Georgia Gov. Brian P. Kemp’s proposed amended fiscal 2024 and fiscal 2025 budget includes spending some of the surplus revenue the state has taken in on capital projects rather than issuing bonds this year.
The state is estimated to have about $11 billion in surplus cash in its coffers, according to the state Department of Economic Development.
Kemp said his amended fiscal 2024 and fiscal 2025 state budget proposals include more than $1.8 billion for capital construction programs and maintenance aimed at maximizing the usability of existing facilities, reducing maintenance costs and meeting projected growth needs.
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“This investment will be made without issuing a single additional dollar in general obligation debt, saving taxpayers millions in future debt service costs over the next two decades,” he said in a letter attached
“It also allocates more than $137 million in debt savings Georgia has realized as a result of its credit strength in recent bond sales, which we will use to pay down existing debt, further reducing the state’s fiscal burden for future generations,” Kemp said.
The fiscal 2025 budget proposal furthers efforts “to keep Georgia competitive by investing in our economy and our workforce while maintaining the same fiscally conservative approach to governance that has enabled us to remain one of the few states to have a triple-A bond rating from all three rating agencies,” Kemp said.
Georgia is rated triple-A by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.
“We must ensure we pay for our obligations within our existing means, not by increasing tax burdens on our citizens or creating unfunded future liabilities for our children,” he said. “Therefore, it is important in a strong economic climate that we invest in state government in a way that will improve efficiency or mitigate loss when times are lean.”
He said his administration had focused on growing the state’s economy rather than growing state government.
In 2022, Kemp signed income tax reduction into law, with phased-in reductions to lower the income tax rate from 5.75% to 4.99%, starting this year.
“While the legislation only initially called for lowering the rate by 26 basis points in this fiscal year, my budget proposals include an additional 10 basis point reduction, lowering the rate to just 5.39%. This additional reduction will save taxpayers $300 million per year, beginning this tax year,” he said.
The proposed tax cut comes amid a trend of
The state’s $3.05 billion net tax collections in December were down 5% year-over-year,
Firms from around the world have been coming to Georgia and to expand their operations, Kemp said.
“We’re making sure communities across the state are able to welcome these growth opportunities, especially rural Georgia,” he said. “We can do that by having a robust infrastructure and skilled workforce ready to meet the needs of job creators.”
He noted that the state boasted the busiest airport in the world — Hartsfield–Jackson Atlanta International Airport — and one of the fastest growing seaports in the United States at Savannah.
“But to ensure freight and goods flow freely,” Kemp said, “We must maintain safe and efficient roadway infrastructure able to keep up with growing demand.”
The amended fiscal 2024 budget includes $1.5 billion for the Georgia Department of Transportation to maintain state roads and accelerate construction on “shovel-ready” projects.
The budget also would include $250 million for the Georgia Environmental Financing Authority’s Georgia Fund, which provides low-interest loans to communities to expand their water and sewer infrastructure.
Additionally, $250 million in additional funds would be provided for economic development grants provided through the Regional Economic Business Assistance grant program and OneGeorgia Authority, including up to $16 million to provide assistance to local governments for economic site development and $50 million for workforce housing initiatives. This builds on the Workforce Housing Fund, which was created last year.
“Georgia’s status as a triple-A rated state government is also an important economic development tool that signals to investors Georgia is efficient, fiscally conservative, and a safe bet for investment,” he said.
The amended budgets would also include a $1 billion for the state’s retirement, risk and health portfolios to maintain fiscal solvency and ensure each fund is able to grow at a sustainable rate to meet future demands, according to Kemp.
This includes a $500 million spent on the Employees’ Retirement System and $250 million for the state’s risk insurance pools to hedge against future potential catastrophic claims and settle existing claims, potentially saving the state millions in future settlement costs, according to the governor’s office.
The fiscal 2025 budget earmarks $244 million in funds to K-12 public schools for health insurance for teachers.
“Maintaining quality retirement and healthcare benefits is crucial for recruitment and retention of the state’s workforce and our K-12 teachers,” Kemp said. “Our state employees work hard every day to serve the citizens of our state, and today we have 26% fewer core state employees than we did in 2008 serving a population that has grown by 15% during that same period.”
He stressed because the state now has a more efficient workforce, it must offer better salaries to remain competitive in a tight labor market.
In the amended fiscal 2024 budget Kemp has proposed a $1,000 pay supplement for all state employees and K-12 teachers and $630 million in fiscal 2025 budget to provide a 4% cost-of-living adjustment to state employees and a $2,500 salary increase for K-12 teachers and certain other employees.
“Meeting our obligations as a fiscally conservative state means meeting our obligations to our local school systems. The state has not significantly updated the formula for pupil transportation for our local schools in almost 20 years,” he said. “As our student population has grown since then, school systems have absorbed the annual costs to continue to provide transportation to and from their schools every day. This means funds that could have gone towards teacher pay and classroom instruction have had to be diverted to cover transportation costs instead.”
The fiscal 2025 budget includes roughly $205 million to update the pupil transportation formula to provide more state support for system transportation needs.
Additionally, the amended budget would provide $104 million to establish a new school security grant program as an ongoing annual program.
In total, the fiscal 2025 budget would provide local schools with more than $1.4 billion in additional funding to meet growth needs, improve teacher pay, maintain quality health and retirement benefits, and increase security, Kemp said.