How to move forward after ‘big beautiful bill’ put Georgia in a pinch
Georgia’s pandemic comeback has been nothing short of remarkable. Unemployment hovers at 3.4% — well below the national average — and lawmakers under the Gold Dome are guarding a $13.8 billion reserve, built during the stimulus-fueled boom of 2021-24.
The recently signed Fiscal Year 2026 budget totals $73.04 billion, including $37.7 billion in state revenue, $22.5 billion in federal dollars and billions more in fund fees. By most measures, Georgia is a post-COVID success story.
Hurricane Helene offered a real-time stress test of that prosperity. The Category 2 storm ripped through South Georgia last September, wiping out an estimated $5.5 billion in timber and row crops. State lawmakers quickly allocated $867 million into the amended FY 2025 budget for storm cleanup, hospital aid and low-interest farm loans, and a separate $300 million tax break for growers and timber owners is in place.
The Federal Emergency Management Agency and the Department of Housing and Urban Development have delivered about $880 million in aid. But the new Trump administration has already closed the door on additional help, denying Gov. Brian Kemp’s request for an extended 100% federal cost share.
That refusal foreshadows a larger shift. Washington, long a partner in everything from highways to children’s health insurance, is ordering states to shoulder more of the load. Trump’s second-term budget — branded the “One Big Beautiful Bill” — keeps overall spending flat by shifting billions in domestic costs to state governors’ offices.
Kemp tells state agencies not to expect increased budgets
Kemp sees the storm clouds. His budget office has told every agency to build FY 2026 and FY 2027 plans without spending increases and to absorb federal cuts internally. Medicaid alone could add $10 billion to Georgia’s budget over the next decade; school enrollment growth must also fit within a shrinking budget.
The deepest effects for Georgia come where the federal budget offloads direct costs onto states. The new federal plan caps Medicaid, imposes work requirements and shifts part of SNAP food stamp funding to states.
Analysts warn such changes will push billions in new costs onto states and leave millions uninsured. Georgia — where Medicaid and PeachCare cover more than 2 million people — cannot realistically ask local taxpayers to cover the new costs. Combine simultaneous cuts to Medicaid, SNAP, housing vouchers and infrastructure grants, and our reserves could drain faster than we could refill them if the state tried to fill all the gaps.
Congress has piled on with the Rescissions Act of 2025, a $9 billion “claw back.” Georgia must return $334 million in unspent public health grants, give up $38 million in opioid response funds and forgo roughly $6 million a year in public broadcasting support. The direct hit approaches $380 million, not counting lost vendor contracts and matching dollars.
Six actions to help Georgia adjust to a new reality
Where do we go from here?
1. Protect the rainy day fund. Keep at least 10% of prior year’s revenue in reserves to defend our AAA credit rating and preserve flexibility when the next recession — or storm — hits.
2. Modernize state spending. Consolidate duplicative workforce programs, audit tax credits for real returns, and sunset obsolete grant lines before classrooms or clinics suffer cuts.
3. Double down on self-reliant growth sectors. Our electric mobility corridor, film ecosystem and logistics backbone already lure private capital. Fast-track site prep and expand apprenticeships.
4. Negotiate smarter with Washington. States known for efficient management often win waivers and pilot funds. Georgia’s fiscal stewardship puts us in a strong position to seek flexibility in Medicaid design, housing finance and disaster cost share rules.
5. Keep all Georgians in mind. Tie any new tax credits or grant programs to a simple test: Do they reach women-owned firms, rural entrepreneurs, low-income families and communities of color at the same rate they serve big industries? Strengthen the Rural Innovation Fund and scale child care scholarships to support Georgians in workforce training programs. Fair growth isn’t a luxury; it’s the cheapest way to keep every Georgian on the tax rolls and off the sidelines.
6. Level with Georgians. This reset isn’t about partisan blame; it’s about math. Federal backstops are shrinking. Preserving pro-growth tax code while meeting basic obligations will require bipartisan honesty about revenues, reserves and priorities.
Georgia has weathered tough times before. We can navigate this reset, too — but only if we acknowledge the era of routine federal backstopping is ending. By tightening our belts strategically and working together, we can keep Georgia’s economy ready for whatever comes next.
Robert Dawson, D- Atlanta, a Georgia state House representative for District 65, works in the financial technology industry.
