Cutting your budget? So will Georgia, Fulton, Atlanta and other local governments.
A map of Georgia on a Downtown building, with Atlanta City Hall in background. File/Credit: Maggie Lee
By Maggie Lee
The last time the economy fell off a cliff on the scale of COVID-19, government layoffs, shorter school years for some students and closed public buildings were the result.
And now elected leaders are mentioning the disastrous 2008 Great Recession when they talk about what might come for Georgia, Fulton, Atlanta and other local governments in the coming years.
“It’s going to be tough,” said state Rep. Terry England, the Auburn Republican who chairs the Georgia House’s budget-writing committee.
COVID-19 is choking off the income and sales taxes that pay cops, keep parks open, hire teachers, fund public defenders and more. Counties, cities and school systems also have to worry about property taxes declining, which also help pay the bills.
But none of them can borrow mountains of money or print it, like the federal government can.
So the options left are cutting expenses, raising taxes, or possibly some very limited borrowing.
England, plus his Senate counterpart and the office of Gov. Brian Kemp on Friday directed all state agencies to propose 14 percent budget cuts for the year that will begin in July.
Georgia’s spending was going to be about $28.1 billion.
Yes, $28.1 billion is a lot of money, but even some fiscal conservatives have said for years that the fat was stripped off that pork chop back during the Great Recession and they don’t see space for big cuts. A favorite statistic: Georgia has about 15,000 fewer employees than it did before the recession.
Democrats, on the other hand, have generally opposed Republican-drafted tax cuts over the last few years, arguing that Georgia’s spending is so lean that it’s hurting state residents.
And a third approach comes from Gov. Brian Kemp, who proposed in January budgets that would have whacked 4% from many departments in the state’s midyear budget and 6% from the next year’s budget.
Kemp’s pre-COVID budgets would have spared K-12 education, the biggest chunk of state expenditures. But it’s not exempt from post-COVID budgets.
During the Great Recession, reduced state funding for schools plus local crises led some city and county systems to cut instructional days.
Health care is the second largest piece of the budget, and that includes the state share of Medicaid, health insurance for low-income Georgians. England said the state is going have to look at doing something “different” there as well.
“Which is very difficult to do in a time like this,” England said. “When you go into a recessionary-type economy, your strain on Medicaid spending goes up at a time when you can least afford it to go up.”
Fulton County, like every other government, is still getting a handle on its total COVID-19 crisis spending, how much tax money won’t arrive in the coming months and years, and how much help the feds may send.
As of mid-April the county had estimated it’ll spend about $35 million on crisis expenses like employee hazard pay, resident meals, emergency rental assistance, building cleaning, personal protective gear and more. The county’s general fund budget this year is $782 million.
District 2 Commissioner Bob Ellis voted for a plan last month that includes cancelling a planned staff raise. It also freezes hiring except in front-line type jobs like health and law enforcement. All the commissioners present voted for the plan as the county moved to husband its resources.
“We need to continue to refresh it as we learn more and some of these uncertainties become a lot more certain,” Ellis said.
Meanwhile, former Atlanta Mayor Shirley Franklin remembers cutting budgets. She took office in 2002 in a city with about 5,600 staff and an annual $80 million spending deficit against a budget of about $426 million.
“There were 1,000 layoffs in our general fund, and a property tax increase of about 42 percent,” Franklin said on a recent public conference call on local government finances.
And her eight years in office ended with the pains of the recession.
“It wasn’t a pretty picture,” she said. “I closed City Hall on Friday. You could not do business in City Hall on Friday.”
These days, the early city numbers suggest the city will be short about $35 million in revenue for the fiscal year that ends next month, against a budget of about $670 million. Next year, the city will go maybe $109 million into the red. The current mayor, Keisha Lance Bottoms, is working on a draft budget to present to Council.
Some crisis aid is coming from the borrowed riches of the fed.
The federal CARES Act will mean something like $88 million for Atlanta to pay some of its bills; its schools will get about $21 million. Fulton will get something like $100 million; its schools, about $18 million. On the state level, there are specific items, like the roughly $140 million Georgia can use for child care for essential workers, to help keep day cares open or other similar expenses.
The CARES Act also allows the U.S. Federal Reserve to lend to states — by buying short-term notes backed up by the future revenue that states will get.
Georgia’s Constitution puts tight limits on the state’s short-term borrowing; it’s not a tool the state habitually uses. The state is much more likely to tap its own nearly $3-billion rainy-day fund.
But it’s way too soon to tell how much the economic shutdown will cost any level of government. And it’s not yet clear how much more the federal government might or might not do to prop up state and local governments.
Franklin said there will be different budget answers for different cities depending on the size of the city and the different ways each city gets revenue.
“And I wouldn’t even begin to speculate what I might do if I were in city government right now,” Franklin said.