to changes in economic conditions • GA constitution requires a balanced budget that matches expenditures with revenues

4. State Budget Cont. • 3 types of budgets: • Original budget--planned spending for 1 fiscal year • Amended budget—when changes are made to the original budget to add, delete, or transfer funds to keep the budget in line w/ state law • Supplementary budget—changes made to original budget to cover new spending when additional or unspent funds are available

5. Georgia’s Revenue Sources • 3 sources: • State funds & Federal funds: these monies are used to plan the budget • Include income taxes, sales taxes, other taxes & fees, lottery receipts, indigent care trust funds, & tobacco settlement funds • Special Fees collected by agencies—these are typically kept by the collecting agency such as state parks collecting their entrance fees • About 90% of GA’s revenues come from taxes

6. Distribution of Revenue • State, county and municipal gov’ts all use collected revenues to provide services for residents • Education is the largest expenditure for the state gov’t (also for county gov’ts) • Other expenditures include wages & salaries for employees, public safety, & transportation

7. How Choices Are Made Given Limited Revenue • Scarcity occurs when revenues fall short of needs • GA required by law to provide essential services: education, road construction & repair, & health services • Taxes can be raised to provide these/meet increased demand; residents typically will agree to tax increases to meet these needs • Spending monitored through reports submitted to the state each quarter • Ensures money is used appropriately • Each agency has enough/needs more/ has a surplus • Reports used to decide spending for the next fiscal year • Surpluses occur when tax collection exceed spending needs; surplus funds are generally placed the State Reserve Funds (like a savings acct) to use for future needs • Deficits occur when the state spends more money than it takes in • GA cannot have a deficit so the governor and lawmakers use surplus funds to balance the budget or make cuts in spending, even on important public services • GA maintains a stable economy during recessions/depressions because of the use of a fiscal budget, a supplementary budget & saving surplus funds.