State agencies have asked for more than $1 billion in new funding next year amid uncertainty over the toll federal spending cuts will take on Georgia’s budget.
Most of the new funding requests are for programs with rising enrollment, including Medicaid, schools and colleges.
Gov. Brian Kemp won’t unveil his proposed fiscal year 2027 budget until January, and the General Assembly won’t make final spending decisions until early next year. But the agency requests show the costs of government continue to rise even as the federal government reduces aid and some Georgia politicians consider eliminating the income tax, the state’s largest source of income.
The governor’s office declined to comment on the agency budget requests.
Spending on state government has grown steadily in recent years as Georgia’s economy and population have expanded. Last year, lawmakers approved a $37.8 billion budget for fiscal year 2026, which began in July — up about 4% from the previous year.
State budget reserves have grown even faster, fueled by COVID-era federal spending and a booming economy. Rising inflation, which increased sales tax revenue, also contributed. Georgia finished fiscal year 2025 with about $16.5 billion in undesignated reserve and “rainy day” funds.
But several factors are expected to make future budgets more challenging.
Kemp and the General Assembly have spent part of those reserves on income tax cuts and refunds, and some elected officials want to eliminate the income tax altogether.
What’s more, federal spending cuts approved by Congress this summer are projected to take a major toll on health care and other programs. President Donald Trump’s One Big, Beautiful Bill Act is expected to cost Georgia health facilities hundreds of millions of dollars over a decade.
But the steepest cuts have been postponed until after next year’s election. For now, there’s a $41 million cut noted in the Department of Community Health’s budget request for the next fiscal year. That’s a long-expected return to normal for Georgia’s Medicaid federal matching funds from higher pandemic stimulus levels.
Still, proposed spending increases far outweigh such cuts in the agency’s budget request. Overall, Medicaid spending is expected to increase next year because of ongoing medical inflation and rising enrollment in the program. The department has requested about $311 million more in state funds for Medicaid and PeachCare health programs next year.
Growing enrollment in schools and colleges also is reflected in agency budget requests. The Department of Education has requested a net increase of about $342 million in funding, while the state university system has requested about $268 million.
Growing motor fuel tax collections — which are required by law to go to road construction and maintenance — are expected to increase the Georgia Department of Transportation’s budget by about $160 million next year. Under the agency’s request, most of that money would be used for road maintenance and construction.
GDOT spokeswoman Natalie Dale said much of the money would cover the rising costs of construction, which has been a problem in recent years.
State courts and other agencies also have requested additional funding. But at Kemp’s request, most agencies submitted budget requests with no additional funding.
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