Georgia’s economic outlook is not bad — so proposed state budget cuts raise questions

By Maggie Lee

Georgia Gov. Brian Kemp has asked many departments for ideas to cut spending over the next 21 months. But with economists predicting only a mild recession — if any for Georgia — lawmakers have some questions about this idea.

At budget hearings last week, one legislator asked what the thinking is on the proposed closure of a youth detention center. Another asked if cuts would allow money to go into the rainy day fund or just get Georgia to a break-even point.  Another asked why Kemp asked for cut proposals of 6% in the year starting next July, even though the administration hasn’t firmed up its revenue estimate yet. Another said Georgia’s not doing enough to bring people into the skilled trades workforce. Another said that Georgia’s payments to Medicaid providers are so low that the state can’t take advantage of a program that rewards health care providers for better patient outcomes.

And those were just Kemp’s fellow Republicans.

Democrat state Rep. Michele Henson of Stone Mountain said she was concerned about proposed cuts to foster parent services.

“It took so long to get the extra money that we needed for foster care,” Henson asked one of Kemp’s representatives. “Why are we doing cuts to areas that are services areas, to people who need the state’s help?”

The question came at a joint hearing of the state House and Senate appropriations committees, called months earlier than usual, to try and grapple with the idea of cuts.

Georgia’s budget is already lean compared to what it was in 2001, when revenue and spending per Georgian was higher. Fiscally conservative Republicans have been doing most of the shaping of it since then. And the 2008 recession walloped a lot of low-hanging fruit off the budgetary tree anyway. (For example, goodbye, Georgia Music Hall of Fame.)

But at the budget hearings, Kemp’s top advisor on state revenue said that it doesn’t take serious economic doom to make the budget tight.

“The math is: that if the economy of Georgia grows at 2.5% this year, which would beat the national average, state revenue will be exactly the same as it was last year because we gave the rest of the money back to either the taxpayers or the counties [via a change in vehicle taxes,]” said Jeffrey Dorfman, a University of Georgia professor in the Department of Agricultural and Applied Economics.

State Rep. Al Williams, D-Midway, said that there’s a lot of panic right now among rank-and-file workers and it’s hurting morale.

“A person working at DFCS in Hinesville, Georgia only knows, ‘I might not have a job, I might go on furlough,’” Williams said, referring to the Georgia Division of Family and Children Services, the state’s child welfare agency.

Kemp’s budget director, Kelly Farr, answering Williams, said people may lose their jobs, but great consideration will be given before that happens.

In an August letter to department heads, Farr passed along instructions from Kemp to submit ideas for budget cuts that could come to 4% in some programs, effective in October 2019, and 6% for the year that begins in July 2020. The letter said some enrollment or formula-driven programs may be be exempted. (That’s typical shorthand for things that grow with population, such as school enrollment and Medicaid clientele.)

The letter read in part, “Growing revenues does not mean growing the size of government.  Instead, we should seek to keep as many dollars in taxpayer hands as possible to grow our economy instead of state government.”

Four and 6% may not sound like much, but that would come to millions of dollars on some line items.

State Senate Appropriations Chairman Jack Hill, R-Reidsville, noted that the state has maintained an AAA bond rating for years, under the leadership of both parties. That is to say, Georgia’s is considered one of the safest borrowers out there.

“We have never taken the shortcuts that some states take; and [we] made hard decisions,” Hill said on Friday. ” I think we have ahead of us, maybe some hard decisions.  maybe things do get better. But by facing them now, I think we’re ahead of the game.”

As for lawmakers’ questions, there aren’t many answers yet. Kemp’s staff have yet to go over budget proposals with all the departments in detail. And it’s not clear yet to anyone exactly how much money Georgia will take in over the next 21 months, and therefore how much Georgia could spend to break even.

And until the governor’s draft budget comes out, it won’t be clear what he proposes cutting, and by how much. But he’s pledged $5,000 raises for teachers, and only $3,000 has been delivered so far.

All three sides — governor, House and Senate — will come up with draft budgets early in the new year and will need to come to some compromise by the time the annual session is over, probably in March or April.