After budget cuts hit Georgia state finances this year, Gov. Brian Kemp’s budget proposal for the upcoming year projects that happy days are here again — for some.
Teachers and state employees making less than $40,000 a year would get a raise. Schools, colleges, universities and Medicaid would get budget increases to meet growing populations or rising costs. New prosecutors and judges would be funded, and Kemp would spend $20 million on a new outdoor stewardship grant program.
But other state agencies would be in line for cuts, sometimes sharp ones. Crucially, Kemp’s budget also doesn’t include the second phase of an income tax cut supported by many fellow Republicans.
Underlying the budget are revenue projections more optimistic than the growth of recent months. Through the first six months of the current budget, Georgia general fund revenues were only 0.3% above last year.
Kemp projects revenue will pick up for the remainder of the budget year, eventually rising by $410 million, or 1.5%. Next year, he projects $726 million in new money, or 2.7% percent growth, pushing total state revenue above $28 billion for the first time.
Through last year, Georgia experienced brisk revenue growth averaging 5.8% a year since the great recession. But revenue growth tanked after lawmakers cut the top rate of the state income tax from 6% to 5.75% in 2019.
“It’s a very lean revenue estimate, with really minimal growth,” said Danny Kanso, a policy analyst at liberal-leaning Georgia Budget and Policy Institute.
Kemp projects an acceleration in state income tax collections next year, skipping the plan to lower the tax rate from 5.75% to 5.5%. House Speaker David Ralston of Blue Ridge and other Republicans have been supporting the cut. which could forego $550 million in revenue next year.
Kemp also projects a pickup in sales tax collections, which could be aided by a bill that lawmakers have sent to Kemp’s desk to tighten tax collections on online sales.
Also giving Kemp’s efforts a boost is a $191 million decrease in expected contributions to the state pension fund for educators. Thanks in part to good investment returns, the Teachers Retirement System says it doesn’t need as large a share of employee salary from employers — typically public schools or colleges — to pay benefits. That eases pressure on funding formulas for K-12, colleges and universities.
Kemp would put about $750 million into education. That includes another $2,000 pay raise for teachers, completing Kemp’s campaign promise of a $5,000 raise after lawmakers allocated the first $3,000 in 2019. That’s projected to cost $362 million.
“Certainly, we are absolutely delighted by the pay raise,” said Claire Suggs, a budget analyst for Professional Association of Georgia Educators, the state’s largest teachers’ group.
Plus, there’s another $5.4 million in raises for school bus drivers and cafeteria workers, and another $14.1 million to give $2,000 raises to teachers employed by the Department of Early Care and Learning.
Public and charter schools would get a combined $194 million to cover enrollment increases, with an additional $32 million to subsidize school districts where property taxes bring in little money.
Kemp would spend an additional $230 million on the state-federal Medicaid program to meet rising costs. He would also spend $46 million to increase salaries of all state workers making less than $40,000 a year by $1,000.
The court system would also get increases. But beyond that, other agencies would take cuts.
Kemp asked agencies to propose cuts of 4% for this budget year and another 2% for the next budget year over the summer, but isn’t seeking equal reductions across the board. In his budget, the governor said he “aligns existing resources” to “streamline operations, eliminate duplicative programs, and leverage technology” while supporting economic development.
“With conservative budgeting and common-sense cost savings, we can prioritize these much-needed investments. I am grateful for the General Assembly’s shared commitment to these objectives, and I applaud state agency leaders for finding new ways to run more efficiently without sacrificing quality,” Kemp wrote.
Combined changes in this year’s budget and next would cut the Department of Agriculture by 13%, for example. That department’s would cut 13 vacant positions from its consumer protection division, which monitors and inspects food facilities, fuel pumps and scales. The spending plan would cut five vacant positions from the department’s marketing and promotion efforts, cut marketing contracts, and spend millions less on state veterinary laboratories in Athens and Tifton. The department declined comment Friday, saying Commissioner Gary Black was out of town.
Of the 49 large agencies listed in budget documents, 31 would see budget decreases. They include agencies that house prisoners, defend the accused in court, serve military veterans, provide driver’s licenses, take care of the mentally ill and care for state forests.
“Many of the agencies are going to have longer wait times,” Kanso said. “They’re going to struggle to provide services and reduce backlogs.”