Republican gubernatorial nominee Brian Kemp and Democratic nominee Stacey Abrams.

State spending could be biggest difference in Georgia governor’s race

There are many differences between Stacey Abrams and Brian Kemp, but few as stark as how they would handle one of any governor’s most important roles: developing, funding and managing the state’s $26 billion annual budget.

Through it, taxpayers help educate 2 million children, provide health care to more than 2 million Georgians, build roads and bridges, manage parks, investigate crimes and incarcerate criminals, and regulate insurance firms and utilities along with dozens of professions.

Abrams, the Democratic nominee for governor, would use the position to push a multitude of policy initiatives on subjects such as child care, services for veterans, health care and arts funding. Kemp, the Republican nominee for governor, would put a lid on state spending, cut income taxes and regulations, and fund a few familiar priorities Georgians are likely to widely embrace, such as much higher teacher pay.

Where Abrams has extensive plans to address a dozen issues — viewing state government and its budget as a means to improve the lives of Georgians — Kemp wants a public sector that gets out of the way of business, and he has targeted big money for a few problems.

It’s unclear whether Georgians will be able to afford either candidate’s platform. Or whether the General Assembly will go along with them.

That’s unlikely to surprise voters.

“Any candidate worth their salt is selling some dreams,” said state Sen. Nan Orrock, D-Atlanta, a member of the Senate Appropriations Committee. “A chicken in every pot and a car in every garage. It’s about political will, about what you decide you want to prioritize.”

Kyle Wingfield, the president of the conservative Georgia Public Policy Foundation, put it another way: “A lot of these campaign promises are aspirational. When they run into realities, sometimes it means their full promises can’t be met, but it tells you something about how they would intend to govern.”

In a broad sense, the two candidates say much the same thing.

“We can really put priorities on where they need to be, and I don’t think anybody would disagree they need to be on education, public safety, transportation, infrastructure and health care,” Kemp said.

Abrams said, “To attract business, to retain business, to decrease health care costs long term, there are three key ingredients: It’s education, infrastructure and health care, whether you are looking at metro Atlanta, rural Georgia or anywhere in the state.”

It’s how they get there that separates them.

What the state has to spend

In a strong economy, like Georgia is experiencing today, tax collections increase $900 million to $1 billion a year as people earn and buy more, and the population grows. In the recently completed fiscal year, the state’s tax take rose $961 million. That means, hypothetically, the governor and General Assembly have an extra $900 million or so to spend each year when times are good.

Much of the new money is spoken for each year. Typically when enrollment in k-12 schools, universities and Medicaid — the public health care program for the poor and disabled — goes up, that triggers increases in state spending in those areas. And in a growing state like Georgia, enrollment always goes up.

House Appropriations Chairman Terry England, R-Auburn, estimates that about $650 million of the new revenue for next year is already all but committed to increasing expenses in areas such as education and health care.

Because of the federal tax plan approved by Congress last year, the state will get a revenue bump. However, that will be temporary because lawmakers reacted to that law by cutting state income tax rates and increasing the standard deduction, and that will cut revenue the following year.

The state could also get a boost of $250 million to $300 million next year from the U.S. Supreme Court’s ruling that states can collect taxes on internet sales. Georgia already gets sales tax revenue from some big online retailers, such as Amazon, but many others collected nothing for the state’s coffers. That is supposed to change Jan. 1.

So the state could have some money left after the formula-driven programs are funded, but likely not enough to keep all the candidates’ promises.

And neither candidate is talking about raising taxes to pay for what they want to do.

As to what is politically possible when the Republican-led General Assembly convenes in January, England’s budgeting philosophy is fairly straightforward: “We’re going to balance the budget and do so without raising taxes.”

Abrams and Kemp start from that premise.

Stacey Abrams

One look at the issues section of Abrams’ campaign website suggests a policy wonk with a lot of big plans for the things she thinks need to get fixed.

She’s certainly not the first Georgia gubernatorial candidate with a lengthy to-do list. Nearly three decades ago, Zell Miller, Andy Young, Roy Barnes and Lauren “Bubba” McDonald ran for the Democratic gubernatorial nomination in a campaign of big ideas.

