State Budgets

State of the State: Georgia

Though much improved over five years ago, the current economic situation in Georgia is anything but peachy. In the annual State of the State Address, Governor Nathan Deal discussed his plans for education, the state budget and a wide swatch of health care related issues.

Governor Deal began by noting the improved economic performance throughout his tenure, citing the drop in the unemployment rate from 10.4 percent to 5.3 percent, and the creation of more than 575,000 jobs. In addition, he touted the growth in the state’s rainy day fund from $116 million to approximately $2.03 billion and maintenance of the Peach State’s AAA bond rating without raising taxes.

In a departure from the fiscal prudence responsible for the state’s stellar financial condition, Governor Deal labeled his newly proposed 19 percent pay increase for caseworkers in the state Department of Family and Children Services as vital for the recruitment and retention of the best possible employees. The governor also requested $50 million to help fund the construction of a new cybersecurity training center near Augusta, calling the center “a resource unlike any other in the country. This will solidify Georgia’s reputation as the Silicon Valley of the south.”

Continuing his theme of Georgia “accentuating the positive,” Governor Deal applauded the 20 percent pay raise given to state-level law enforcement last fall. In addition, he announced improvements already implemented in law enforcement structure and operations, most notably expansion of training for deescalating violence, community policing and alternatives to deadly force.

Turning from the economy, Governor Deal began his discussion on education. In his brief discussion of voters’ rejection of a constitutional amendment granting the state control of any “failing” schools, the governor decried the increase in the number of chronically failing public schools in the state; the jump from 127 two years ago to 153 this year is startling. According to the governor, Georgia’s failing education system affects 89,000 students. “It should be abundantly clear to everyone, including those in the education community who so staunchly support the status quo that this is unacceptable,” he admonished. While acknowledging an increase in school funding will not necessarily cure the problem, Governor Deal still announced a two percent pay raise for public school teachers to help attract and retain quality educators.

The governor concluded with a discussion of health care issues–most notably Medicaid. He asked state lawmakers to expand mental health coverage for children under the age of four in the state’s Medicaid and PeachCare programs, as well as to allow pharmacists to dispense naloxone (the opioid overdose-treatment) over the counter. As noted by Governor Deal, even though many of the healthcare issues the state faces are inseparable from federal policy, the state bears financial responsibility for some of these programs; Georgia will expend over $10.5 billion in next year’s budget on Medicaid. Hospital provider fees, a form of tax directed specifically at hospitals, are one of the primary funding sources for Georgia’s healthcare spending. With the fee set to lapse in its authority this year, the governor pleaded with lawmakers to reauthorize it, claiming, “That is money the state uses to leverage over $600 million from the federal government. This authority will expire unless you reauthorize the DCH board to collect it. If authority is not renewed, the more than $900 million dollars now available to us for the Medicaid program will have to be made up elsewhere in our allocations.” This fee on hospitals is passed along to consumers, yet another burden on taxpayers.

Governor Deal commendably brought attention to much-needed reforms and budgetary concerns. However, his proposals for increased spending on infrastructure, education and economic development far outweighed his suggestions for enhanced government efficiency. In particular, many of these development projects benefit only a select few businesses and individuals; this is not a path to sustainable, long-term economic growth. With personal income taxes higher than most of its neighbors, and sales and corporate taxes uncompetitive with the national average, Georgia deters businesses along with the jobs, wealth and opportunity accompanying them. Georgia lawmakers should ignore the impetus to spend and instead pursue the pro-growth tax and regulatory reform that sparks economic opportunity.

 


In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace …

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