Gov. Nathan Deal has been bragging for months about how well Georgia has rebounded since the economic collapse of the Great Recession and with good reason. Georgia surpassed $2 billion in reserve funds last year.
But what does that figure mean?
A new 50-state study released this week by the Pew Charitable Trusts finds that Georgia has 35 days of emergency operating expenses in reserve, down from 56.2 days in the 2007 fiscal year. That puts Georgia among 35 other states that have not fully replenished their reserve funds to pre-recession levels.
Among surrounding states, only Alabama has more operating days in reserve than it did before the recession, although Alabama only has 36 days’ worth of cash on hand (a total of $786 million).
Compared to the nation, Georgia is right at the median in terms of the percentage of its annual state budget held in reserve. Pew has a neat data visualization that allows you to compare states against the national median here.
Reserve funds are important to states for a lot reasons. First, they help lessen the impact of economic downturns, as Georgia’s did during the recession. Like lots of states, Georgia dipped into its reserve funds to prop up sagging tax collections and keep services. Also a healthy reserve fund can improve or maintain a state’s credit rating and keep borrowing costs down, saving money for taxpayers.
While Georgia’s reserve fund has increased in actual dollars, so has the state budget. The $2 billion the state has in reserves represents 9.6 percent of the general fund budget. In fiscal 2007, reserves were 15.4 percent of the state budget.