Early last month, the order came out of the governor’s office like a bolt from the blue.
Brian Kemp demanded that state agency heads trim their current budgets by 4%, effective Oct. 1, then submit cuts of another 6% from next year’s budget.
They were the first budget cuts requested of state agencies since the decimation of the Great Recession nearly a decade ago, and state lawmakers were baffled. In six of the seven months since Kemp was sworn in as governor, the state had seen an increase in tax revenue – a usually reliable sign of economic health.
The sole outlier was January, which saw a 12.2% dip over the previous year only because economic activity in January 2018 had been supercharged by the tax cuts passed by Congress a month earlier.
“We’ve had a great run,” Kemp told the Gwinnett Chamber two weeks later. “I don’t think the economy will stay quite as good for me as through the (Gov. Nathan) Deal years, but I’m keeping my fingers crossed.”
Trade wars and Brexit appeared to be part of the governor’s concern. “There’s just things happening around the world that are a little frustrating — you can’t really control them, so we’ve got to deal with what we’ve got to deal with,” he said.
The problem was that Kemp’s sentiments didn’t just clash with the state’s monthly receipts.
“I don’t think we’re having a recession,” President Donald Trump, whose re-election bid could depend on a strong economy, said the next day. “We’re doing tremendously well. Our consumers are rich. I gave a tremendous tax cut and they’re loaded up with money.”
At least two local news outlets, including this one, noted the contradiction. The governor’s press secretary quickly offered his boss some advice:
“Good morning, sir! We put together these points on the economy/budget stuff. The AJC is going to contrast Trump’s optimism with your real talk. To avoid unnecessary conflict, let’s shift the talker,” wrote Cody Hall in an email obtained by the AJC.
“Continue to highlight the good,” the governor was advised. Emphasize the record unemployment. When talking cuts, use words like “streamline” and suggest alternative projects such as teacher pay raises and a need to “spend on priorities like health care.”
The prototype closing sentence that the governor was offered: “I’m a small business guy and I know one thing. You can’t predict the future, but you can make smart decisions today to ensure a better, brighter tomorrow.”
The emailed advice is remarkable because it attempts to confront the two most important roles of any Georgia governor.
On one hand, Kemp is the Cheerleader-in-Chief of a ruling party whose future, like Trump’s, could depend on whether voters are satisfied with the health of their wallets. The governor will get a pass, but 2020 is an election year for all 236 members of the Legislature.
But the state Constitution also deputizes Kemp as the state’s de facto Director of Economic Realism. Unbalanced budgets are prohibited. The $27.5 billion income estimate that the state budget was based on, the one that now requires a 4% haircut, was an economic bet Kemp placed back in January, as one of his first acts as governor.
In the last few weeks, Kemp has emphasized optimism over “real talk,” to the point that he now chides the press for ignoring his economic successes. “Fifty jobs in Bainbridge is just as good as 500 jobs in Buckhead, and we’re going to continue to focus on that. But we’re off to a great start with job announcements,” the governor recently told Valdosta business leaders.
That same day, Sept. 11, the governor’s office announced the first dip in month-over-month revenue collections since January. August collections were down 2.8%.
Which apparently didn’t bother state Labor Commissioner Mark Butler, who on Thursday pointed to August’s 3.6 percent unemployment rate, unchanged from July.
“While there’s been a lot of talk nationally about a slowdown,” Butler said. “I don’t see any evidence of that in Georgia.”
State lawmakers, particularly those in the House, have struggled with the mixed messaging.
One week after Kemp ordered the cuts, House Speaker David Ralston, R-Blue Ridge, announced that his chamber’s appropriations committee would hold two days of hearings in September, to discern the impact of the two rounds of cuts – the first of which will go into effect in 10 days.
But the governor immediately put out the word that agency heads were not to cooperate. Something of a truce has been declared, smoothing over some raised hackles.
Rather vague documents from state agencies have been posted on the Office of Planning and Budget website.
The GBI has proposed cutting forensic scientists and lab techs — positions recently added to eliminate the backlog on the testing of rape kits. Criminal justice reform, a priority of the Deal administration, would take hits. Funding for “accountability” courts would be reduced. Education programs for state prison inmates would be cut.
Money set aside to encourage doctors to move to rural Georgia would be trimmed as well. And there are strong hints that a $9 million cut to the state’s Cooperative Extension Service and Agricultural Experiment Station could result in layoffs.
Some of this may be evidence of a bureaucratic counter-insurgency — an effort to make cuts as politically difficult as possible.
The point is that House and Senate members will gather next Thursday and Friday to study the cuts Kemp is demanding. But they probably won’t know the details until after they go into effect on Oct. 1.
We’re told that these lawmakers will add one other topic to these Sept. 26-27 meetings. Outside economic experts will be brought in to educate House members on what may be a governor’s farthest-reaching power — the authority to set the revenue estimate for each year’s spending, and the factors that control it.
Each January, it is the governor who decides how much ground there is to fight over – rather like declaring, each season, whether the football field will be 100 yards. Or 90. Or 110.
This January, it seems, the choice could be between White House optimism and “real talk.”
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