Unprecedented surplus sparks debate over state spending
Legislative Democrats and social services advocates have long complained that Georgia doesn’t spend enough money to meet the educational, health-care, and public-safety needs of a growing population. But there’s something different about the latest fiscal numbers that prompted the left-leaning Georgia Budget and Policy Institute (GBPI) to release a 15-page report Oct. 31 calling for the state to loosen its purse strings.
The state was sitting on $16 billion in unspent funds at the end of the last fiscal year in June, including $11 billion in undesignated reserves.
“It’s uncharted territory,” said Danny Kanso, the GBPI’s fiscal analyst and the report’s author. “I don’t think it serves anyone to have $11 billion sitting there in an account with no plan for it.” While news of that much tax money not going toward any purpose is sure to stir debate during the 2024 General Assembly session beginning in January, Republican Gov. Brian Kemp and GOP legislative leaders are sticking with their determination to maintain fiscal discipline.
“The governor looks forward to working closely with the General Assembly on priorities for how the state’s one-time funds will be utilized in a strategically responsible way that does not commit short-term revenue gains to long-term obligations,” Garrison Douglas, a spokesman for Kemp, said back in July as initial word of a third straight year of large budget surpluses was surfacing. “Everyone’s foaming at the mouth over $16 billion,” state Senate Appropriations Committee Chairman Blake Tillery, R-Vidalia, said Nov. 2. “They forget that’s only six months of revenue for the state. You have a rough time and that money will burn very quickly.”
The GBPI report attributes the huge pile of unspent dollars to “repeated underestimations of annual state revenue collections” that resulted in the state bringing in far more tax money than was being spent for three consecutive years. On the other side of the equation, state spending was failing to keep pace with inflation and population growth, according to the report.
“There are several unique areas in which surplus funds present a rare opportunity to address deficits built up over time and projected needs in the future – all while strengthening Georgia’s economy, supporting job creation, and benefiting families statewide,” the report stated.
Specifically, the report suggests the state use undesignated reserves to:
• create a $7.5 billion, self-sustaining Child Care Trust Fund to promote access to affordable, quality child care.
• modernize Georgia’s school bus fleet by making long-deferred investments to help cash-strapped local school districts maintain and replace aging buses.
• provide bonuses to state employees to help agencies providing vital services reduce turnover.
Kanso said the Child Care Trust Fund could pay for itself by being managed in the same way the state handles its teacher and employee retirement system funds. The balance of the fund would compound each year at a rate higher than the annual payout, the report said.
Kanso said one-third of the school buses plying Georgia highways are more than 15 years old because state funding for the buses has been cut significantly in recent years. His report recommends spending $850 million to $2.7 billion to modernize the school bus fleet.
“If we don’t address that, it’s going to be more and more costs for local school districts,” he said. “The state can help local school districts catch their breath.”
Kemp and the General Assembly already have provided targeted pay raises to employees of state agencies suffering high turnover rates, including $11,000 increases for state law enforcement officers during the last two years and $2,000 raises this year for other state workers, teachers, and university system employees. Altogether, teacher salaries have gone up $5,000 since Kemp took office in 2019.
Kanso’s report pointed to annual turnover rates of 25% in state agencies Georgians rely on for vital services as evidence the state still needs to do more.
The governor and legislature also have used surplus funds to provide state income tax rebates to Georgians during the last two years, while Kemp has suspended the state sales tax on gasoline to curb rising prices at the pump.
Kanso said those tax cuts are just scratching the surface of the huge pile of undesignated reserves the state could use to beef up investments in ongoing needs.
But Tillery said the General Assembly’s Republican majorities aren’t about to suddenly change course on spending.
“It’s not the state’s money. It’s taxpayers’ money,” he said. “Individuals who think the session is going to be a money-rainingfrom-heaven free-for-all are mistaken.”