Georgia’s cash hoard approaches $11 billion after a third year of big surpluses
FILE - Georgia Gov. Brian Kemp speaks during a Georgia Chamber Congressional Luncheon at The Classic Center, Aug. 8, 2023, in Athens, Ga. State officials announced Monday, Oct. 16, 2023, that Georgia now has $10.7 billion in surplus cash, the third straight year of big surpluses under the Republican Kemp. (Hyosub Shin/Atlanta Journal-Constitution via AP, File)
ATLANTA (AP) — Georgia now has $10.7 billion in surplus cash that its leaders can spend however they want after the state ran a huge surplus for the third straight year.
The State Accounting Office, in a Monday report, said Georgia ran a $5.3 billion surplus in the 2022 budget year ended June 30, even after spending $32.6 billion.
Total state general fund receipts rose about $1 billion, or 3%. But because Gov. Brian Kemp has kept budgeting spending well below prior year revenues, the amount of surplus cash at the end of each year keeps rising.
The state has other reserves, as well, including a rainy day fund filled to the legal limit of $5.4 billion and a lottery reserve fund that now tops $2.1 billion. All told, Georgia had about $18.5 billion in cash reserves by June 30, an amount equal to more than half of projected state spending for the current budget year.
The $10.7 billion tower of cash is enough to give $1,000 to every Georgia resident. It grew taller even though the Republican Kemp rolled back collection of state gasoline and diesel taxes for much of the budget year, funding more than $1 billion in road and bridge construction from other sources. The governor also persuaded lawmakers to fund a $1.1 billion income tax break out of surplus funds. Without that, Georgia would have closer to $13 billion in extra cash.
Kemp is already dipping into the surplus for tax breaks again, after he issued a novel legal declaration finding that high prices were an emergency in September and again waived collection of Georgia’s gasoline tax of 29.1 cents per gallon and its diesel tax of 32.6 cents per gallon. Lawmakers must ratify the move when they return in January, but Republicans leaders of the state House and Senate have voiced support.
Some state tax collections are cooling off, especially once $185 million a month in fuel taxes are knocked off. The governor’s office said Monday that state tax collections in September, when motor fuel tax collections are excluded, fell by about $100 million compared to the same month in 2022. The declines are mostly in personal income tax collections.
But Georgia is likely to run another multibillion dollar surplus in the budget year that began July 1, unless revenues fall much more sharply.
Kemp indicated in August that he would consider some spending increases, telling state agencies they could ask for 3% increases both when the current 2024 budget is amended and when lawmakers write the 2025 budget next year. He also invited agencies to propose one-time ways to spend the state’s unallocated surplus.
“I don’t think you’re going to see us sit on it,” said House Appropriations Committee Chairman Matt Hatchett, a Dublin Republican. Hatchett said he thought lawmakers would try to spend down most of the $10.7 billion over several years on tax relief, meeting needs for state agencies and infrastructure, and reducing the unfunded liabilities of state employee retirement plans.
“You’ve got a lot of things that need a little infusion,” Hatchett said, adding that budget writers would also have to monitor how income tax rate reductions affect revenue.
One of the governor’s strongest powers is setting the revenue estimate, an amount state law says legislators can’t exceed when writing the state budget.
Kemp continues to say he doesn’t want to spend “one-time” revenue on recurring expenses. But Georgia’s surpluses are also recurring at this point. Critics of Kemp’s fiscal policy, including the liberal-leaning Georgia Budget & Policy Institute, say he has starved state services by setting artificially low revenue estimates.
Most Georgia agencies took a 10% cut in the 2021 budget, when officials feared a sharp revenue drop from the COVID-19 pandemic. Instead, federal stimulus programs and inflation fueled higher tax collections. Agencies saw budgets increase in 2022 and 2023, but mostly to raise employee pay. Many programs never recovered from 2021 cuts.
Georgia plans to spend $32.5 billion in state revenue — or $55.9 billion overall once federal and other revenue is included — in the year that began July 1.
Georgia’s budget pays to educate 1.7 million K-12 students and 435,000 college students; house 49,000 state prisoners; pave 18,000 miles (29,000 kilometers) of highways; and care for more than 200,000 people who are mentally ill, developmentally disabled, or addicted to drugs or alcohol.
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