Amid surplus, Kemp again seeks to keep Georgia spending flat

ATLANTA (AP) — Even after two years of big surpluses, Georgia Gov. Brian Kemp is telling state agencies not to expect more money.

Office of Planning and Budget Director Kelly Farr wrote Wednesday in an annual memo that kicks off the state’s budget process that agencies shouldn’t ask for more money than they got in the current budget, which started on July 1. Education and health agencies are exempt. who receive money based on registration or other formulas.

Farr described the Kemp administration’s decision to order agencies not to ask for increases in a memo that includes a long list of reasons why budgets might not stretch that far next year. than this year.

“While the Georgian economy remains strong, domestic economic policies are bringing greater headwinds to our state due to inflation, supply chain disruptions and rising gas prices which may have an impact on state finances,” Farr wrote. “While we expect state revenues to be sufficient to meet the needs of our growing population, inflationary pressures will be a significant driver in the next fiscal cycle.”

Most agencies saw big spending increases this year thanks to $5,000 pay raises for state employees. But while the state added resources to pay for a mental health overhaul, many other agencies got little to expand the scope of their work, despite a sharp cut in state spending during uncertainty at the start of the COVID-19 pandemic.

If reelected, Kemp will propose to lawmakers when they convene in January changes to the current year’s budget, as well as a budget for fiscal year 2024 beginning next July. Although lawmakers make changes, these spending documents tend to guide the process. If Democrat Stacey Abrams defeats Kemp, she would inherit partially written budgets with a short window to make changes.

The governor’s office could propose higher spending than the agencies’ proposals, but asking agencies to submit fixed budgets makes it harder for them to define needs and wants that could prompt lawmakers to seek more spending than Kemp does. do not want.

Georgia is expected to spend $30.2 billion in government revenue and $57.9 billion in total, an overall increase of nearly 11% in spending. But revenues were so high last year that the state ran a surplus of about $5 billion, and Georgia could again bank a similar surplus at the end of this year if revenues are only equal. to last year’s collections. Inflation and wage increases are likely to send sales and income tax collections skyrocketing, though Kemp’s decision to waive fuel taxes is costing him more than $150 million a month.

One of Kemp’s strongest powers as governor is to set the revenue estimate, an amount lawmakers cannot exceed. Critics of Kemp’s fiscal policy, like the liberal-leaning Georgia Budget & Police Institute, say he is starving state departments by setting an artificially low revenue estimate.

Abrams argued in a speech outlining his economic vision Tuesday that Georgia should use higher revenue to expand Medicaid instead of giving it all back in the form of tax relief. Abrams and Kemp are both backing an additional $1 billion in tax refunds. Kemp also wants lawmakers to approve a $1 billion property tax rebate for homeowners, which Abrams opposes.

“I will use our once-in-a-generation surplus to solve fundamental problems, not buy election-year goodwill,” Abrams said Tuesday.