The stock market went on a post-election roll, Georgia’s jobless rate remains low, revenue continues growing and Gov. Nathan Deal touts the state as one of the best places in the nation for business relocations.
The next general election is two years off, and some of the hottest, controversial issues from the past few legislative sessions have cooled.
What’s not to like if you’re a state legislator?
But in some ways, lawmakers face more uncertainty than at any time in recent years when they head into the 2017 session on Jan. 9. The election of the entirely unconventional Donald Trump as president, and a GOP Congress itching to make major changes in how government programs operate and are funded, have seen to that.
Nowhere might the impact show up more quickly than in the state’s budget, which is heavily padded with federal funding and is the financial lifeblood for millions of Georgians who rely on public money for education, health care, transportation and policing.
Will the new Congress quickly pass a stimulus plan that sends a torrent of money to the state for road and bridge projects? Will it change the formula for funding programs by sending “block grants,” chunks of money with fewer strings attached? Will tax laws be changed, making an impact on the state’s bottom line, and will complicated, big-money health care programs such as Medicaid for the poor and elderly be rewritten?
None of that may occur anytime soon. Or all of it could affect the General Assembly enough over the next few months that lawmakers call a temporary halt to the session or hold a special session later in the year to deal with any changes Congress makes.
What happens in Washington over the next few months is particularly important to the people who have to decide how much the state will spend over the coming year for schools, nursing care, roads and state police.
“Budget writers are always nervous about uncertainty,” said Carolyn Bourdeaux, the director of Georgia State University’s Center for State and Local Finance and a former Georgia Senate budget director.
As House Appropriations Chairman Terry England, R-Auburn, said, “We really have no clue.
“I personally think we go in and we see whether or not Trump’s 100-day agenda looks like it’s on the rails and is actually going to happen,” he said. “Then we have to consider what to do if it is.”
The first big news of the session comes in its first week, when the governor announces what is expected to be a record state budget of about $24.6 billion (more than $48 billion with federal money included).
Despite rising state tax collections and a relatively strong economy in Georgia, Deal has already made it clear to key lawmakers that he will set a conservative estimate for spending growth in fiscal 2018, which begins July 1. Growth will likely be limited to about 4 percent or less, and most state agencies were told not to ask for anything extra.
The governor has his reasons. He has generally set low-ball estimates for tax revenue, preferring to be on the low side and sock away big surpluses when the economy outperforms his projections.
But Deal also can’t be sure when the business cycle of expansion and retraction will turn down. Before Trump’s election, some legislators were predicting the economy would slow at the end of 2017 after pretty much constant improvement in revenue collections and jobless rates following the Great Recession.
If that happens, the state could see a slowing of income and sales taxes, hitting a budget that funds the education of more than 2 million students and provides health and nursing care for about 2 million Georgians.
Beyond that, the state funds road improvements and prisons, economic development initiatives and cancer research, business and environmental regulation, parks and water projects. It creates thousands of private-sector jobs through construction projects. And it pays at least part of the salaries of more than 200,000 educators and state employees.
Much of the additional tax money Deal expects to see during the upcoming year has been spent because of growth in school and public health care rolls, pension costs, and a 20 percent pay increase Deal has promised to law enforcement.
Teachers and state employees will get some kind of raise, but it may not be the 3 percent offered in 2016. Some school districts did not pass on that raise money to teachers, and Deal said he is planning to mandate that they do so this year.
“He is going to see to it that the teachers get a pay raise and it has his name on it,” said Senate Appropriations Chairman Jack Hill, R-Reidsville. “He’s learned his lesson when they didn’t pass that pay raise on and then they blasted him for it.”
There are a few other education changes that could add to the state’s tab. In the wake of the voter rout in November of Deal’s proposed constitutional amendment to create an Opportunity School District, the governor and top lawmakers have already vowed to push a Plan B to help an estimated 69,000 children attending chronically low-performing schools.
Any such plan could involve putting more money into those schools to pay for special instruction.
It is still unclear whether lawmakers will approve a rewriting of the three-decade-old formula the state uses to fund k-12 schools, a priority of Deal’s. A panel studying the issue in 2015 put the price tag at about $240 million.
Top lawmakers say the uncertainty over what will happen in Washington over the next few months will keep them guessing as they try to write the state budget.
In some recent years, lawmakers have taken short breaks in the session to see whether Congress, for instance, reauthorized spending on PeachCare, the low-cost insurance plan for uninsured children.
If some major changes occur in Congress that make new demands on states or affect their spending, legislators could stop the clock on the session and come back later. Or the General Assembly could run the full 40 days and Deal could call a special session over the summer to readjust what lawmakers approve during the regular session.
Deal, a former longtime congressman, has tried to counsel legislators not to worry too much about the goings-on in Washington affecting the 2017 session.
“The uncertainty that plagues us is the same uncertainly that plagues every state in the nation,” the governor said during a speech to lawmakers in early December. “Even though we (Republicans) have control of every level of the federal government, it still takes time to get changes through the process.
“For some of those who think they are going to change the world in the first 100 days, I’ve got news for them. It’s going to take more time than that.”
And even if Trump and Congress weren’t on their minds, state budget writers are trained to be a little pessimistic — able to find a dark cloud in every silver lining. Which is one of the reasons 2017 won’t bring a bonanza for those hoping for a major uptick in state spending or major government programs.
“We all have short-term memory,” said England, the state House budget chairman. “A lot of folks forget that the next recession is just around the corner. It is just a matter of when it happens.”
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