Friday, December 28, 2018
NOTES FROM THE SENATE, DECEMBER 28, 2018
"TEN REASONS TO BE OPTIMISTIC ABOUT 2019"
Back in the middle of the Great Recession in 2008 and 2009, there were few reasons to be optimistic. The economy had tanked, unemployment rate was over 10%, banks were closing and state revenues dropped $3.5 billion in a year.
I wrote the "Ten Reasons" column starting in those years to try to find elements of positive news even in the midst of misery. It has been interesting to look back and read what, at the time, passed for "good news."
Today, it is easy to find positive elements all around us with unemployment at a historic low, economic growth very positive and state reserves nearly full. I bring these to you so that we may all be thankful for our Blessings of 2018 and truly be optimistic for 2019.
1. STATE REVENUES AT A PEAK-- With full employment and strong job growth, Georgia's revenues have been growing at a strong 6.9% growth rate with Individual Income Taxes growing at a 7.6% rate and Sales Taxes up 7.1% YTD.
2. JOB CREATION-WHO NEEDS AMAZON? -- This has been an amazing run on creating new jobs in Georgia. Governor Deal recently pointed to close to 800,000 jobs created in Georgia during his two terms as reported by the Department of Labor. The Department of Economic Development reports that they brought 225,644 new jobs to Georgia during the eight years...An incredible record with that number amounting to the equivalent of many Amazon development... and these are spread out around the state. Fiscal Year 2018 showed 27,373 jobs created.
3. GEORGIA'S PORTS KEEP BREAKING RECORDS-- If there is an "irresistible force" in Georgia, it has to be Georgia's Ports and their continued growth and reinvestment. The Port at Savannah handled 4.2 million container units in FY 18, an 8.4% increase. The deepening of the Savannah River is over half completed and federal matching funds appear to be moving towards completion. Inland ports will increase rail transportation, a better way to handle increased port traffic.
4. NEW TRANSPORTATION FUNDS GOING TO WORK--The addition of almost one billion dollars in new transportation funds is beginning to pay dividends for the state in meeting the challenges that a growing state like Georgia has. In FY 17, there were 642 projects let along with 688 grants totaling $1.829 billion. The Department of Transportation is working towards solving many of our people-mover issues and there is now a fresh focus on transit issues statewide.
5. NEW GOVERNOR/LT. GOVERNOR BRING SENSE OF ANTICIPATION-- The swearing-in of Brian Kemp as Georgia's 83rd Governor and Geoff Duncan as the 12th Lt. Governor turns a page in Georgia politics and there is definitely a feeling of change in the air. I believe Brian Kemp will be a thoughtful, logical minded leader who will be methodical in dealing with issues. Geoff Duncan will hold his own in the give and take with the House and other political forces. He is a fast learner striving to succeed.
6. STRONG SALES TAX GROWTH TELLS THE FUTURE? -- Net State Sales tax revenues have been running at twice the traditional revenue numbers for a while. So far this Fiscal Year, Sales Tax revenues are up 7.1%. This follows a national trend of strong retail sales this past year and apparently a very strong Christmas buying season. Hard to tell if some of the increase is in the taxing of internet sales although the wide collection only starts Jan. 1. Amazon was already collecting state sales taxes and all of the large retailers already collect sales taxes on internet sales.
7. A BRIGHTER TARIFF OUTLOOK? You get the feeling that a breakthrough with China on tariffs is in the making. This is one of the elements that has rattled the stock market. Agriculture has been particularly hard hit, with exports of a number of products falling drastically.
8. THEY'RE NEVER WRONG-RIGHT? -- The Governor's Council of Economic Advisors is made up of economists from the major universities and has private sector input as well. They meet in early December and help steer the Governor in setting the Revenue Estimate for the coming fiscal year upon which the general budget is based.
They confirmed that 2018 has been an excellent year and predict around 7% growth in 2019, slowing to 5% in 2020 and around 3% in 2021 with the possibility of a recession. But that is a subject for another day.
9. AGRICULTURE-BETTER DAYS AHEAD? Between falling commodity prices and the effects of tariffs on exports to China, things can't get much worse and surely must get better. The Farm Bill passed by Congress recently will help some crops, but left others like blueberries, out. A resolution of the tariff crisis would be a huge help for soybeans and cotton. Poultry continues to be a bright spot. Georgia leads the nation growing 1.4 billion broilers yearly, also leading in exports, sending out of Savannah's port 454,000 metric tons of chicken.
10. GEORGIA SOUTHERN FOOTBALL IS BACK! -- After a 10 loss season and the firing of the Coach, expectations at our university, Georgia Southern, were not very bright this year. But new coach Chad Lunsford found the missing "Erk Russell Spirit" and won 10 games including an exciting Camelia Bowl last minute thriller over Eastern Michigan. They are no patsies....Eastern Michigan beat Purdue, 20-19, who beat Ohio State, a top ten team. And you can't top this for spirit...Country Singer/GS grad Cole Swindell paying for a bus so students could go to the bowl game, as did Coach Lunsford as well as tickets to the game. Georgia Southern brought some 8000 fans to the bowl game!