Georgia starts budget season with $16.5 billion in reserves

ATLANTA — Georgia officials will begin the upcoming budget season with plenty of cash on hand and no shortage of ways to spend it.

The state closed the fiscal year that ended in July with nearly $16.5 billion in “rainy day” and undesignated reserves, according to a recent state report. That’s enough to pay for nearly half a year’s state spending.

Those reserves should ensure Georgia can avoid significant budget problems for now despite a small decrease in state revenue in recent months.

Danny Kanso, senior fiscal analyst for the left-leaning Georgia Budget and Policy Institute, said it’s very early in the budget process. But one thing is clear.

“The state is in a very healthy financial position,” Kanso said. “The state of Georgia has more resources on hand than at any time in our history.”

Georgia budget reserves have surged over the last four years — fueled by a combination of massive federal spending, the economic boom that followed the COVID-19 pandemic, inflation and other factors. According to a State Accounting Office report released last month, Georgia finished the fiscal year that ended June 30 with an $11 billion undesignated budget surplus, plus nearly $5.5 billion set aside in case of revenue shortfalls.

That doesn’t include $2.4 billion in lottery funds and other restricted reserves.

That big financial cushion is a dramatic improvement from 14 years ago, when the fallout from the Great Recession left Georgia with just enough cash on hand to pay for a couple days’ worth of spending.

Then-Gov. Nathan Deal began rebuilding the state’s reserves in the 2010s by holding the line on spending as revenue improved. Gov. Brian Kemp has continued that approach.

By law, legislators can only appropriate as much as the governor estimates the state will collect in revenue each year. In recent years, Kemp’s conservative revenue estimates have restrained state spending. When revenue exceeded Kemp’s estimates, it led to billions of dollars in surpluses.

That has allowed the governor and legislators to spend big in recent years on priorities such as raises and bonuses for teachers and state employees, while still providing tax rebates and tax cuts to Georgian residents and businesses.

More recently, state revenue collections have slowed. For the fiscal year that ended June 30, collections were down $182 million, or 0.5%. They fell 0.6% for the first four months of this fiscal year compared to the same period last year.

But the state’s sizable reserves mean Kemp and legislators still have plenty of cash to spend.

“They have all the money in the bank to pursue whatever substantial or transformative pursuits they want,” said Kyle Wingfield, president of the conservative Georgia Public Policy Foundation.

Plans to spend some of the money are already taking shape.

Last month Kemp and Republican legislative leaders announced plans to refund more than $1 billion to taxpayers when they file their income taxes next year. If approved by the General Assembly, Georgians would receive a maximum refund of $250 for single residents, $375 for heads of households and $500 for married couples filing jointly based on their 2023 earnings.

Elected officials also could spend some of the cash on infrastructure projects, as they did last year. In a recent budget request, the Georgia Department of Transportation asked for an extra $100 million for road resurfacing this year and $125 million for construction projects.

The governor also could propose more tax cuts, pay raises and aid for victims of Hurricane Helene.

Kemp won’t unveil his proposed budget until January, though he could announce some details before then. Legislators will put their own stamp on spending before approving amended 2025 and initial 2026 budgets early next year.

“The governor continues to work with our partners and stakeholders and looks forward to proposing a budget, early next year, that funds our priorities and makes our government more efficient, streamlined, and responsive to the needs of hardworking Georgians,” said Kemp spokesperson Garrison Douglas.

BY THE NUMBERS

$16.5 billion

Surplus the state reported at the end of the 2024 fiscal year which ended June 30: $11.5 billion in undesignated reserves and $5.5 billion set aside in case of revenue shortfalls, so-called “rainy day” funds.

$2.4 billion

Amount available in lottery funds and other restricted reserves. This amount isn’t included in the reported surplus.

$1 billion

Refund amount Gov. Brian Kemp and Republican legislative leaders proposed to Georgians when they file their taxes next year. The measure must first pass the GOP-controlled Legislature, which convenes in January.