Georgia reports $14.6 billion surplus

In yet another budget year, Georgia spent nearly $2 billion less than it collected, according to state accountants, giving the state’s Republican governor and GOP-led legislature additional funds to spend or save in what’s expected to be an intense election year.

Early indications show that Gov. Brian Kemp wants little or no new spending by the state, despite the more than $14 billion in the state’s coffers reported by the Georgia State Accounting office. That’s even though many lawmakers and citizens are worried about filling funding gaps in social safety net and other services caused by  the Trump administration’s federal spending cuts. 

Ahead of the January legislative session, Kemp has instructed state agencies to plan flat spending, except in areas like education where a rising population drives a formula for higher spending. Republican lawmakers, meanwhile, have expressed no urgency in appropriating more funds to counteract federal cutbacks in healthcare, the environment or infrastructure like broadband Internet expansion. Citing the $2 billion, at least some Republicans are more likely in an election year to propose a tax cut.

From July 1, 2024, through June 30, 2025, Georgia collected $37.2 billion in taxes and fees, and spent $35.4 billion to cover health care, K-12 education, prisons and its other main general fund expenses, according to the just-released state report. 

The current financial reserves amount to about 41% of spending in fiscal year 2025. About $9.1 billion of the savings are in an unrestricted reserve. The other $5.6 billion sits in a  state-mandated reserve that’s capped at 15% of revenues and subject to some rules on spending.

Back in 2024, Kemp’s office set its fiscal year 2025 budget based on an estimated tax assessment that turned out too low. Kemp banked on $34.4 billion in revenue for his initial budget proposal, whereas $37.2 billion actually came in.   

The governor’s office credits conservative state government budgets for the state’s AAA credit rating. Years of savings have been made possible in part from billions of dollars in federal dollars after COVID-19, an internet sales tax and other measures. 

For the last three years the governor has returned money to Georgia residents in the form of tax rebates.  The state government has also allocated funds to infrastructure, including $502 million for Chatham, Effingham and Bryan water works.

Critics of the governor say it’s time to spend down more of the money on services for Georgians rather than letting it sit in the bank. Others, like Republican Lt. Gov. Burt Jones, who is running to replace the governor, supports repealing the personal income tax, a measure that would disrupt many state funding budgets, and could prompt a drawdown of the fiscal reserves.

In January, Kemp will publish his proposals for the next 18 months of state spending. That’ll coincide with the start of an election year, when every office in the state Capitol and legislature will be on the ballot.  

The Tide brings regular notes and observations on news and events by The Current staff.