The $1.9 trillion COVID-19 relief bill President Joe Biden is expected to sign this week would flood Georgia’s state government with about $4.7 billion and local governments with billions more.
The big question at the state Capitol these days is, “What do we do with all that money?”
To put it in perspective, it’s the equivalent of adding about 17% to the $27.2 billion state budget for the upcoming fiscal year that the Georgia House just passed.
The state constitution gives Gov. Brian Kemp the say over how the money will be spent, and his staffers note the federal Treasury Department will have to provide guidelines for using the money, just as it did last spring when the CARES Act was approved early in the COVID-19 pandemic.
But the relief bill is already causing initial political skirmishes that highlight the difference between what Statehouse Republicans and Democrats think should be done.
Republicans, who have seen state tax collections increase over the past year despite the COVID-19 economic slowdown in some sectors, such as the hospitality industry, don’t think the state really needs all that money to spend and would prefer to use at least some of it to cut taxes. At the same time, Kemp has complained that the relief bill gives too much money to Democratic-run states that have poorly managed their finances and shortchanges Georgia.
Republicans fear wording in the relief bill even threatens the modest $140 million state income tax cut the Georgia House has already approved.
“Democrats in Washington, D.C., are now telling states they can’t cut their taxes,” Kemp said. “This bill represents everything that is wrong with Washington, D.C.”
House Speaker David Ralston, R-Blue Ridge, sent a letter to Biden and Georgia’s congressional delegation saying that the relief bill is flawed.
“In Georgia, we have prioritized providing tax relief to our citizens,” he wrote the president.
Democrats, the minority party in the Georgia House and Senate, say there are plenty of needs, such as the hundreds of thousands of Georgians who lack health insurance, thousands who are waiting for disability and mental health services, and schools and universities that took cuts in June, when lawmakers reduced spending $2.2 billion because of fears a COVID-19 recession would dry up tax revenue.
In particular they’d like the relief package to ensure that the state expands Medicaid, so more Georgians will gain coverage through the health care program for the poor and disabled. That’s been a top priority ever since President Barack Obama’s Affordable Care Act offered that possibility, something Republicans have always called too costly.
“The amount of money Georgia is receiving under the federal stimulus package will cover the state’s portion of Medicaid expansion,” said Senate Minority Leader Gloria Butler, D-Stone Mountain.
The relief bill would include money to cover the full tab of Medicaid expansion for two years.
The governor’s office said the relief money can broadly be spent for economic relief and recovery purposes, including giving assistance to households and small businesses, replacing revenue lost because of the recession, and shoring up infrastructure. At least some of it may go to pay the tab for state-funded unemployment checks and possibly increasing funding in areas cut by lawmakers last year.
The General Assembly already backfilled about 60% of those cuts in the midyear budget that it approved in February. Kemp has already signed that bill into law.
House Appropriations Chairman Terry England, R-Auburn, said he doesn’t “have a clue” how the $5 billion will be spent, but he added that Kemp officials will likely have discussions about it with legislative leaders in coming weeks and months.
“One of the things we have been looking at is, what are some one-time expense items we could use it for that don’t create reoccurring expenditures,” England said. “Even to the point of capital investments, like repaving roads, fixing more bridges, doing buildings we were going to do at some point.”
The budget for fiscal 2022, which the state House passed last week, includes about $1 billion in borrowing, mostly for construction projects. It’s unclear whether some of that could be paid for with the federal relief money.
Democrats say there are more than enough needs, in areas such as health care and education, that the state can spend the relief money on in coming months.
Cutting taxes, which would have a long-term impact on state revenue, would be a mistake, said Sen. Nan Orrock, D-Atlanta.
“It’s very concerning and the worst thing you could do is reduce state revenues by tampering with the tax code,” she said. “That would be going in the wrong direction.”
