The fiscal timing couldn’t be better for Gov. Brian Kemp as he begins his reelection year.
Record tax collections flowing into state coffers allowed Kemp on Thursday to reel off a series of voter-pleasing proposals to state lawmakers, including pay raises, tax refunds and increased spending in key areas such as education, law enforcement and health care.
Tax collections — bolstered by federal COVID-19 pandemic relief funds sent to Georgians — have been on the rise since mid-2020. The record income produced a $3.7 billion state surplus in the fiscal year that ended June 30, and collections have continued to soar as the state’s economy recovered.
“Nearly two years after the first case of COVID-19 was detected in Georgia, millions are vaccinated, and Georgia’s economy is roaring back faster and stronger than other states across the country,” Kemp told lawmakers Thursday in his annual State of the State address.
Kemp’s proposal calls for a record $30.2 billion in state spending next year, up 11% from this year’s budget he signed into law in May.
It includes $5,000 salary increases for state employees to cut down on high turnover rates; $2,000 pay raises for teachers; income tax refunds of $250 for single filers and $500 for joint filers; the first cost-of-living raise for state retirees in more than a decade; new funding to reduce a persistent backlog at the GBI crime lab; and hundreds of millions of dollars more for k-12 schools and higher education.
Full-time teachers and school staff would receive a $2,000 bonus in the first half of this year, and part-time staffers $1,000. That’s in addition to the pay raises in the next fiscal year, which begins July 1.
The governor had promised teachers a $5,000 raise when he ran for office in 2018, and he delivered on $3,000 of that in 2019. The raise in the coming year allows Kemp to run for reelection having fulfilled that promise.
“Hardworking Georgians in our schools — the school staff, administrators, bus drivers, cafeteria workers and teachers — all do a terrific job keeping our kids safe and investing in their futures,” Kemp said in his address to lawmakers.
“To support their heroic efforts day in and day out,” he said, “I believe we as state leaders must continue to do everything we can to ensure they have the resources necessary to fulfill their mission and prepare the next generation of leaders for successful lives and careers.”
Lawmakers had cut k-12 and college funding in mid-2020 when they feared a pandemic recession. Kemp’s plan would restore that lost funding in the budget, costing about $650 million a year.
“We are pleased that Gov. Kemp continues to keep public education at the forefront of his agenda,” said Lisa Morgan, a kindergarten teacher and president of the Georgia Association of Educators. “We applaud his efforts in fulfilling his promise of a salary increase, including added bonuses, as well as fully funding the QBE formula for the coming school year. We hope and expect the General Assembly will approve his budget priorities.”
The governor also called for hundreds of millions of dollars in new spending for Medicaid, the health care plan for the poor and disabled. Medicaid providers would receive more money, and extra would be spent on health care for children in low-income families. Coverage would also be expanded from six months to 12 months for women on the program after they give birth.
The state would spend $76 million moving department staffers out of the troubled 2 Peachtree St. tower to Capitol Hill and renovating a building for them. It would spend $124 million for a reinsurance program in hopes of reducing health insurance premiums.
Millions more would go to establish or expand prosecution units targeting gangs and human trafficking, add more state troopers and expand the Georgia Bureau of Investigation’s medical examiner and crime lab programs.
An additional $80 million would be spent expanding the Savannah convention center. The state has already borrowed $184 million for the project. Kemp also wants to spend $600 million to buy a prison and build another. He said that would allow the state to close four of its older and most dangerous prisons.
The governor requested $11.6 million to design a training center and provide training for the electric car industry, part of the deal to lure a $5 billion Rivian car plant. The total package for Rivian in the budget, including land, is $125 million.
The pay raises for teachers and state workers alone would cost more than $900 million a year. The tax refunds, which will come out of last year’s surplus, would cost about $1.6 billion.
Kemp’s critics saw the largesse as a political ploy. A spokesman for former U.S. Sen. David Perdue, Kemp’s top GOP rival, said the governor was “embarking on an election-year spending spree to try and make up for broken promises over his 20-year political career.”
Lauren Groh-Wargo, campaign manager for Kemp’s Democratic rival, Stacey Abrams, said the governor should be thanking Democrats in Washington for COVID-19 relief money that aided the recovery.
“After months and months of delays and just in time for his re-election effort, Kemp is distributing resources he wished to deprive Georgians: Democratic investments in jobs, infrastructure, technology and more,” she said.
Danny Kanso, senior policy analyst for the left-leaning Georgia Budget and Policy Institute, tweeted, “On balance, @GovKemp presented a series of important fiscal priorities that will find bipartisan support.”
But Senate Minority Leader Gloria Butler, D-Stone Mountain, was more critical, saying Kemp’s priorities were off.
“Today we heard a speech that is all about power and very little about the real work of Georgia,” Butler said. “This is the best time to invest in Georgians, not the status quo. The governor doesn’t seem to be doing anything — not one thing — that would help the most people.”
The governor is counting on Georgia’s economy continuing to grow at a rapid rate in 2022 after seeing unemployment rates drop to record lows last year.
The General Assembly will now use Kemp’s recommendations as a starting point for writing the budget. House Speaker David Ralston, for one, has endorsed the salary hikes for public employees but has raised concerns about broader spending.
Kemp’s proposed spending comes only a few months before he must face Perdue, a cousin of former Gov. Sonny Perdue, in the Republican primary. Perdue has been endorsed by former President Donald Trump, who wields substantial influence with GOP voters.
If Kemp wins the primary, he will likely have to take on Abrams, whom he narrowly beat in 2018, in the general election in November.
Staff writer Greg Bluestein contributed to this article.
Gov. Brian Kemp has proposed record spending over the next 18 months. It will require the Legislature’s approval. Here are some of the budget’s highlights:
- $1.6 billion in refunds to Georgia taxpayers, sending $250 to single filers and $500 to joint filers.
- $5,000 salary increases for state employees, plus $2,000 pay raises for teachers to fulfill a 2018 campaign promise to raise educators’ earnings by $5,000 before the end of his first term.
- $2,000 bonuses during the first half of this year for full-time teachers and staff, with part-time staffers receiving $1,000.