Gov. Brian Kemp on Thursday made it clear the state won’t be hitting the brakes on its recent record spending, promising 4% raises for many state workers, more money for law enforcement, education and mental health programs, and $500 million to prop up the employees pension system.
Sitting on $16 billion in “rainy day” and undesignated reserves, Kemp told state lawmakers that state finances are in good enough shape to continue big increases in spending, despite flagging tax collections.
Under his budget plan — which he highlighted in his State of the State address — state law enforcement employees would get $3,000 raises, on top of the $6,000 increases approved last session. Child protection and placement services caseworkers in the Division of Family and Children Services would also receive $3,000 raises.
Other rank-and-file workers would receive 4% increases — up to about the first $70,000 in salary — and teachers $2,500 more.
“It’s no secret that most state government jobs pay less than private-sector opportunities in the same line of work,” Kemp told legislators. “But many of our employees do it because they feel a sense of public service and they want our state to succeed.
“But for state government to stay efficient, and stay ahead of Georgia’s continued growth, we must be able to attract and then retain employees who perform vitally important jobs.”
Danny Kanso, senior budget analyst for the left-leaning Georgia Budget and Policy Institute, praised the raise proposals.
“These pay raises are urgently needed to keep Georgia’s workforce intact and meet basic needs of residents across the state,” he wrote on social media. “Georgia reported this month that turnover among full-time employees remained incredibly high ... at 21% statewide.”
Credit: arvin.temkar@ajc.com
Credit: arvin.temkar@ajc.com
Lawmakers will begin work next week on the midyear 2024 budget — which runs through June 30 — and the fiscal 2025 budget.
Kemp’s address came three days after the state announced that tax collections were off 5% in December.
For the first six months of the fiscal year, which began July 1, collections are up 1.6%. Had the state been collecting gas taxes during the first half of the previous year — Kemp had suspended them to reduce the cost of fuel — revenue would have been down 2.5% during the comparable months.
Collections were slow for most of 2023 after three years of skyrocketing growth.
That matters because the money the state collects in taxes helps pay for K-12 schools, colleges, public health care, prisons, policing, business regulation, roads and a host of other services.
But three years of massive surpluses — and Kemp is planning for another one this fiscal year — have built up record reserves.
State spending has jumped
The state spent about $26.6 billion — excluding federal funding — in fiscal 2020, the last budget plan approved before the COVID-19 pandemic hit. Last year, it was more than $32 billion, and Kemp’s proposal would spend billions more this year and in fiscal 2025, which begins July 1.
The midyear plan would boost spending to $37.5 billion. Of that, $2 billion would come out of “undesignated” reserves.
Unlike in most years, the state would pay in cash for new college buildings, agency facilities and maintenance programs they typically borrow money to provide, administration officials said. That will save the state $1.3 billion in borrowing costs over 20 years, they said.
Kemp is estimating the state will take in less in taxes this year and in 2025 than it did in 2023. Lawmakers can only appropriate what the governor estimates will come in. If his estimates are low, it often leads to a surplus, as it has the past three years.
The governor had already announced some of his spending priorities.
In December, Kemp said he’d push legislation during the 2024 General Assembly session to speed up cuts in state income tax rates and he handed out $1,000 retention bonuses to more than 300,000 teachers, school workers and state agency staffers. He also called for $100 million in school safety grants.
On Wednesday, he unveiled plans for more than $2 billion more in spending for a range of major infrastructure and education proposals, including a new medical school, a new dental school, more money for sewer improvements and a massive road-building project.
On Thursday, he told lawmakers he wanted an additional $1.4 billion in K-12 education funding, and he called for a $205 million increase in mental health spending, a priority in the General Assembly in recent years.
“This new funding will enable (the state mental health agency) to expand services for those struggling with mental illness. It will increase the number of crisis beds throughout the state. It will further crisis intervention resources in all communities and improve the quality of mental health services overall,” he said.
Kemp is asking the General Assembly to approve spending $500 million to prop up the finances of the Employees’ Retirement System, which provides pensions to state government retirees. The money would not be used to give bigger pensions, but it would improve the long-term financial health of the fund. Payments to the more well-funded Teachers Retirement System would increase by more than $75 million.
Credit: Ben Gray
Credit: Ben Gray
Over $200 million more would go to school districts to pay for transporting children to school, something local officials have requested for years.
Kemp’s spending plan would restore $66 million in spending cuts to the University System of Georgia — which he opposed when lawmakers made the reduction late in the 2023 session. His proposal would also include $11 million as part of a yearslong plan to cut the size of prekindergarten classes to make it easier for teachers to help students.
Kemp’s plan includes hundreds of millions of dollars more for Medicaid, the state-federal health care program for the poor and disabled, including big money to increase payments to nursing home operators and other providers
The governor also proposed putting tens of millions of dollars into improving health care in prisons, a longtime issue. His plan includes $450 million for a new prison in Washington County as well.
Kemp’s budget request includes $29.25 million for public safety and infrastructure costs related to the 2026 FIFA World Cup and 2025 College Football Playoff National Championship events in Atlanta.
Not everyone was on board with Kemp’s budget proposal, saying the state still has unmet needs.
Credit: Natrice Miller/AJC
Credit: Natrice Miller/AJC
“We’re on track for a surplus and our people are underserved,” said state Sen. Nabilah Islam Parkes, D-Lawrenceville. “This isn’t fiscal responsibility. It’s fiscal negligence. Gov. Kemp, it’s time to invest in health care, our children’s education and our workforce, and in protecting our democratic rights.”
Sen. Josh McLaurin, D-Sandy Springs, said Republican leaders deliberately downplayed the size of surpluses.
“And now, the majority has magically found $16 billion to hand out in an election year,“ he said. “Republicans are ignoring the big picture but acting like they’re the heroes in an election year. And in the meantime, they stay about 10 years behind in funding our biggest priorities.”
However, Kemp said, state leaders have made sound choices that allowed Georgia to build surpluses and spend what it needs to spend in a growing economy.
“Instead of expanding the size and scope of government, we’re putting state dollars to work in targeted, efficient ways to recruit, retain and thank employees in vital roles from corrections officers to caseworkers,” he said. “By doing so, we’re continuing our efforts to wisely use every penny taxpayers send us, from state agency personnel to our schools, public safety and the health care marketplace.”
Staff writer Greg Bluestein contributed to this article.
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