In many respects, this has been a swell time to be a governor.
True, the past eight years have seen a devastating pandemic, climate-related natural disasters and other challenges. But the federal aid which came in the wake of the COVID-19 pandemic also helped to create a boom in state revenues. Across the country, states have bolstered their rainy day funds, funded new programs and cut taxes with the money.
Gov. Brian Kemp has negotiated the flush times skillfully, growing Georgia’s rainy day fund as well his own political war chest, both of which have made for smooth relations with the legislature, which thrives on money.
All things come to an end, however. The governor’s second term, and the flush times.
Back in May, Kemp signed into law signed the state income tax cut approved in this year’s legislative session, but in his line-item veto package the following day, he announced he was cutting $300 million in new spending, including money for rural hospitals and people with disabilities. He said this was necessary because the tax-cut bill, which went further than he had wished, had created a 1.3 billion hole in the state budget.
Although a new governor will be elected in November, under the state budget process, agencies have to give their budget proposals to the governor by September. Last week, Kemp’s Office of Planning and Budget send a memo directing agencies to freeze their budgets for next year at the current level. It also directed the agencies to look for ways to cut their budgets if that should become necessary.
Compared to the feast Kemp has enjoyed, that’s a pretty bare table to set for either Keisha Lance Bottoms or Rick Jackson. Given the challenges that loom for state budgets across the country, however, it may not be excessive. The flood of federal money that came after COVID-19 has dried up, and the cuts in federal Medicaid and SNAP money enacted in the Big Beautiful Bill Act begin next year and continue growing into 2018. Revenue growth has already begun to slow.
In a recent report, the governmental affairs firm MultiState said the number of fiscally stable states — those in no immediate danger of a budget shortfall — has fallen from 40 two years ago to 26 today. Georgia, with its growing population and economy, is one of the 26 states that are still considered on the safe side.
Safe enough that both candidates for governor have advanced their own tax-cutting proposals. Bottoms has proposed eliminating state income taxes for teachers. Jackson has promised to cut state income taxes in half in four years and work to eliminate it in eight, and to freeze property taxes.
Ideas like these were born out of a time when state general funds were still fat enough to imagine them. Not long ago, in other words. Tax-cutting ideas may continue as campaign fodder for several more cycles. But actual tax-cutting at the state level may be reaching an end, at least in this era. What there is likely to be is a lot of tax re-organization, as states search for more effective ways to identify and collect.
Kemp still has that enormous war chest ($32 million, by a recent estimate), but the lame-duck governor hasn’t made much news as a political player since the failure of his attempt to promote Derrick Dooley in the Republican Senate Primary. Maybe he’s just biding his time. Or maybe he can’t think of a job better than the one he’s had.
The post Kemp signals his successor may not be as lucky as he’s been appeared first on SaportaReport.
