Last month, the Ministry of Finance of Georgia released its report on the unaudited tax collections for the fiscal year (FY) 2022, which on 30th a full Revenue Shortfall Reserve (RSR), which acts as the state’s savings account. In September, Georgia’s state accounting department will release a more comprehensive report detailing all tax receipts and government expenditures in addition to the balance of its reserve accounts.

Where does excess income go?
The RSR was created in 1976 to deal with instability in tax collection and to hedge against the possibility of a recession. If the state generates more revenue than it spends, it produces a surplus. At the end of each fiscal year, any excess of general tax revenue is automatically added to the state’s RSR until that account reaches 15 percent of the prior year’s revenue. At this point, funds go into a segregated account representing an uncommitted or unearmarked surplus. This is in addition to a special reserve account for excess funds raised by the Georgia Lottery, as well as smaller reserve accounts used to manage bond payments and tobacco settlement funds.

Aside from the availability of excess funds that could be added to the Governor’s revenue estimate to be approved by the General Assembly, the state is also experiencing a widening gap between its official revenue estimate and the amount of revenue it expects to collect in fiscal 2023. Georgia’s official revenue estimate is the cornerstone of the state governor’s executive budgetary authority to shape the state’s spending plan. The determination of the revenue estimate is a political decision taken in consultation with the State Treasurer and limits the amount of funds available for appropriation, subject to the appropriate constitutional responsibility of the General Assembly.

As of today, the state estimates that it will collect 21 percent less income and sales and use taxes in the current fiscal year (FY2023) than reported last year, accounting for about two-thirds of the total state budget. Even after accounting for a potential economic recession and the impact of federal spending cuts, it appears that conservative revenue estimates have tightened in subsequent years to the point that Georgia could spend significantly more in the coming year than it currently wants to spend.

Additionally, the state plans to spend about $121 less per resident in fiscal 2023 — a total of $1.3 billion less — than it did before the Great Recession, as Georgia budgeted through spending cuts the state made in response to weaker spending tax revenue was turned upside down.

Now, with a full provision for revenue shortfalls expected to exceed $5 billion and an estimated uncommitted surplus also expected to exceed $5 billion, world leaders have a unique opportunity to start long-delayed investments to make up ground lost after a decade of austerity. This means that even if government revenue falls short of the revenue estimate set by the governor, Georgia’s existing reserves will almost certainly be more than sufficient to cover the difference. This is important to note as the unprecedented level of resources available presents heads of state with a range of options where excess funds could either be pre-emptively added to the governor’s revenue estimate or act as a back-up against economic uncertainty. This healthy fiscal position provides an opportunity to appropriately revise Georgia’s revenue estimate to more accurately reflect future revenue.

The state has prioritized growing surplus accounts over funding programs, services, and labor

Due to the state’s response to the Great Recession, Georgia’s Revenue Shortfall Reserve balance fell from $1.5 billion in fiscal 2007 to just over $100 million in fiscal 2009.[1] After a sharp drop in state revenue, then-Governor Deal made it a top priority to rebuild the state’s reserve account by setting conservative revenue estimates to increase the RSR’s balance. In the eight years from 2010 to 2018, Georgia’s revenue exceeded the state government’s annual spending by an average of $305 million.[2] As a result, the state savings account balance grew from $116 million in fiscal 2010 to over $2.5 billion when Deal left office.[3] However, as the state’s RSR has reached the maximum level of 15 percent allowed under state law, a trend in conservative revenue estimates issued by Gov. Kemp since fiscal 2019 has helped create the state’s current fiscal position, in which it is relatively low remains the level of spending, but continues to contribute to increasingly empty reserve accounts.

Additionally, in response to the pandemic-induced recession, world leaders have again implemented across-the-board spending cuts in 2020, Georgia’s primary response to an expected drop in tax revenues.[4] Unlike the previous recession, apart from a limited release early in the pandemic, Gov. Kemp declined to add funds from RSR to manage the downturn, instead relying mostly on spending cuts. However, due in large part to unprecedented federal intervention, the state saw only a modest fall in tax revenue, followed by increases in both fiscal 2021 and fiscal 2022. As a result of this combination, Georgia pre-emptively took deep budget cuts of before 10 percent for most government agencies and programs, cuts that were unnecessary to withstand the negative economic impact of the pandemic.

