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Monday Morning Newspapers , Monday,
January 16, 1961. (ALL NEWS MEDIA
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S. ERNEST VANDIVER GOVERNOR

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January 14, 1961

PETER ZACK GEER EXECUTIVE SECRETARY

BUDGET Mi!:SSAGE
Honorable George L. Smith, II Speaker House of Representatives State Capitol Atlanta, Georgia Dear Mister Speaker and Membersof the House:
Acting pursuant to Article VII, Sec. IX, par. I, of the Constitution of the State of Georgia of 1945 requiring that the Goyernor submit to the General Assembly a BUDGET MESSAGE together with a draft of a General Appropriations' Bill, the following is submitted:
A peculiar problem in connection with preparation of the State Budget is presented to me as Governor and to you -- the Members of the General Assembly -- in view of the unsettled economic ~onditions.
Undoubtedly, for several months now, due primarily to the effects of the steel strike last year and the Federal Reserve Board's so-called "tight money" policy, recessionary influences have been at work in the national economy, as reflected
1. By a nationwide drop in capital investment in plant and equipment.
2. By widespread lnventory correction.
3. By acbwnturn in consumer demand; and
4. By a resultant drop in corporate earnings.

In the nation, unemployment is expected to be above five million by mid-February -- steel production is at less than fifty per cent of capacity -- motor vehicle production is expected to be off more than 'thirteen per cent in the new year -- freight car loadings are down considerably -- factory orders are lagging and overall industrial output is feeling its results.
In Georgia, anticipating the effects of this trend, non-farm employment in the first six months of
1961 is expected to be less than the same period last
year. Retail sales in our State reflect a decline.
As you are aware, Georgia's tax structure is largely dependent upon business and economic conditions.
If the economy rises, so do revenue collections.
If business is down, revenue falls.
If trade 1s static, state receipts level off.
What is in store, then?
There is a sharp difference of opinion reported among financial leaders.
The general consensus, however, is that 1961
will reflect a decline in the early months, with qualified predictions of varying degrees of recovery in the second half.
INC01v1E ESTIMATE ASKED
Taking this into consideration, a few days ago I wrote the State Revenue Commissioner requesting his best and studied opinion as to . . . the amount of Revenue Department collections which would be made in the present
fiscal year, 1960-1961 . . . and.
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. how much that figure would be reduced by overpayments on income tax and by other refunds.
The Revenue Commissioner replied, by stating:
", , it is my best judgment that revenue collect1ons turned over to the Treasury from this depart-
ment during the current year will be between 370 and 380 million dollars, Economic changes will, of course, to
a large extent, determine which end of this range will
be more likely, MY refunds will be made from the
Treasury out of the above funds, our best estimate of total ta.x refunds during the year is from 5 to 6 million
dollars."
In the last fiscal year, 1959-1960, Treasury receipts from taxes were $355 million dollars and income from department regulatory fees and sales was $15 million dollars, producing a total State income of $370 million
dollars.
DANG~~R OF DEFICIT THIS YE~R
Based upon the Revenue Commissioner's estimates, total receipts from tax collections and departmental regulatory fees, minus refunds, should place total net State income for the present fiscal year somewhere in the
range between $380 and $390 millions of dollars.
Present state spending is at the rate of
$397 millions.
Taking the most liberal income prediction, that would result in a deficit in income under outgo of
$7 millions.
Or, with the conservative prediction, a
deficit of $17 millions.

