Georgia’s state tax receipts jumped by more than $3 billion in the budget year ended June 30, Gov. Brian Kemp announced Monday, setting up an election-year session in which lawmakers will have many options for new spending or tax cuts.
Georgia collected $26.9 billion in revenue, up 13.5% from $23.7 billion in the 2020 budget year. Lawmakers had cut spending sharply before the 2021 budget year began, fearing revenue would plunge because of the COVID-19 pandemic. But it’s been clear for months that tax receipts were soaring instead.
Kemp and other Republicans have credited the increase to Kemp’s decision to lift coronavirus restrictions early, although Democrats have said Georgia’s good fortune has more to do with the trillions Congress handed out to businesses and individuals to keep them afloat during the pandemic.
The better-than-expected news led Georgia lawmakers to restore $567 million to the state’s K-12 school funding formula in the just-concluded budget year, after originally cutting it by $950 million. But lawmakers voiced caution in writing a $27.3 billion budget in the year that began July 1. By the time the General Assembly returns in January, it too could look overly timid.
The state’s $2.7 billion rainy fund is likely to rise nearer to its limit of 15% of state revenue, about $4 billion based on Monday’s figures. That won’t be clear until the state closes its books later this summer, but the rainy day fund rose $160 million last year even with budget pressures.
The numbers in Georgia’s budget can feel huge and abstract — nearly $54 billion once federal money and other revenue is included. But the budget pays to educate 1.7 million K-12 students and 435,000 college students, house 45,000 state prisoners, pave 18,000 miles of highways and care for more than 200,000 people who are mentally ill, developmentally disabled or addicted to drugs or alcohol.
Kemp promised teachers a $5,000 pay raise when he got elected and has so far delivered $3,000. The remaining $2,000 was estimated to cost $350 million when it was last discussed in 2020. The governor told The Associated Press in an interview last week that restoring the remaining amount to the K-12 funding formula is also likely to be a priority.
Republican House Speaker David Ralston of Blue Ridge has advocated for a further cut in the state income tax, a proposal priced at $250 million in foregone revenue in 2020. Other priorities could include a pay raise for state employees, more spending on mental health and restoring budget cuts to other agencies. Democrats would like to expand the state’s Medicaid program to cover more uninsured adults.
Senate Appropriations Committee Chairman Blake Tillery, a Vidalia Republican, said he is “still extremely concerned” that revenue may dry up as federal aid runs out. While not endorsing any priorities, he acknowledged there will be pressure to spend next year, with Kemp and all 236 members of the General Assembly up for election. Tillery said lawmakers should focus on spending that will pay off over the long run.
“The thing I’m concerned about is that we continue to lay a stable foundation for the next decade or decades,” he said. “There will be a lot of debate about what that is.”
Others, though, say the state should spend more immediately to reverse the 10% cuts to many agencies made in June 2020
“State leaders have the necessary resources,” said Danny Kanso, a budget analyst with the liberal-leaning Georgia Budget & Policy Institute.
The state also has $4.8 billion in federal coronavirus aid that Kemp plans to spend on internet access, water and sewer infrastructure and offsetting the economic harms of COVID-19.