Even with record surplus, Kemp tells agencies to hold line on spending

Credit: Curtis Compton

Credit: Curtis Compton

Despite a likely record surplus, billions of dollars in federal aid and a growing economy, Gov. Brian Kemp is telling most state agencies not to request any extra money to spend in the upcoming year.

In his annual instructions to agency leaders, Kemp’s budget director, Kelly Farr, said inflation could have an impact on the state’s fiscal outlook, so many agencies won’t see increased budgets.

The exception will be for education and health care programs that receive funding based on enrollment in schools or programs. For instance, if there are more students in a college than the previous year, it receives extra state money to educate those extra students.

The governor will use agency plans to build the budget proposal he will present to the General Assembly in January.

Kemp’s approach may come as a surprise since the state is coming off a record fiscal year — which ended June 30 — in which tax collections increased $6 billion, providing a hefty surplus. Kemp is proposing spending a big chunk of that on income tax and property tax breaks.

Agencies also saw huge spending increases in the past year because of the record revenue flowing in, so holding the line in the coming year might not have a big impact.

The more than $30 billion in taxes the state collects helps it educate 2 million children, provide health care to more than 2 million Georgians, manage and improve parks, investigate crimes and incarcerate criminals, and regulate insurance firms, utilities and dozens of professions.

The state issues driver’s licenses and helps pay for nursing home care for the elderly.

The state is a major provider of treatment for mental health and drug addiction, and it helps fund public health programs that are fighting the coronavirus pandemic. Besides paying salaries, it helps make sure that hundreds of thousands of former teachers, university staffers and state employees receive pensions and health care.

Kemp’s message to state agencies to hold the line on spending is identical to what his predecessor, Gov. Nathan Deal, usually requested every year as Georgia recovered from the Great Recession.