BY prudent administration we have managed to accumulate sufflcient funds to underwrite this current deficit, but we are not in position to continue to absorb such loss as will be reflected when the books are closed on June 30th.
If general business conditions deteriorate further, of course, these income figures could be substantially less.
we are hopeful that this will not be the case.
But we cannot afford to make budget commitments when there is no prospect of carrying them out.
TWO-YEAR BUDGET
This administration has the problem of financing the budgetsfor the next fiscal year and also
the one for 1962-1963.
That being the case, we must lay our plans at this session for state operations over a two-year period.
:~VA m11st g11P:rd 2.gaJnst, creat,~.ng cond1.t:tons which mlght, ;force us t,o haye to resort to new taxes in the next two years.
We must avoid any schemes and stratagems which might result in a headlong rush into bankruptcy.
we ~1st resist any and al.l efforts to weaken
the tax structure of the state -- to weaken enforcement procedures to provide loopholes through which evaders might slip in avoiding their taxes.
The red flag is up.
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It is squarely up to you and to me to do everything possible to,avoid the need for massive new tax increases on the people of Georgia.
I am going to do my utmost, and I am sure that you will join with me in that determination.
PRIORITIES STATED It is incumbent upon us in preparing the
budget for the coming biennium:
First, to meet emergencies, to carry forward existing programs and to provide for normal expansions in established services, such as projecting the Minimum Foundation Program for Education on a current basis;
Second, to carry out departmental responsibilities already fixed by the General Assembly for which no funds heretofore huve been appropriated;
Third, to provide for extraordinary expansions in present programs; ~nd
Fourth, to undertake new programs.
The Appropriations' Act must contain sufficient flexibility to be serviceable whether the economy declines or improves.
The bill to be presented to you takes all of this into account.
The first obligation is to finance present services.
we are providing for all of these in the
basic budget.
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Education
Provision is made in the Appropriations Bill for projecting the Minimum Foundation Program for Educa-tion for the next two years, including_employment of 1,400 new teachers and expansions of various items required in the Foundation Program. Also provided, is the support necessary to undertake the area trade school program to which we are committed already.
To do these things, will require an increase in the common school budget of $4,500,000 in the 1961-62 fiscal year and another $4,200,000 in 1962-63.
Unlversj_ty System
To provide for expansions required by increased enrollments in University System Colleges, to meet essential commitments, tolaunch a new scholarship program and to provide additional support for the Industrial Development Branch at Georgia Tech, will require an additional $2,250,000 in the coming year and another $2,000,000 in 1962-63 for University system operations.
Teacher Retirement
To finance increased State contributions to the Teacher Retirement System and to provide broader retirement benefits will require an additional million dollars during the next two years.
Welfare Assistance
In the Welfare Department, an annual million dollar increase is provided --
$700,000 for normal expansion which will occur in the present assistance programs and $300,000 additional which must be provided for operation uf the training schools.
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Jjgalth
In Health, in the basic budget, by far tne largest item is for continued expansion in tne Milledge-. ville State Hospital improvemen~ program -- a million dollar increase each year forthat purpose.
Provision is made for a $375,000 increase for Gracewood over the two-year period.
There are other normal increases which will be required for regular health operations, the State Employees Health Service and the Alcoholic Rehabilitation Service.
Highways
For Highways, and grants-to-counties for road work, there is a Constitutional mandate to provide the amount collected in motor fuel taxes in the preceding year. In no event, will this be less than the approxi.mately $84,000,000, that the motor fuel taxes amounted to in this past fiscal year.
Comrnerce
For the Department of Commerce, the Appropriations' Bill provides an annual increase of approximately $45,000 for expansion in the industrial and tourist promotion programs.
Considering this increase and the one provided for industrial research for the first time Georgia will have a million-dollar-a-year industrial program.
Agricul t,ure
For Agriculture, it is proposed that an additional $300~000 be appropriated to carry 011t the meat inspection responsibility placed upon that department by the General Assembly -- an undertaking vital to tho health of Georgia families.

Comptroller-General
For the Comptroller-General, a $125,000 increase will be required to carry out mandatory provisions of the new insurance code.
Forestry
For the Forestry Commission, a $150,000 increase is proposed for normal expansions required in the forest fire protection, forest management and reforestation programs.
Public Safety
For the Department of Public Safety, an increase of $560,00.0 is proposed to replace radio equipment in accord with Federal Communications Commission regulations and for other limited requirements.
THE BASIC BUDGET
These normal expansion items, plus other smaller ones in the basic operations' budget for 19611962, less such reductions as we were able to make, produce a net overall increase of $8,500,000 over the present fiscal year's budget of $397,000,000, or, a total budget for next year of $406,ooo,ooo.
In fiscal year after next, 1962-1963, there is a net increase of $17,000,000, or a total basic budget in that fiscal year of $414,000,000.
These totals are $15,500,000 for the fiscal year 1961-1962 and $24,000,000 for the fiscal year 19621963 above the most liberal estimate of the current year's income of $390 million dollars.
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If there is not a decided change for the better in the economic picture in Georgia and the nation in the very near future, we may find ourselves in a position that will force a pro rata, across-the-board reduction in appropriations proposed.
The basic budget must be met before any thought can be given to extraordinary expansion or new programs.
Barring some now unexpected and unforseen reverses in the overall national economy, you and I, working together, will be able to meet Georgia's most essential governmental needs -- education, health, highways, welfare, institutions, stimulation of industrial development and others -- on an expanded basis
FAR GREATER THAN EVER BEFORE, UNDER THE FRAMEWORK OF
THE EXISTING REVENUE STRUCTURE.
EXPANSION, INCOME PERMITTING
Should general economic conditions improve and bring about State income materially greater than current estimates, then a limited amount of EXPANSION could be undertaken.
Th:io KX.f-'Ar~UJUN in 1()61-1962, finances and other emergency conditions permitting, would include:
1. A $200 teachers' salary raise, $5,806,000.
2. A $200 raise for school bus drivers, $910,000.
3. Extra teacher retirement funds, $540,000.
4. Activation of the Medical Care Assistance Program, $5,000,000.

