Deal warns Georgia agencies not to expect new money in next budget

Gov. Nathan Deal doesn’t face any more elections and he’ll likely have more money to spend in coming years than any governor in Georgia history.

But this week his office sent out instructions to state agencies telling them to submit budget requests for the next year that mimic what they are spending now.

In other words, don’t expect bigger budgets unless there is a big-time need.

“Each agency, department and authority must submit a budget request that is equal to the level of funding that is appropriated for the FY 2016 budget,” read the instructions sent out by Teresa MacCartney, the governor’s budget director.

The instructions were pretty much the same as in recent years. Key agencies with growing enrollment, such as k-12 schools and Medicaid, will get the bulk of any new money.

Deal, who will be three-fourths of the way through his second and final term by the end of next year’s budget cycle, is trying to hold down expectations at a time when state coffers are relatively flush with money.

But, as in recent years, rising costs for Medicaid, the health care program for the poor and disabled, and for education and state pensions will eat up a big chunk of the new money. Those areas will need to be addressed before there is any discussion of state employee pay raises, which lawmakers say are badly needed as hiring strengthens in private industry and more companies go after lower-paid government workers.

House Appropriations Chairman Terry England, R-Auburn, said he’s not surprised by the governor’s conservative approach.

“If I were in his shoes, I’d do the same thing,” England said. “We’ve got to be careful about how much we loosen the reins and how much we hold back.”

Lawmakers may also consider tax cuts during the 2016 session, which begins in early January. A special legislative committee is expected to study the tax system over the next five months. Also, 2016 is an election year, and there is nothing legislators like to talk about more on the campaign trail than a fresh tax cut.

State tax collections in fiscal 2015, which ended June 30, were up 6.4 percent over the previous year. That’s about $1.1 billion more in collections.

This year’s state budget of close to $22 billion (more than $40 billion including federal money spent in state programs) is back above where it was before the Great Recession.

In addition, this year’s spending plan doesn’t account for the $1 billion in new funding expected from the transportation bill that was approved by the General Assembly in March. That bill raised gas taxes and other fees to bring in more money for roads and bridges.

The state will have reserves of more than $1 billion when all the financial books are closed on fiscal 2015.

MacCartney, Deal’s budget director, acknowledges the relatively good financial times in the budget instructions:

“Georgia continues to experience increasingly strong economic growth during recent years; a trend that we expect to continue into future fiscal years as Georgia remains a worldwide destination for business growth and expansion.

“We expect that this continued economic growth will be sufficient to enable the state to meet mandatory growth obligations in education and health care through increases in state revenues while maintaining the current level of funding for other core state services.”