(The Center Square) – Georgia's fiscal health before the COVID-19 pandemic was middle of the road, and the state likely will come out of the current financial crisis in a worse situation, a new report says.
Georgia's elected officials have made repeated financial decisions that left the state with a debt burden of $8.8 billion, the report by financial watchdog Truth in Accounting (TIA) showed.
The state had $24.4 billion to pay $33.1 billion worth of bills, resulting in its $8.8 billion shortfall.
Using the state's most-recent audited financial report from fiscal year 2019, TIA calculated every taxpayer in Georgia would owe $2,900 to pay off the state's debt.
Georgia ranked 22nd out of 50 states for fiscal health and budget management and earned a "C" grade in the TIA analysis. Any government with a taxpayer burden between $0 and $4,900 received a "C."
Georgia's financial problems mostly were a result of unfunded retirement obligations that have piled up over the years, TIA said.
Georgia did not fund $8 billion in pension liabilities and $5.5 billion in retiree health care benefits of the total $46.4 billion in retirement benefits promised to state employees, TIA said.
The state did not have enough money in its reserves to weather COVID-19 economic shutdowns and the market's response. TIA estimated Georgia could lose $10 billion in revenue as a result of the health crisis.
"The uncertainty surrounding this crisis makes it impossible to determine how much will be needed to maintain government services and benefits, but Georgia's overall debt will most likely increase," TIA stated.
Georgia was one of the first states to reopen businesses that were shuttered to help stop the spread of the coronavirus. The first case of COVID-19 was reported in March. By May, Georgia's tax collections were down by 10.1% compared with the previous fiscal year, and fiscal-year-to-date net tax collections through May were $20.81 billion, down 4% compared with the previous fiscal year.
Gov. Brian Kemp asked state agencies to reduce their fiscal year 2021 budgets to align with the revenue shortfalls. The latest revenue report, however, showed an increase in tax collections of $134.5 million – or 7.7% – in August compared with August 2019.
Only 11 states reported a taxpayer surplus at the end of the fiscal year 2019, TIA's report found. The majority, 39 states, did not have enough money to pay their bills and were ill-prepared for any crisis, let alone economic free falls resulting from COVID-19 shutdowns.
TIA found all 50 states combined reported more than $1.4 trillion worth of debt, including $855 billion in pension debt and $617 billion in other post-employment benefits debt.
"The bottom line is that the majority of states went into the pandemic in poor fiscal health, and they will most likely come out of it even worse," said Sheila Weinberg, TIA founder and CEO.