FOR RELEASE: Thursday Morning Newspapers, January 26, 1961.
(Memo to Editors: - Due to the important nature of the attached release in the form of a letter to Representative Jack Ray, Chairman of the House Appropriations Committee, it would be most appreciated if space would permit, if you could publish the full text of this letter, in view of the complicated nature of the subject treated. Your cooperation in the past has been greatly helpful to me and I want you to know I am grateful for it.
Sincerely,
S. E. V.)

S. ERNEST VANDIVER GOVERNOR

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January 25, 1961

PETER ZACK GEER EXECUTIVE SECRETARY

HChoaniorrmaabnle, TJahcekARpapyropriations Committee House of Representatives State Capitol Atlanta, Georgia Dear Jack:
Recently, I have read in the press some news articles which indicate there is a disposition on the part of some to raise the amounts appropriated in the basic budgets which I submitted to you to higher figures, the aggregate of which would far exceed State income estimates.
This letter is to amplify my budget message and to caution against such unwise moves in the strongest possible terms.
It should be emphasized that in the present fiscal year, 1960-1961, we are budgeting at the rate of $397 million, while income estimates from all sources during this fiscal year will be at the rate of $391 millions -- that is, a deficit in excess of $6 million dollars.
The $6 million dollar deficit could hold unless income conditions improve materially between now and July 1st. All expert opinion holds that is unlikely and that business conditions are not likely to show any gains until mid-year.
That means $6 million dollars will have to t)e subtracted from the net operating surplus to make 11p the deficit in fiscal 1 61 before any thought can be given to the 1961-1962 budget.

The Revenue of the State for normal expansion in the basic budget for the fiscal year 1961-62, I have proposed to you is $406 million dollars -- that is $15 million dollars greater than the Revenue Commissioner's inGome estimate, either for this year or for the next -which means a deficit in fiscal 1961- 1 62 of $15 million dollars in financing the basic budget alone -- a deficit which I caution you could be much higher if State income fails to live up to the Revenue Commissioner's estimates, estimates which some expert opinion maintains are too liberal.
The rate of spending for normal expansion in the basic budget for 1962-63 is $414 million dollars -that is, $23 million dollars more than the Revenue Commissioner's estimate of State income for that year -- a deficit of $23 million dollars -- a deficit which I again cauti.on you could be much higher if State income does not meet these predictions.
You can see from these figures, that is if State income in the next two fiscal years should fall in the lowest range of the Revenue Commissioner's estimates, financing of the basic budgets alone over the next two years and the deficit this year would exhaust the surplus prior to the middle of the 1962-63 year and would, in that fiscal year, force an across-the-board reduction in even the basic budget items.
You will agree that such an event would create havoc and could result in a breakdown in essential services.
Perhaps we may have been overly-liberal in the basic budgets because of this possible danger. Certainly we cannot afford to go beyond that and take the risk of setting the basic budgets at figures higher than possilJly can be paid.
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At the rate of spending in the basic budgets proposed over the next two fiscal years, taking into account emergency conditions which always occur, the net
operating surplus will have been reduced to less than $6 million dollars at the beginning of fiscal 1962- 1 63, that
is, after increases in the basic budget for normal expansion items have been financed. This, of course, assumes that revenue will meet the Revenue Commissioner's expectations.
Should income rise materially above present
estimates of $391 million dollars, provision is made in
the Appropriations' Bill to afford Georgia school teachers a salary raise of $400 over the next two-year period. Authority is also in~luded in such circumstances, should extra income materialize,-to finance medical care for the aged and to provide modest additional highway funds.
Over and above these, should business improve greatly, resulting in an extraordinary increase in State income, an improvement which is now not in sight, authorization is contained in the Appropriations' Bill for another $300 increase in teachers' salaries but, as I stated in
its my budget message, this must take/place along with other contingent items.
Let me reemphasize that if additional expansion items over those contained in the basic budget are to be financed, based upon liberal income estimates, additional taxation will become necessary.
If the General Assembly will hold appropriations in the basic budgets to the recommendations proposed, I will do the very best that I can to finance normal expansion and to meet such highest priority items as I can out of whatever additional income is available over and above that required for normal expansion and emergencies.
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I call upon the General Assembly, in exercising its proper constitutional prerogatives over State spending and over State appropriations, to demonstrate to the people of Georgia that they will be exercised in the peoples interests and that no appropriations will be made, as the State Constitution requires, unless sufficient income is in sight or sufficient new and additional
I
revenue measures are levied to finance such appropriations.
I still hope that we can avoid such a course, but I must tell you quite frankly that if additional items
of expenditures are placed in the basic budget over and above income estimates and utilization of the present surplus, common honesty, prudence and sound business practice demand that.revenue measures calculated to produce the needed income- be attached.
The State Constitution requires that be done.
I am sure you will not be a party, nor any
member of your committee will be a party, nor will I be
a party to the slick, dishonest purely political maneuver of passing some sort of bill or resolution which would have the effect of creating an empty obligation to our teachers and elder citizens - - an act which would be tantamount to writing a worthless check on a kited bank account.
Unless income increases due to improved business conditions over the next two years, teacher raises of any substan-
tial amourits, m.ed ical care for the aged and
additional highway. mental health and
other funds o:v-er and aho:ve tbase increases
tn the baste budgets, are dependent upon
additional taxation.
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Let me say this, in all fairness, if the General Assembly undertakes such obligations, without providing the revenue for them, no other choice will be available to me other than to ask for and insist upon the revenue to make the appropriations good.
Let us not forget the facts of simple arithmetic that if the totals in the basic budgets are raised above the present $406 million dollar and $414 million dollar figures, I will have no alternative but to ask for revenue to finance them.
No other choice will be available to me.
I say this because it would be basically unsound to lump extraordinary increases in the basic budgets which, when the money did not materialize to finance them, would force budget authorities to make an across-the-board reduction in essential services.
Two years have been spent by this Administration seeking to remove any so-called "fat" from the State budget.
That we have succeeded is attested by the results achieved thus far in rescuing the State from bankrupt conditions, financing an expanded program larger than ever before instituted in education since the enactment of the sales tax, and doing all this without new taxes.
You are aware that if an across-the-board reduction were forced upon the administration, instead of trimming "fat" as overall cuts once did, now, they would cut into bone and muscle.
They would severely cripple State operations and would have the effect of unjustly enriching a few departmental budgets at the expense of all of the others. That is what would come if arbitrary, instead of selective,

reductions had to be imposed. All of the work this administration has done to institute proper fiscal.planning would be destroyed. Bankruptcy would, in fact, ensue.
State finances, now on a sound basis and rehabilitated, would have deteriorated again.
I am confident that you and members of your committee and the members of the General Assembly recognize the imperative necessity of exercising utmost care in helping me to perfect the budget and to buttress the financial structure of the State.
In so doing, I am confident you will help me in resisting irresponsibly-made spending proposals, no matter how seemingly worthy, bu~ which would have the effect of totally wrecking an equitable over-all State budget and which would create obligations -- false obligations which cannot be met under the present revenue structure of the State.
Let me congratulate you and the members of your committee for an apparent willingness to do more than just give a cursory study to State financial operations. With the State having grown to nearly a half-billion-dollar business, it will not be possible now and in the future for legislative members to give scant study to the budget or make snap decisions about it.
With the expression of my esteem and warmest regards, I am
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