This is a column by Charlie Harper, an Atlanta-based political pundit and longtime contributor to the Savannah Morning News.
When I write about government and the running of our state, I often do so through the prism of the state budget. Like too much in life, money is how we score points. It shows us what our spending priorities are and how much we are willing to take from our citizens to achieve stated goals.
The Georgian budget, like the checkbooks of so many of our citizens, took a pretty big hit during the financial and real estate collapse that began around 2008. Because so many of Georgia’s key economic sectors were involved, including banking and finance, real estate and airlines, Georgia’s tax revenues trended downward for several years as we recovered from the aftermath.
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In the decade that revenues have been rising, Georgia’s spending has been focused on key areas. Education has received about half of all revenue growth each year, culminating in a fully funded QBE formula for our state’s schools in 2018.
Transportation, once literally the lower end of per capita spending among comparator states, received an additional $1 billion per year as of 2016. Health care, support for pension systems and a few other areas have also seen additional spending.
However, over time, budgets have been modest relative to Georgia’s actual economic growth. Most of the year’s surpluses went to the “rainy day fund,” which is now at its legal limit of just under $3 billion.
Those dollars came in handy during the pandemic. Unlike in the last economic crisis, teachers and civil servants were not furloughed. Budgets have been cut and some plans – including planned tax cuts – have been shelved. When the economic storms hit, Georgia was prepared.
Georgia was also among the first states to reopen its economy. Governor Brian Kemp has garnered a lot of attention from the local and national press, but comparative medical and economic data from states that have chosen the forever lockdown path shows Georgia’s navigation during these unprecedented times has yielded positive results.
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Georgia’s economy continues to boom, with unemployment rates at their lowest on record and tax revenues continuing to post double-digit monthly gains. Extra federal money on top of what Georgia has been generating has placed the state in a unique position. We have a full rainy day fund with billions left to appropriate.
Some of the spending plans have been covered in detail here. State employees get their first cost-of-living adjustment in 14 years. Teachers receive the final tranche of their promised $5,000 raises. Additional funds go to law enforcement, fighting gang violence, mental health programs and fighting human trafficking.
At schools, all of the austerity measures that began at the beginning of the pandemic have been restored, along with boatloads of additional federal funding. Given that Georgian schools collectively entered the pandemic with higher reserves than the state, with restored state funds and new federal funds, Georgian schools should be sitting on more funds than they have historically had.
Grants were awarded for water and sanitation projects at the local level. Rural broadband improvement programs receive similar dollars. Economic development projects continue to receive funding to help Georgia’s economy grow across the country.
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Priorities are funded at unprecedented levels. And yet money remains. It goes to a group that is under-sold when governments want to spend money: Georgia’s taxpayers.
While many federal grants to schools and infrastructure dollars come with strings attached that limit tax cuts, the Georgian economy has grown enough to allow for tax cuts while still meeting federal money acceptance requirements.
The cuts come in two forms. Gov. Kemp’s budget proposal, which is pending in the legislature, provides Georgia taxpayer rebates of $250 for individual applicants and $500 for those applying collectively. This is a rebate for the surplus that the state has already collected but not spent.
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This week Speaker David Ralston and House Ways and Means Chairman Shaw Blackmon announced legislation that would lower Georgia’s tax rate from 5.75% to 5.25% while increasing the standard deduction for each taxpayer.
A family of four earning $30,000 would pay no Georgia income tax under this proposal. A similar family earning $50,000 would see their tax liability decrease by 28%.
There will continue to be those who will chastise these real cuts with their imaginary proposals for a total income tax abolition. They are not burdened with having to have teachers on furlough once to fund Georgia law enforcement officers’ salaries, pave streets or prop up our stretched-out mental health system.
Those bearing these burdens have finally been able to commit resources to many priorities they have long had to do without. This also includes relieving the burden on Georgian taxpayers.
