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Gov. Kemp releases cautious budgets as Biden pushes pandemic relief for states

By David Pendered

“My fellow Georgians, the state of the state is resilient. And we will endure.” – Gov. Brian Kemp, 2021 State of the State message.

Gov. Brian Kemp (center) commended Scott Hawkins (second from left) for the resiliency displayed by the apparel manufacturer he founded, American Knits, which shifted its line to gowns and masks during the pandemic. Credit: facebook.com

With these words, Kemp on Thursday unveiled his proposal for updating the state budget that goes through June 30, and his plan for the fiscal year that begins July 1. The Legislature now has its turn at amending the governor’s proposals, after which the two branches of government are to reach consensus on both budgets.

There’s wind at the back of Kemp’s spending proposals.

President-elect Biden on Thursday night unveiled a $1.9 trillion pandemic relief proposal that provides $350 billion to state and local governments, according to a report in wsj.com. This proposed share for state, local and tribal governments is more than twice the $150 billion earmarked for state, local and tribal governments in the CARES Act, according to a report by the Treasury Department.

Full funding of Biden’s plan isn’t expected. Congress is more likely to fund from $750 billion to $1 trillion, with another round of funding possible later in the year, Mark Zandi, chief economist for Moody’s Analytics, said Thursday at a virtual conference sponsored by The Volcker Alliance and Penn Institute for Urban Research. The stimulus factors into Zandi’s theory that in the third quarter, “the economy will kick into high gear.”

“With all that fiscal support, that’s a lot of juice and should help get the economy going,” Zandi said.

Zandi voiced thoughts of a fairly rosy outlook economic recovery. He cited three notions:

  • Vaccines and pent-up cash – By summer, the vaccine will give persons comfort to congregate, and folks in the top quintile will feel safe enough to go out and spend some of the $1 trillion in savings they’ve accumulated;
  • The Federal Reserve has made clear its intention to maintain low interest rates for a period likely to last several years, or long enough to reach full employment and inflation at 3%;
  • The third round of federal pandemic relief funding will arrive by April, just in time to get through a late Spring economic lull and help cover shortfalls in states that have spent their reserves.

Georgia has rebuilt its reserve fund following the Great Recession and Gov. Brian Kemp has not suggested dipping deeply into it during the recession spurred by the coronavirus pandemic. Credit: Governor’s Budget Report Amended FY 2021 and FY 2022

Georgia’s reserve fund remains robust and is to remain so in Kemp’s spending plan.

The reserve fund is to remain near 10 percent of the previous year’s net revenues. This level is below the maximum ceiling 15 percent, as set in state law.

In its conservative spending approach, Kemp’s budget is in keeping with the Economic Report at the back of the governor’s budget proposal. The report is peppered with “yes, but” evaluations on a growing economy, such as:

  • “Sectors such as food service, entertainment, and travel should see gains. …
    “As these hard-hit sectors recover, those who gained during the pandemic, such as home improvement, will see declines back toward their pre-pandemic levels.”

The conclusion makes a general statement about the role of entrepreneurs in building a way out of the recession. Kemp put a face on the premise.

The Economic Report observes:

  • “Finally, as is typical emerging from recessions, new business formation should be strong with new companies and innovative products taking advantage of disruption to find buyers for their goods and services. Georgia should gain considerably from such entrepreneurship as it continues to be ranked the number one state in which to do business.”

Kemp cited a cut-and-sew apparel manufacturer in Swainsboro, commending plant manager and owner Steve Hawkins, and staff at American Knits, for producing masks and gowns that gained FDA approval for use by frontline health care workers. Kemp observed:

  • “When the pandemic hit, they didn’t slow down. They rolled up their sleeves and they kept chopping. These American heroes shifted the entire operation to begin producing masks and gowns….
  • “I want to thank you for that. You and your team’s commitment to that mission represent the best of Georgia’s business community. And reminds us all of what is possible in rural Georgia. On behalf of all Georgians, thank you, sir. Thank you and your team. God bless you.”

 

 

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David Pendered

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow.

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