The State of  Georgia's  Constitution  requires  that  the  State Government  operate  under a balanced  budget.  This means  that  the state cannot  incur a deficit  and cannot borrow  money  for operating funds. No expenses can be incurred for which funds are not available. And no state  funds can be spent unless they  are authorized in an appropriation bill approved by the General Assembly and signed by the Governor.

          The  state's  budget  laws,  passed  in  1962, carefully  spell out the responsibilities of both the Executive  and  Legislative  Branches.  The  budget  process  is  orderly  and  carefully  structured to protect the interest of the taxpayers.

          Generally,  the  only  borrowing  permitted   the  state is for the funding of major capital outlay projects through  the  issuance of  bonds.  To keep  this borrowing from overburdening the state, the annual debt service payments cannot exceed 10 percent of prior year's treasury receipts.

          First,  departments   submit   formal   budget  requests.   Second,   the  Governor   makes spending  recommendations  to  the  General Assembly  through  a  Budget  Report. Third,   the General  Assembly  passes  an  appropriation  bill.  Fourth,   the appropriated  funds  are  spent under the direct control of the Governor's Office of Planning and Budget.

          Since  Georgia's  budget  must be balanced, the key to the size of the budget each year is the availability of  funds  to be spent.  Three components are involved in making this determination. They are:

Revenue estimate. This is a projection of the amount of tax  receipts, fees and other revenues that will be collected by the state's general treasury during a twelve-month fiscal year period. This official estimate becomes a part of the fund availability to be appropriated.

Surplus. Part of the surplus comes from funds that have been appropriated but are not spent. These funds are lapsed and become  available  for  reappropriation.  The  second  part of  a surplus comes from revenue collections that exceed the official revenue estimate.

Other funds.Lottery income, Indigent Care Trust Fund, Tobacco Fund and the Midyear Adjustment Reserve.

          The Governor,  who is  the Budget Director,  is responsible for making the official revenue estimate.   He  is  assisted in this responsibility by a state economist under contract as a consultant with the Governor's Office of Planning and Budget, which manages the budget for the Governor.

          The  basis  for  making  revenue projections is a computerized econometrics model. From this model,  a  range  of   estimates   is   provided  to  the  Governor  by   his  economic  consultant.  In  early December,  just  prior  to  finalizing  his  budget  recommendations to  the  General Assembly, a  final  estimate  is  adopted  by the Governor and the size of the forthcoming appropriation bill is determined.

          There  has  been much misunderstanding of the term surplus in the state's budget language. As mentioned  earlier,  the surplus at  the end of  the fiscal year comes from two sources--the excess of revenue collections over the official estimate, and funds  appropriated  to  agencies but which were not spent. Surplus funds are usually appropriated in the  fiscal  year following the year in which the surplus actually occurred.

          Since   actual   revenues   for   a fiscal  year   are  not  collected  until  after  the  amended appropriation Bill  is  passed,  it is possible for the  revenue estimate  to  exceed actual collections. Should  this  occur,  the  Revenue Shortfall Reserve (RSR)  may  be used to balance the budget. The RSR  is reserved  from prior  years  surpluses  and  is  equal  to  up  to 5% of the prior  years revenue estimate.  These reserves  are  not  appropriated,   they  are  drawn  from  reserves  only when expenditures have exceeded  the actual revenues collected.

          The  first  phase of  the  budget  process involves official requests  by each  department  or state  agency   to   the  Governor.    These   requests   must   be  submitted  to  the  Governor  by September 1 each year  for  the  budget  year  that begins  the  following July 1. To be able to submit the requests by this deadline, many agencies begin working on the requests in the spring  for  a budget year still some 14 to 15 months away.

          The  budget requests from state departments and agencies go first to the Governor's  Office of  Planning  and  Budget (OPB).  Even  before  budget  requests  are received on  September 1, OPB budget analysts  are working with the departments and agencies on  their   projected   budget submissions. At this stage the analysts are becoming familiar with the departments  budget  needs  so they can better understand and evaluate the requests once they are  received.  During  this same time period, the Legislative Budget Office (LBO) analysts are also beginning  to look  at  issues  and  talking  with state agencies about programs and budgetary needs.