In parallel, Georgia’s system-wide workforce was reduced from about 101,000 state employees in FY2008 to 81,000 in FY2018 to fewer than 76,000 in FY2021.[5] Looking only at full-time employees, the state’s workforce fell from 83,000 to 60,000 between fiscal 2008 and 2021, a decline of nearly 28 percent. In recent years, this trend has only accelerated. In fact, the reported 8.7 percent drop in full-time employment from 2019 to 2021 among law enforcement agencies represents the sharpest drop since 2008 to 2010.[6] Additionally, as of fiscal 2021, the state experienced an unprecedented 23 percent employee turnover rate, due in part to a failure to raise salaries appropriately in line with market conditions.[7] While a variety of factors combine to affect the state’s revenue estimate and actual revenue collections, these trends and policy decisions helped create the record gap seen in fiscal 2022.


As heads of state look ahead, the 2023 legislature will be a crucial turning point for the state budget, which will affect all 10.8 million Georgians. Public education and health services account for about 73 percent of the total state budget, while these categories and infrastructure, corrections, social services and public safety together account for about 95 percent.[8] In order to make the most of the taxes and revenues collected by Georgians, the state would be best served by properly adjusting its revenue estimate to more accurately predict actual revenues and allocating more resources to urgent needs.

In areas of the state budget, the consequences of continued austerity measures remain clear, as Georgia ranks in the bottom 10 states nationally in terms of government spending per capita.[9] Georgia has fallen behind in K-12 education as one of six states that don’t allocate funds to schools to educate poor students.[10] Additionally, the state also maintains the third-highest uninsured rate in the United States as communities across the state continue to be impacted by the impact of the pandemic and brace for a wave of likely rural hospital closures as recent increases in federal funding ease.[11] With unprecedented resources in reserve to provide additional security in adequately funding the needs of Georgians, leaders must seize this unique opportunity to make long-overdue adjustments and ensure all Georgian families can thrive.


[1] Governor’s Budget Report amended for FY2022 and FY2023.

[2] For GBPI nominal surplus calculations, see Governor’s Budget Report amended for FY2022 and FY2023.

[3] ibid.

[4] Kanso, D. (2022, January 21). Georgia fiscal year 2023 budget overview. Georgia Budget and Policy Institute.

[5] Human Resources Administration Department. (2021, November). Administrative Services Department. State of Georgia TeamWorks HCM System Employee Report for Fiscal Year 2021 End (July 1, 2020 – June 30, 2021).

Note: System-wide staff count includes executive branch, judicial branch, legislative branch, and local/affiliated government agency staff. Does not include K-12 educators or University System of Georgia staff.

[6] Human Resources Administration Department. (2021, November). Administrative Services Department. State of Georgia TeamWorks HCM System Fiscal Year End 2021 Workforce Report (July 1, 2020 – June 30, 2021), page 2. %20Year%20End%202021%20Workforce%20Report.pdf

[7] Human Resources Administration Department. (2021, November). Administrative Services Department. State of Georgia TeamWorks HCM System Fiscal Year End 2021 Employee Report (July 1, 2020 – June 30, 2021), page 9. %20Year%20End%202021%20Workforce%20Report.pdf

[8] Kanso, D. (2022, January 21). Georgia fiscal year 2023 budget overview. Georgia Budget and Policy Institute.

[9] Financial Research Center. (2022, January). Ranking of Georgia among states: budget, taxes and other indicators.

[10] Owens, S. (2022, February 1). Opinion: Poverty Georgia students will be left behind by Kemp’s plan. Constitution of the Atlanta Journal.

[11] Dreher, A. (2022, July 14). Rural hospitals are again at financial risk. axios.; Kaiser Family Foundation. “Health Insurance Coverage for the Total Population.”,%22sort%22:%22desc %22%7D