“One was always trying to up the ante on the other ones,” said state Rep. Calvin Smyre, D-Columbus, the dean of the General Assembly.

Miller, the winner, ran on everything from lowering car insurance rates to improving schools. He promised a state lottery for education, which wound up, after he took office, funding the nationally praised HOPE scholarship for college students. He felt families shouldn’t have to pay sales taxes on the food they bought at grocery stores, so four years later, he ran again repeating a 1990 promise to take the levy off groceries, which he did during his second term.

Abrams’ most talked-about spending priority is expanding Medicaid, which would add hundreds of thousands of low-income Georgians to public health care rolls.

Democrats have pushed for the change ever since the Affordable Care Act was created. The Republicans who run Georgia say it would be too expensive for the state, even though the federal government would pick up most of the tab.

Medicaid expansion would insure 473,000 currently uninsured Georgians, according to an analysis by the Urban Institute, and cost the state budget $246 million a year. Republicans cite a state fiscal note on a similar plan that puts the cost at between $373.5 million and $468.2 million by fiscal 2022.

Laura Harker, a health care analyst with the left-leaning Georgia Budget and Policy Institute, estimates the true cost to the state would be closer to $136 million when other things are factored in, such as increased income and sales taxes from staffers that hospital and medical facilities would be able to hire.

Supporters estimate it would allow the state to draw down about $3 billion a year in matching federal funds. Republicans wonder how long that money will be available, considering the GOP-led Congress’ antipathy toward the Affordable Care Act and the federal government’s massive deficit.

Abrams said expanding Medicaid would help prop up hospitals in rural Georgia, which has seen several medical facilities close in recent years. That flood of health care money would also mean the state wouldn’t need to continue setting aside $60 million a year in tax credits to people and companies that donate to rural hospitals, a pet program of Republican leaders.

England is skeptical of Abrams’ top proposal.

“There is no way to expand Medicaid and cover the cost without having a serious conversation about raising taxes on all Georgians,” he said.

Abrams disagrees.

“The challenge with Medicaid expansion is entirely ideological, it is not about economics,” she said. “There is no economic argument that justifies the refusal of those dollars, especially when you look at the economic benefit to the state.”

Abrams is also calling for a $350 million plan to make quality child care more affordable through a new scholarship, tax credits for teachers in early childhood jobs and an initiative to expand child care options to more rural areas. Abrams’ advisers say the cost may not be quite that high.

She also wants an earned income tax credit — $150 million in new state credits aimed at lower-income families — plus $40 million for a plan to incentivize investment in the renewable energy industry, and $20 million to $25 million in lottery funds to make technical college tuition-free.

She’d spend more on incentives to persuade doctors to work in underserved areas, give companies state income tax credits for hiring veterans, create a state affordable housing trust fund, expand arts education in schools, and put money into expanding broadband in rural Georgia.

In some cases, Abrams has said she would pay for programs by closing tax loopholes, historically a fairly common theme for state candidates.

Stacey Abrams, Democratic candidate for Georgia governor, talks about talks raising the pay for teachers in the state.

Besides the possibility of eventually eliminating the tax credit for rural hospitals if Medicaid expansion is approved, she has pledged to do away with the decade-old private school scholarship tax credit. The state will give $100 million in tax credits this fiscal year to Georgians who donate to programs that give scholarships for children to attend private schools.

How Abrams’ plan to eliminate the student scholarship credits, or SSOs, would happen is unclear. The SSO scholarships, like the rural hospital tax credit program, have strong backing in a Republican-led General Assembly. Lawmakers voted earlier this year to expand the program, and Republicans are expected to retain a comfortable majority in the General Assembly heading into the 2019 session.

Abrams also said the state could see a huge increase in revenue by doing a better job of collecting sales taxes from “noncompliant retailers.”

“If you look at the proposals we have put forward, these aren’t extraordinary investments,” she said, “these are necessary investments to maintain the kind of return Georgia is currently seeing. Most of the things I am proposing are amplifications of core values that Democrats and Republicans have agreed upon. “

Brian Kemp

Until recently, the issues section of Kemp’s website was the opposite of Abrams’. While she had position papers on a dozen subjects, his no-nonsense platform was bare bones.

