Still in the money: Georgia government will pocket another $5 billion budget surplus

FILE - Georgia Gov. Brian Kemp delivers the State of the State address on the House floor of the state Capitol, Jan. 25, 2023, in Atlanta. The Republican Kemp announced final tax collections for 2023 on Wednesday, July 12, indicating the state will run a roughly $5 billion surplus for the budget year just ended. (AP Photo/Alex Slitz, File)
FILE - Georgia Gov. Brian Kemp delivers the State of the State address on the House floor of the state Capitol, Jan. 25, 2023, in Atlanta. The Republican Kemp announced final tax collections for 2023 on Wednesday, July 12, indicating the state will run a roughly $5 billion surplus for the budget year just ended. (AP Photo/Alex Slitz, File)

ATLANTA (AP) — Georgia will collect another $5 billion in surplus revenue after the just-concluded budget year, which could leave lawmakers and Gov. Brian Kemp with more than $10 billion in extra cash to spend, invest or give back to taxpayers. That's about $1,000 for every Georgia resident.

Final numbers for the 2023 budget year that ended June 30 won't be clear for weeks. But numbers announced Wednesday by the state Revenue Department show taxes collected by that department matched last year's $33 billion, while the Republican Kemp had estimated a $5.4 billion decrease.

It's the third year of huge surpluses, after $3.7 billion in 2021 and $6.4 billion in 2022, and critics are questioning whether Republicans are purposefully holding down spending while cutting university spending, refusing to fully expand Medicaid health insurance to poorer adults and struggling to retain state employees.

The gusher of revenue, which started during the pandemic, continued in the 2023 budget year thanks to big boosts in corporate income tax collections and sales tax collections, even as personal income taxes fell.

Overall tax collections have cooled in recent months — they were down 0.4% in June compared to the same month in 2022. But the state would have to see a disastrous $5 billion drop in tax revenues in the 2024 budget year, which began July 1, to not meet needed projections for the current year. That means Georgia is likely to run a fourth year of surpluses, unless Kemp and lawmakers substantially increase spending or cut taxes.

"The governor looks forward to working closely with the General Assembly on priorities for how the state's one-time funds will be used in a strategic, fiscally responsible way that does not commit short-term revenue gains to long-term obligations," spokesperson Andrew Isenhour said in a statement.

But after three years of big surpluses, it's far from clear that the revenue bump is a short-term gain. Democrat Stacey Abrams proposed in her campaign last year to spend some of the surplus to launch new programs. But with Kemp winning another term, he has cracked the state's purse only a little, using the governor's power to set a ceiling on how much lawmakers can spend.

Sen. Nan Orrock, an Atlanta Democrat, said too many state services are "on a starvation diet" and that it's time for Kemp to increase spending.

"He's been very off on revenue projections, and it's time to break with the building up a cash surplus and hoarding," Orrock said. "It's time to come to the table with a plan to fund the services Georgians are crying out for."

Kemp dipped into the surplus this year for a second $1 billion round of state income tax rebates, giving taxpayers between $250 and $500 back. But a property tax rebate program, giving the typical homeowner about $500, was paid for inside the budget, spending some of the state's increased revenue.

Lawmakers amended the budget that ended June 30 to boost spending by $2.4 billion, although revenue would have allowed for much higher outlays. Including federal money, lottery proceeds, and other fees and taxes state agencies collect, total spending was budgeted at $61.6 billion.

Beyond the unallocated surplus, Georgia also has a rainy day fund of $5.2 billion. By law, it contains up to 15% of tax collections from the previous year, set aside for budget shortfalls or other crises. Because state tax collections were flat, the rainy day fund should stay basically level.

Isenhour said some of the money will be needed for a midyear adjustment for K-12 schools, which cost $350 million. He said Kemp also plans to ask lawmakers in January to spend more in the current budget to cover costs that have risen because of inflation.

Georgia's budget pays to educate 1.7 million K-12 students and 435,000 college students, house 47,000 state prisoners, pave 18,000 miles (29,000 kilometers) of highways and care for more than 200,000 people who are mentally ill, developmentally disabled, or addicted to drugs or alcohol.

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