(The Center Square) – Georgia ended the last fiscal year with a $3.7 billion surplus, a new report by the State Accounting Office (SAO) showed.
The Georgia Revenues and Reserves report said the state increased its rainy day fund and still had money leftover after the 2021 fiscal year, which ran July 1, 2020, through June 30, 2021.
Georgia’s financial outcome is vastly different from what state officials expected. Gov. Brian Kemp instructed state agencies in August to maintain current spending levels over the next two years as a cautionary measure. Kemp also directed the agencies to cut spending during fiscal years 2020 and 2021.
The spending plan for fiscal year 2022 gradually replaces more than $2 billion that was cut from the budget at the onset of the COVID-19 pandemic.
Net tax collections were nearly $27 billion for fiscal 2021, a 13% year-over-year increase. Net tax revenue in Georgia was $2.5 billion in June, representing a $563 million increase – or 29.1% – compared with June 2020, Kemp’s office said.
Georgia’s rainy day fund grew from $2.7 billion on July 1, 2020, to nearly $4.3 billion by June 30, 2021, because of the surplus. State law requires 15% of the state’s general revenue funds be placed in the reserve account.
Lawmakers must decide what the state will do with the remaining nearly $2.2 billion. Economic analysts said the surplus is a one-time boost that has been injected into the state economy.
“Due largely to unprecedented support from the federal government, tens of billions of dollars were added to Georgia’s economy during the 2021 fiscal year, helping avert economic disaster and positioning the state for a surge in revenue collections,” Georgia Budget Policy Institute Senior Policy Analyst Danny Kanso said.
A Pew Charitable Trusts report released Sept. 1 showed the state’s personal income in the first quarter of 2020 through the first quarter of 2021 increased by 15.7%, which economists attributed to federal aid. The federal government passed three stimulus bills in response to the COVID-19 pandemic, distributing hundreds of billions of dollars in support for states.
Kanso said lawmakers should restore cuts to schools, health care programs and agencies that assist needy Georgians.
“Lawmakers must undo the harm wrought by these budget cuts by leveraging the surplus to restore funding and then extend meaningful and overdue economic assistance to the low- and middle-income Georgians that have been harmed most by the pandemic,” Kanso said.
Democrats are pushing for the extra funding to be used to expand the state’s Medicaid program. Georgia Public Policy Foundation President and CEO Kyle Wingfield said, however, lawmakers should focus on reducing debt instead of increasing debt for taxpayers. He said lawmakers should use the “one-time money for one-time investments” such as spending on broadband, other infrastructure and paying off petition liabilities.
“It’s very important for people to understand that just because there’s $2 billion extra in the bank right now doesn’t mean that you can commit to a bunch of programs that are going to cost hundreds of millions of dollars per year, well into the future because this money will be gone, at some point,” Wingfield said.
