Each January, the Governor proposes two separate budgets. The first is an adjusted budget for the remainder of the current fiscal year based on tax revenue from the first six months. This is the adjusted FY 2020 budget, which will be in effect until June 30, 2020. The second proposal is the FY 2021 budget which will be in effect starting July 1st, 2020.
Both of the budget proposals this session entail mandatory budget cuts to many essential programs in the state. Education, child care, healthcare, public safety, and essential services are all set to be impacted. On the other hand, there will be increases in funding for certain areas. These additional appropriations include, but are not limited to, a $2,000 pay raise in the salaries of all teachers, a $1,000 pay raise for full-time state employees earning less than $40,000 annually, and mandatory formula-based increases for education and healthcare. These upcoming budget cuts are a cumulation of decreased state revenue, slowing economic growth, increased spending to fulfill campaign promises, and the effects of the country’s recent trade war.
State Revenue Analysis
Georgia’s economy will continue to grow in 2020, but at a much slower rate than in recent years . The reported budget notes that “[a]s Georgia is the twelfth most trade-dependent state in the United States, slow economic growth in most of our major trade partners is slowing Georgia’s economic growth ’.The country’s recent trade war is one factor contributing to this. Georgia’s farmers have felt the brunt of the impact. China’s retaliation taxes targeted cotton and peanut butter, which comprises a majority of Georgia’s agricultural output . The problems of the agricultural sector were further exacerbated by Hurricane Michael, which hit Georgia in October of 2018, and resulted in damages worth an estimated $1.2 billion .
In 2018, Georgia’s income and corporate taxes were lowered from 6% to 5.75%. Additionally, the legislature has the power to further cut the income tax to 5.5% this session if they see fit. These tax cuts alongside other smaller, targeted, special tax deductions and exemptions all contribute to reductions in state revenue. The budget report states that “[t]hese legislative changes reduced projected fiscal year 2020 state revenue collections by roughly $1 billion from the previous baseline” and that “Georgia’s economy must grow by approximately 2.5% simply to hold state revenue collection constant .”
In effect, the adjusted FY 2020 budget lowers the original estimated income revenue for FY 2020 by $416 million .
Budget Cut and Appropriations Highlights
As stated previously, the amended FY 2020 budget includes pay raises for all certified Pre-K and K-12 Georgia teachers. The $2,000 increase in their salaries was preceded by a $3,000 increase in the previous year. Together, these increases fulfill Gov. Brian Kemp’s campaign promise of increasing every teachers pay by $5,000. Additionally, the two budgets together allocate $256.5 million, which is mandatory due to increased enrollment in K-12 education.
In contrast, budget cuts will impact a multitude of different programs in Georgia and will likely result in reduced capacity for many agencies . Budget cuts impacting education and child care include the following: $982,000 cut from Bright from the Start, which reduces funds for childcare services; $3.1 million cut from public libraries; and a $12.5 million cut from the Department of Education.
Budget cuts impacting healthcare include the following: $35.4 million in cuts to the Department of Behavioral Health and Developmental Disabilities, including $14 million cut from Child and Adolescent Mental Health Services and $8 million cut from adult addictive disease services; $6.2 million in cuts related to the Department of Community Health, including $463,000 reduction in funding for the Rural Health Systems Innovation Center; and $16.4 million in cuts to the Department of Public Health.
Budgets cuts will also impact many public safety agencies such as: $19 million in reduced funding for the Department of Juvenile Justice; $6.6 million reduction of funds to the Department of Public Safety, including $54 million cut from the Department of Corrections, including: $43.7 million in cuts to state prisons and $6.9 million for health care.
Finally, budget cuts on essential service include the following: $1.8 million cut from the Department of Veterans Service; $28.8 million cut from the Department of Human Services; $6.5 million cut from the Department of Agriculture; and $9 million in cuts to the Department of Natural Resources including reductions for Environmental Protection and Wildlife resources.
Many department officials worry about the impact budget cuts will have on Georgia residents. Georgia Commissioner of Agriculture, Gary Black, warns that budget cuts, which demand vacant positions be eliminated, will result in fewer and less frequent food inspections in the state . Poison control may also experience a slowing down of their functions which could result in longer wait times on calls after snakebites, poison intake, and other emergencies . Furthermore, budget cuts for the Department of Corrections will result in reduced overtime pay for employees and an increase in workload due to elimination of vacant jobs . Additionally, those who are incarcerated and their loved ones will have to carry the burden via increases in commissary prices.
Public health will also be significantly impacted, especially in rural communities, who need the assistance the most. Judy Fitzgerald, Commissioner of the Georgia Department of Behavioral Health and Developmental Disabilities, has cautioned that budget cuts will lead to reductions in preventative services and programs . This will likely lead to more spending due to increased crisis situations. This paints an even bleaker picture as Georgia is already ranked 47th in the country for access to mental care resources . In rural communities, a few of the impacts of budget cuts are as follows: reduced funding for programs that subsidizes doctors in rural areas to incentivize them to remain there, reduced funding for county public health departments, and elimination of funding for a rural water association and a rural health innovation program . This comes at a time when Georgia’s rural counties are already facing a health crisis, where communities often lack pediatricians and OB/GYNs, and in some cases have no doctors at all .
This is the first significant budget cut in Georgia since the Great Recession. The Georgia Budget and Policy Institute reported that nearly 80% of residents oppose risky budget cuts to education, healthcare, and public safety . Additionally, 53.4% of residents oppose the possible tax cuts on top income earners as it would save the average family only $5 a month . Overall, the current strategy of the budget is to combat slowing economic growth by deeply cutting budgets, while also reducing our state’s revenue. However, these budget cuts will come at a cost to the wellbeing of all Georgians.
“Georgia Economic Report,” The Governor’s Budget Report, Amended Fiscal Year 2020 & Fiscal Year 2021.
”Georgia Economic Report,” The Governor’s Budget Report, Amended Fiscal Year 2020 & Fiscal Year 2021.
Written by: Buket Urgen