Georgia Budget Writers Greet Improved Revenue With Caution
After a $2 billion bloodletting last year because of the economic downturn brought on by the coronavirus pandemic, Georgia’s budget picture is looking better.
But it’s still unclear how much better, which state budget writers say will drive caution.
Through November, Georgia’s tax collections are running nearly 6% ahead of last year’s numbers, meaning the state is more than $550 million ahead of projections on its $26 billion spending plan.
“”With the money, I think we’re in a different situation that we thought we were going to be in,” said Rep. David Wilkerson, a Powder Springs Democrat and the minority whip. “Most people thought the pandemic was going to cause a huge hole in the budget.”
Lawmakers are likely to try to add back some but not all of the money they cut from K-12 schools, and Gov. Brian Kemp has asked for $400 million more for Medicaid, in part to fund his partial expansion of the program. But no teacher pay raises or major tax cuts are likely to be in the offing, and it’s unclear how much budgets for other state services will rebound.
House Appropriations Committee Chairman Terry England, an Auburn Republican, said he fears tax collections have been propped up by federal coronavirus relief payments, especially the $600-a-week unemployment supplement that jobless people were getting for months. The worry is shared by Senate Appropriations Committee Chairman Blake Tillery, a Vidalia Republican. Unemployment recipients were generally paying state income tax from benefits, and could get big tax refunds in the next few months, cutting into any surplus.
Beyond that is the continuing uncertainty over how the economy will perform this year. A pandemic that rages into the summer will crimp spending on tourism and travel, important drivers of the economy especially in the Atlanta area and along Georgia’s coast.
“If you listen to the economists, the economists are saying it’s going to be pretty good,” England said. “I don’t know that I’m quite as optimistic as those guys are.”
As always, lawmakers have two budgets to write when they return on Monday. First up will be amendments to the continuing 2021 budget. Despite uncertainty over revenue, England said there could be an effort to put back some of the $950 million that was cut from K-12 schools this year.
“I don’t know what the numbers will do just yet, but the goal is to do as much as we can on (funding formula) restoration,” England said.
The state could use any surplus to build its $2 billion-plus savings account after dipping into to pay for COVID-19 and other expenses. “If there are some critical, urgent needs, we could talk about those,” House Speaker David Ralston said Thursday. “But we are going to need to replenish that account.”
The 2022 budget picture will become clearer next week when Kemp releases his budget proposal and the revenue estimate for the year beginning July 1. That estimate is the upper limit of how much lawmakers can spend.
With school enrollment down more than 30,000 statewide, mostly because of the pandemic, some K-12 groups have lobbied to prevent further cuts by funding schools in the 2022 budget beginning July 1 based on 2019-2020 enrollment. But Tillery and England have said they believe that would create winners and losers among districts where enrollments have changed at different rates.
Instead, the goal is to apportion money based on current enrollment numbers, but put as much money back into the Quality Basic Education funding formula as possible, maybe more than $300 million. That could give all school districts more state aid than they had this year.
“That’s our first priority is to have the money start going back into QBE,” said Angela Palm, who oversees lobbying for the Georgia School Boards Association.
The recent additional federal coronavirus relief measure could partially offset pressure to help K-12, because $54 million more was allocated for schools nationwide.
After education comes Medicaid, the state-federal health insurance program. Kemp’s administration based its $400 million request on assumptions that medical spending will resume growing and extra federal funding given during the pandemic would expire. But it’s not clear when extra federal money will stop flowing.
Kemp also needs money to pay for a Medicaid plan that would give cash to private insurers to drive down individual health insurance premiums on the private market. It would also provide access to Medicaid for some people below the federal poverty level if they document 80 hours of work, volunteer, job training or school activity a month. Democrats strongly dislike the plan, preferring a full expansion of Medicaid to everyone under 138% of the federal poverty level, as foreseen in Barack Obama’s healthcare overhaul.