(The Center Square) — Georgia doesn’t produce budget stress tests or a long-term budget assessment, and a non-profit group says the Peach State and other states should start preparing for economic uncertainty.
“Pretty much every state was experiencing, at some point since 2021, a significant budget surplus,” Josh Goodman, senior officer with the Pew Charitable Trusts, told The Center Square. “But I think policymakers widely recognized that there were temporary factors that were playing into those surpluses.
“The big question that lawmakers were sort of wrestling with is we have all these deferred priorities, we’ve all these things we want to do — whether it’s cutting taxes, whether it’s increasing spending — but we know we can afford it this year, we might know we can afford it next year but what about over the long term?” Goodman said.
Georgia officials have regularly touted their fiscal footing, pointing to a large budget “surplus,” generally bolstered by federal COVID relief money. Georgia Gov. Brian Kemp, a Republican, has cited the state’s “responsible approach to budgeting” in suspending motor and locomotive fuel excise tax collection.
“What we recommend in our research is two analytical tools that help states answer those questions,” Goodman said. “One is what we call a long-term budget assessment. And all that means is revenue projections and spending projections going out at least three years into the future.”
“The other tool is a budget stress test, and what a budget stress test does is it looks at not just the baseline or expected scenario, like the long-term budget assessment, but rather if we had a recession, if we have a stress scenario or different stress scenarios, how would that affect our budget? How would that affect revenue?” Goodman said. “In some cases, how would that affect spending? And, importantly, are we prepared for that scenario?”
Truth in Accounting, a taxpayer advocacy group, gave Georgia a “C” financial grade, ranking the state 23rd in the country for its fiscal health.
According to the non-profit’s “Financial State of the States 2023” report, Georgia had $46.907 billion to pay $46.923 billion worth of bills. As a result, the group said the state would need $5 from every taxpayer to pay its outstanding bills, which include bonds and unfunded retiree health care benefits.
“Part of the reason, historically, states haven’t done this kind of analysis, at least not consistently, is just in state government, there’s so much focus on the annual or biennial budget,” Goodman said. “It’s one of the constitutional obligations of the legislature to pass a budget each year or each two years. And so naturally, lawmakers focus a lot on that.
“That’s the place where they’re trying to achieve their policy goals. And so it’s much easier to neglect that longer-term picture.”
By T.A. DeFeo | The Center Square contributor