Gov. Brian Kemp’s budget director told lawmakers Friday that the governor’s call to cut spending could mean job losses for state employees, but that making the government more efficient and reducing costs in other areas is a priority.
Kelly Farr, the director of the Office of Planning and Budget, said at a joint hearing of the House and Senate Appropriations committees that before cutting jobs, Kemp wants agencies to reduce spending in areas such as staff travel, look at using technology to trim costs and consider leaving open vacancies that may not need to be filled.
Still, Farr told legislators it is “very possible” there could be job cuts.
That is a major concern to some lawmakers, and has been since Kemp announced in August that he wanted state agencies to cut 4% from their budgets this year - starting Tuesday - and 6% next year. The governor’s goal is to both prepare the state in case of an economic downturn and reallocate money so there is funding available for his priorities, including higher teacher pay.
Rep. Al Williams, D-Midway, a member of the House Appropriations Committee, said he is hearing from state employees concerned about their future.
“There is a lot of panic right now among rank-and-file workers,” Williams said. “They are very concerned. It affects morale tremendously if a person doesn’t know if they are going to have a job in January.”
Farr said Kemp had to fire employees when he served as secretary of state from 2010 to 2018 and it was always a difficult decision. He said the governor doesn’t take the fate of tens of thousands of state employees lightly.
But several state agencies - such as the Georgia Bureau of Investigation, the Department of Agriculture and the Public Defender Council - have proposed either eliminating jobs or furloughing employees without pay in response to Kemp’s budget-cut requests.
Farr told lawmakers Georgia’s economy is doing “very well” but state revenue - collections mostly from income and sales taxes - have been sluggish. The state’s fiscal economist told legislators Thursday that he expects to see a decline in revenue for the first three months of fiscal 2020 - which began July 1 - when the final numbers are in.
Farr said that could turn around. But he added: “It could be worse. I hope it’s not, I pray it’s not.”
Jeffrey Dorfman, the state’s fiscal economist, said Thursday that there is a 50-50 chance of a mild recession next year.
With fairly weak growth nationally, the state’s fiscal economist said negative shocks — political or economic — could lead to a recession, which some European countries are already experiencing.
Even if there is a “mild recession” next year, Dorfman said it won’t be anything like the Great Recession, when unemployment spiked dramatically and state revenue collections collapsed.
Many big areas of spending — k-12 schools, Medicaid and transportation — are exempt from the governor’s order, which aims to save about $200 million this year and $300 million next year.
At least part of the revenue slowdown is due to the General Assembly’s decision in 2018 to cut the top state income tax rate from 6% to 5.75%. Lawmakers will decide in 2020 whether to lower it again to 5.5%, something tough to vote against in an election year. However, the tax cuts cost the state hundreds of millions of dollars each year in revenue.
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