He wants a cap on state spending to limit growth in the budget. He wants to eliminate state income taxes on retirement pay for military veterans and expand a network of career training centers to 22 tech college campuses across the state, which he said would cost about $60 million. He promised to spend about $90 million on safety grants to schools and school counselors. He wants to expand the rural hospital tax credit  — which Abrams said won’t be needed if Medicaid is expanded — from $60 million to $100 million.

Kemp pledged to create a statewide Gang Strike Team to help local authorities combat crime, launch a public awareness campaign on the dangers of gangs and pour an unspecified amount of state funding into a database created in 2010 to track gang members.

All of those might be doable (the General Assembly put $16 million into the budget for school safety grants in March), but jaws dropped around the Capitol last month when Kemp announced that he wanted to give teachers a $5,000 pay raise. He estimated the cost at around $600 million, however lawmakers and state budget staffers say the cost would be closer to $800 million when add-ons such as pension payments and other benefits are included.

That’s most of the new revenue the state could expect to get in a year when the economy is strong.

While some Republican state senators applauded Kemp’s proposal, House Speaker David Ralston, R-Blue Ridge, immediately indicated through a spokesman that the jury was out on the plan. England wouldn’t comment on it.

Abrams said: “I don’t even think ‘trust but verify’ works here. He cannot be trusted, and you cannot verify that he’s going to do it.” Abrams said she would prioritize “competitive pay” for teachers, but she didn’t go as far as Kemp by putting a number to it.

Brian Kemp is running for Governor. The AJC had three questions for him.

John Palmer, a Cobb County educator and spokesman for the teacher group TRAGIC, said the salary boost is needed.

“Teachers saw a decade of furloughs and pay freezes during the recession, as well as higher health care costs,” Palmer said. “We have fewer teachers entering the profession, and Georgia, like much of the country, faces a looming teacher shortage.

“Increasing teacher salaries will help retain our best educators and assist in bringing young, quality teachers into Georgia classrooms,” he added. “If this were an $800 million corporate tax cut, politicians would be falling all over themselves to pass it.”

The average Georgia public school teacher earns roughly $54,000 a year, according to a 2017 National Education Association study, ranking the state 23rd in the nation. A recent state Department of Education report showed that roughly 44 percent of all teachers leave the profession within five years.

Kemp isn’t fazed by questions about the cost of the pay raise.

“I think we can do it with the revenue growth we are seeing in the state,” he said. “We can do everything we proposed. We haven’t just thrown this out there. We’ve analyzed the numbers and feel confident being able to do the teacher pay raise, the other things we’ve talked about.”

The Republican said he will do it at the same time he caps state spending and lowers income taxes.

“We are going to continue to keep lowering the tax rates so we have a good business environment which will drive up revenues and keep our state growing,” he said.

Like Abrams, Kemp said he would look at tax breaks lawmakers dole out to special interests every year to see which ones are creating jobs and which ones are giveaways. Governors and lawmakers have pushed for such reviews in the past, but they’ve seldom produced much in the way of savings, in part because many tax breaks originate with lobbyists and special interests who fight to protect them.

The plans of both Kemp and Abrams rely somewhat on the economy not tanking, as it did in the early 2000s and later during the Great Recession. Both candidates served in the General Assembly during periods when lawmakers had to cut spending dramatically because tax collections slowed to a trickle. Kemp said that’s why his proposal to cap growth in state spending is important.

“We are not going to grow too fast, we are going to budget conservatively,” he said. “If we go the other way with Stacey Abrams as governor, we’re going to have more regulations, more government and higher taxes.”

Abrams, meanwhile, sees her broader approach, to tackle problems from several different angles, as more likely to both better the lives of a majority of Georgians and lower what state government spends on them.

“I would rather we think about this in terms of what are the policies we can put in place that increase the prosperity for everyone because that reduces the cost of government,” she said. “You spend less on criminal justice when you have more people who are economically secure, you spend less on emergency room costs when people have better preventative care access, you spend less in trying to address the issue of homelessness when people have access to affordable housing.”

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Staff writer Greg Bluestein contributed to this article.