5. Highways, $3,000,000, additional.
EXPANSION in 1962-1963, finances and emergencies permitting, would include:
1. A further $200 teachers' raise, $5,932,000.
2. Extra teacher retirement funds, $500,000.
3. Highways, $2,000,000 additional.
Total EXPANSION, finances and emergencies permitting, for the next fiscal year totals $18,000,000.
In 1962-1963, it totals in excess of $8,000,000.
I have also included in the Appropriations' Bill authority to effectuate still another $200 teachers' raise but this item must take its place alongside other items. Its financing will be dependent upon substantiallyincreased revenue.
Yes, Georgia has her budget problems, but they are not confined to us. News dispatches from neighboring states report they are having their share. Some are further complicated by already-declining revenues, as is the case with the federal budget. Up to now, through better enforcement and better administration, Georgia has prevented such a decline here. It is to the credit of the State Revenue Commissioner and the staff of the Georgia Revenue Department that we have not experienced a substantial loss of revenue this year.
EESPONSIBLE STATE BUDGETING
I do not need to tell you that it would be suicidal in a period of unsettled economic conditions to undertake to expend an anticipated surplus that may or may not materialize.
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Such an imprudent course could lead to bankrupt conditions on the one hand or to the alternative of a tax-raising session on the other.
I am sure that you will support me to the fullest in my continuing fight for responsible State budgeting.
You and I have the opportunity to do an unprecedented job for the people.
I call upon you -- I call upon the Department heads and agency chiefs of the State -- I call upon the people of Georgia -- I call upon all groups and organizations to help me and to help you in keeping Georgia's government strong, solvent and responsive to the people's needs.
HIGHWAY MAINTENANCE
As regards our highways, we, in Georgia, find ourselves in much the same position as the home owner with a leaky roof which has grown worse year by year and now threatens his entire investment.
If it is not possible at the time for the home owner to pay cash and do the job -- if it is not possible to correct out of current income a condition which has
been 30 years in the making, then, sufficient funds
must be borrowed to protect the structure.
That is exactly the situation which prevails today in connection with highv;ay maintenance.
BUILD and BUILD and BUILD, with scant thought given to repairs, has been the policy of highvvay administration after highway administration.
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The present administration, under the direction of the General Assembly, has increased the maintenance budget almost 40% to provide emergency improvements to many of these highways but this increase came too late to catch up with the years of neglect.

Over a BILLION dollars in state arterial highway investment is imperiled. These are the roads which tie our State together and carry over 88 per cent of the motoring public.

The Highway Department has completed a survey of every mile of Federal-aid Primary and Federal-aid Secondary highways in this State. The resultant compilation shows that immediate rehabilitation-~ widening and re-surfacing -- of these roads previously constructed on the State system will cost an estimated $100,953,000.

I propose that the General Assembly authorize immediately after the passage of the Georgia State Highway Authority Act $100 million dollars to finance this work and that it be restricted to Federal-aid Primary and Federal-aid Secondary highways on the State System.

taxes.

This does not necessitate any increase in

Funds allotted coming to the Highway Department from motor fuel receipts and other appropriations will be adequate to retire the bonds, so I am informed by Highway Board Members.

The future of our industrial development, the lure of our tourist attractions, the future progress of our State, all depend on action now. It is my earnest

.
hope that you will give this proposal with the restrictions I have suggested your immediate and careful consideration.
A draft of the administration's proposed Appropriations' Bill has been delivered to the Speaker of the House since the bill must originate in the House of Representatives.
Respectfully submitted,
d44f ~
ERNEST VANDIVER Governor
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