Minutes after the Georgia House approved a midyear budget Wednesday that mitigated some of Gov. Brian Kemp’s proposed spending cuts, Republican leaders reiterated that they are ready to reduce state income tax rates for a second time in two years.
Some members of both parties say the initial rate cut in 2018 slowed tax collections, which are used to fund state services from schools to mental heath programs, criminal investigations to food safety inspections, bridges to prisons.
That slowdown, they say, was one of the reasons Kemp called on state agencies to pare spending in the first place.
The initial tax cut, from a top rate of 6% to 5.75%, is estimated to save taxpayers, and cost state coffers, about $500 million a year. The legislation that cut the rate set 2020 as the date to consider another reduction.
Both House Speaker David Ralston, R-Blue Ridge, and House Appropriations Chairman Terry England, R-Auburn, made it clear they'd support another rate cut this session, to 5.5%.
“I view that as a commitment we made to the taxpayers two years ago,” Ralston said. “I think they expect that Republicans cut taxes.”
England said, “I would rather have a dollar be in my pocket, your pocket, to spend than us as a state taking it and trying to spend it differently.”
When asked about Kemp’s big priority in the upcoming fiscal 2021 budget — a $2,000 pay raise for teachers — Ralston responded, “We have a lot of competing priorities.”
Those “competing priorities” will set the tone as the House now begins making decisions on Kemp’s budget proposals for fiscal 2021, which begins July 1.
The comments by Ralston and England came after House and Senate leaders spent much of the past month hearing concerns about the impact on state services from Kemp’s proposals to cut about $200 million worth of spending in the midyear budget and $300 million next year.
Midyear budget passes
The House on Wednesday backed its version of the midyear budget — which runs through June 30 — rejecting or pulling back many of Kemp’s proposed cuts in state spending. But even what passed included reductions in most agencies.
The proposal now heads to the Senate for its consideration.
Next on both chambers’ plates will be the $28.1 billion budget Kemp proposed for fiscal 2021.
Kemp ordered state agencies in August to prepare plans for 4% budget cuts this fiscal year and 6% next year to both respond to slow tax collections and provide enough money for his priorities, such as the teacher pay raise.
About three-fourths of the budget — money that goes to k-12 schools, colleges, the health program Medicaid and transportation — was exempted from reductions.
Under state law, the governor sets the estimate of how much tax money the government is expected to bring in next year. Lawmakers can’t spend more than that, so to make up for things they want to add, they must cut elsewhere.
During debate on the midyear spending plan Wednesday, House Minority Leader Robert Trammell, D-Luthersville, said lawmakers are having to vote for budget cuts — despite a strong economy — because of the General Assembly's decision to cut income tax rates in 2018.
“The bad news is we are having to cut (spending) when times are good,” Trammell said. “And you know when times are tough again, we will have to cut again.
“Is this the best budget we can do for Georgia?” he asked. “We can do better, Georgians deserve better.”
Ralston and England had a different take on the reasons for the collections slowdown. They said it had more to do with the impact of Hurricane Michael in 2018, when they said $2 billion in farm products were wiped out overnight.
“This state is still recovering from a major hurricane a couple of years ago,” England said. “That was a crippling blow to a good bit of our economy. We are kind of just now paying the price for it.”
A recent report by the Georgia Budget and Policy Institute, a think tank that opposes a second income tax rate cut, said it would cost the state about $615 million a year. It said less expensive legislation is being considered, but that it would raise income taxes on hundreds of thousands of middle-income Georgians.
Senate Finance Chairman Chuck Hufstetler, R-Rome, last month questioned whether the state can afford the second rate cut.
Kemp’s proposed spending cuts
A major part of the savings from Kemp’s proposed spending cuts would come from eliminating about 1,200 vacant state positions, some of which — including crime lab scientists and guards in the juvenile justice system — lawmakers say need to be filled.
During debate Wednesday, England called it “disingenuous” to suggest that eliminating or holding open such jobs wouldn’t impact state services.
House budget writers rejected Kemp’s proposal to cut funding to accountability courts. The courts, which were greatly expanded by his predecessor, allow defendants to avoid prison time if they stay sober, get treatment, receive an education and find a job. The courts are set up for drug addicts, drunken drivers, the mentally ill and veterans who’ve been charged largely with nonviolent crimes and low-level offenses and have been highly popular with lawmakers.
The House reduced cuts the governor proposed for the Agriculture Experiment Station and Cooperative Extension Service, two areas of vital interest to rural lawmakers, and said no to Kemp’s reductions in funding for Morehouse and Mercer medical schools for preparing doctors.
House leaders also reduced cuts that Kemp proposed for mental health, substance abuse treatment, autism treatment and grants to county public health departments, and they eliminated reductions for local library materials.
They put money into the budget to hire three scientists and two lab technicians at the GBI crime lab, which tests rape kits, DNA and firearms. Lawmakers feared not filling those positions would increase a case backlog.
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