          After receiving  the official  requests, each analyst in OPB and LBO begins detailed analysis. Each  proposed  expenditure  is examined  for cost justification and/or  benefits. If  the analyst  has questions regarding either, a meeting with agency personnel  is scheduled  and additional information may be requested.

          A series of meetings with the Governor  are  held  in  October and November,  during which each  OPB  budget analyst  briefs  the  Governor   on  agency  requests  and   makes  preliminary recommendations based on his or her analysis of the requests.  The  Governorthen  formulates  his tentative recommendations.

          In  late  November and  early  December  the  Governor may meet with department heads to review   with  them  his  tentative  budget  recommendations  for  their department  and  to  reconcile differences in funding priorities.

          During  this  period  the  Governor has been making budget decisions based on a preliminary revenue estimate.  When  the estimate  is  finalized in early December, final budget recommendations are then made.

          Late  in  the  month  of  December  the  Governor's Budget Report  is  printed. It details his recommendations  to  the  General Assembly.  State law requires that the publication be  presented to  the  General Assembly within five days after it convenes in January.  Traditionally,  the Governor announces his recommendations in a meeting with the joint committees and  also delivers  a  Budget Message to a joint session of the General Assembly on Thursday of the first week of the session.

          The  joint  appropriations committees  of  the  House  and Senate  hold  hearings  on  the Amended General Budget Requests  the  week  before  the General Assembly  convenes.  The  joint  hearing for  the  General Appropriations Budget Requests  are  held  the  week  following  the  first  week  of  the session.

          After  the Appropriations Hearings,  the  budget  process in the General Assembly begins with the Subcommittees   of    the   House  Appropriations   Committee.   The   Subcommittees make recommendations  to  the  Budget Subcommittee,  which is made up of the leadership of the House. The House Budget  Subcommittee considers  all   of  the  subcommittee  recommendations  and proposes  a   recommendation   to   the  House  Appropriations   Committee.   The   House Appropriations  Committee  then    passes    it's   recommendation   to   the   full  House.     The Appropriation Bill is  then  transmitted to  the  Senate. The  Senate  follows  the  same committee process as the House. Once the Senate has adopted their substitute to the House Bill, they send the bill back to the House for acceptance or rejection.  When  the House  rejects  the  Senate proposal, a   conference    committee    is   appointed.    The   Speaker   of   the   House   appoints  three  members from  the  House of Representatives  and  the Lieutenant Governor  appoints  three members   from    the  Senate   to  serve  as conferees.   The  Conference  Committee,  through negotiation  and  compromise,  agree  on  a proposed appropriation to be voted on by both Houses. The House and the Senate must vote Yea  or  Nea  on  the Conference Committee Report.  No amendments  are  allowed.  After an  Appropriation Bill is passed, it is sent to the Governor for his signature. The Governor has line item veto power,  however he  must sign the bill within forty days after adjournment or the bill becomes law.

          Once an Appropriation Act has been passed by the General Assembly and signed into law, the   Governor's   Office  of  Planning  and  Budget  is  responsible  for  ensuring   that   all   state expenditures  conform  to  the  legislative mandate and that no state agency  exceeds  its  spending authorizations by total appropriation or by object class.

          This  is  done  in  three successive stages.   First,  each  agency  must  submit  an   Annual Operating Budget  in  conformance with the Appropriation Act.  The  AOB  is the agency's work program for spending appropriated  funds  and funds obtained from other sources, and is designed to ensure that funds are spent legally and as authorized.

          The second stage  is  the quarterly allotment of  funds.  Each  agency  submits  a  request  for allotment of funds to OPB  no later  than  15  days  prior to the beginning  of  each  quarter.  This allotment constitutes a proposed work program for each department.

          The third  stage is the requirement that each agency must submit a report detailing quarterlyexpenditures.