"We cannot afford to have a $700 million hole in our Medicaid budget," Deal said.
It may take until 2014 before Georgia receives as much tax revenue as it did before the Great Recession, which started in late 2007, said Kenneth Heaghney, a Georgia State University professor who serves as the state's fiscal economist.
Growth in Georgia's labor market has started outperforming the rest of the country, the housing market shows signs of improvement and some of the state's most important sectors — information technology, professional and business services, and manufacturing — are growing. But consumer spending is subdued and business investment has slowed.
He cautioned lawmakers that increasing federal taxes, a sluggish global growth and uncertainty over federal spending policy could constrain economic growth in Georgia.
"So all of this creates an environment in which there's still a lot of economic uncertainty," Heaghney said. "And so we try to plan for that, but there's a lot of different ways the economy could move depending on how these three areas play out over time."
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