Gov. Brian Kemp is pitching his plan to lawmakers to spend almost $3 billion more in the coming budget year, telling them “we’ve got a lot of good things to talk about this year.”
That list includes income tax rebates, pay raises for teachers, university employees and state employees, more funding for K-12 and higher education. State economist Jeffrey Dorfman forecasts the state can afford the spending because tax revenue is expected to continue growing after a potential flat patch later this year.
In a speech to legislative budget writers Tuesday, Kemp joked about “only being off $4 billion” on the state’s revenue estimate last year. The Republican governor sets that estimate, the legal limit on what lawmakers can spend. Both Kemp and lawmakers believed revenue would decline sharply during the pandemic, but federal aid not only propped up spending but fattened household savings, helping to boost tax receipts and pouring money into state coffers.
Now, months before he faces a competitive Republican primary and then Democrat Stacey Abrams as he seeks another term, Kemp wants to spend $30.2 billion in the year beginning July 1. The governor would push even more spending into the rest of the current year.
With $2.35 billion in spare cash even after filling the state’s savings account to its legal limit of $4.3 billion, Kemp wants to give $1.6 billion in tax rebates in April — $250 to every single person filing state income taxes, $375 to every single person heading a household and $500 to married people filing jointly.
“I firmly believe that when government takes in more than it needs, it’s our responsibility to the taxpayers to return those funds to them, because it’s their money, not the government’s,” Kemp said “And these funds will do more good in the pockets of our citizens than in the coffers of our state, especially when we’re dealing with an inflation rate that’s at a 39-year high.”
Kemp’s administration would hold back more than $700 million in the remaining surplus from last year. It’s unclear what would happen to that money.
The budget proposes a $2,000 raise for teachers, which would complete Kemp’s pledge to raise their pay by $5,000. He also wants $5,000 across-the-board raises for college, university and state agency employees. That includes $2,000 for teachers and $5,000 for university and state agency employees. Kemp wants to give those amounts as one-time payments this year, and then as permanent pay raises next year. The governor also would make one-time $1,000 payments to other K-12 workers including school bus drivers, part-time employees and cafeteria workers.
The governor is also proposing boosts in retirement contributions for state employees. But agencies wouldn’t get back the money cut from their budgets at the beginning of the pandemic to spend on programming.
“We’re continuing to see returns on that decision to cut where we were able and to invest more wisely,” Kemp said.
Dorfman said the state economy is being bolstered by $75 billion in additional savings that residents put away during the pandemic from federal aid payments. He said that although some people remain out of the labor force, people are still in good financial shape.
“Georgia consumers have a lot of money available to spend,” Dorfman said. “They spend a fair bit on Christmas this year, but they still have an awful lot left, and that is going to support our economy going forward.”
Dorfman said there’s very little chance of a recession in the next year, although he predicted the growth of the economy and state tax revenues would slow as savings are spent down before resuming a more normal growth rate next year.
___
Follow Jeff Amy on Twitter at http://twitter.com/jeffamy.
