ATLANTA — The only constitutional requirement Georgia lawmakers must fulfill each year is passing a state budget.
But faced with anemic state tax collections that will require significant spending cuts, the budget will be front and center even more than usual during the 2020 General Assembly session beginning Monday.
While the legislature grapples with issues including whether to legalize gambling in Georgia, increase the availability of public transit in rural communities and take control of Atlanta’s airport from the city, the top priority will be reducing spending while protecting vital government programs and services.
“I don’t think you can take a blanket approach,” said Georgia House Speaker David Ralston, R-Blue Ridge. “The budget is about more than numbers and percentages. The budget touches people’s lives.”
Gov. Brian Kemp set the stage last summer for what promises to be a budget-cutting legislative session. With tax revenues running well below projections, the first-year governor ordered most state agencies to reduce spending by 4% during the current fiscal year and 6% in fiscal 2021, which starts July 1.
Kemp said he expects to achieve the cuts by not filling vacant positions in state government and looking to the affected agencies to do more with less.
“What we’re trying to do is make government more efficient and streamline operations so we can fund our priorities,” he said.
Kemp said he would like to follow through with the remaining $2,000 of a $5,000 teacher pay raise he promised on the campaign trail in 2018. Lawmakers approved the initial $3,000 installment last year.
But the governor said he’s not sure the state can afford to pay for the raise this year.
“I’m definitely committed to continuing the teacher pay raise,” Kemp said. “[But] it’s obviously a tougher budget environment to be able to do that.”
Another priority of legislative Republicans that may fall by the wayside, at least in 2020, is the second phase of a two-stage income tax cut then-Gov. Nathan Deal steered through the legislature two years ago. He and other supporters said the reduction was necessary to offset a revenue windfall the state was expecting from the federal tax reforms Congress had passed in late 2017.
The General Assembly voted in 2018 to reduce Georgia’s income tax rate for the first time since the 1930s from 6% to 5.75%. This year, lawmakers are due to decide whether to cut the tax rate again to 5.5%.
Senate Appropriations Committee Chairman Jack Hill said the state can’t afford the revenue hit another tax cut would bring.
“One of the reasons we passed this tax cut is we were told there would be a revenue bump from the federal tax cut,” said Hill, R-Reidsville. “I can’t tell that we ever had that bump. … Nobody’s against a tax cut, but we really need to be cautious.”
The Georgia Budget and Policy Institute (GBPI) shares that caution. The Atlanta-based think tank reported the 2018 income tax cut reduced state revenues by $450 million per year.
“A further cut could create a real fiscal crisis for the state,” said Danny Kanso, a policy analyst with the GBPI.
But Ralston said House Republicans remain committed to following through on the tax cut in order to fulfill a campaign promise to Georgia voters.
Kyle Wingfield, president and CEO of the Georgia Public Policy Foundation, warned lawmakers not to give up on the tax cut too soon. He said it remains uncertain whether the revenue declines of the last six months will continue.
“Is this a blip that is causing a temporary dip that we’ll pull out of and be fine?” Wingfield asked. “We ought to consider that before the legislature throws up its hands and says, ‘We can’t do this.’ ”
One way the state might be able to afford an additional tax cut would be tapping into new sources of revenue. A special committee the House formed last year that held hearings around the state during the fall considered options including applying the state sales tax to “marketplace facilitators” such as Amazon.
Another alternative lawmakers likely will revisit this year is raising the sales tax on tobacco products. Georgia historically has had one of the lowest tobacco taxes in the nation, and there’s support for at least bringing it up to the national average.
But the House Special Committee on Economic Growth spent most of its time debating whether to ask voters to legalize gambling in Georgia and dedicate a portion of the proceeds to the HOPE Scholarships program and possibly health care.
Efforts to get a constitutional amendment on the statewide ballot to legalize casino gambling and/or pari-mutuel betting on horse racing have failed in the past. But supporters say the push for legalized gambling could gain more traction in 2020 because of the glaring need for more tax revenue.
Also, sports betting has been added to the mix thanks to a U.S. Supreme Court decision that struck down a federal law banning commercial sports betting.
“You can cut and cut, but you have to find ways to increase revenues,” said Sen. Brandon Beach, R-Alpharetta, who has sponsored efforts to legalize pari-mutuel betting on horse racing.
Beach and other supporters argue there’s no harm in giving Georgia voters the right to decide whether to legalize gambling and let the chips fall where they may.
While any constitutional amendment lawmakers pass on gambling would not go to Kemp for his signature under Georgia law, so-called “enabling bills” spelling out details of how casinos, racetracks or sports betting would be managed in Georgia would require his approval.
Kemp is noncommittal on sports betting but decidedly cool toward both casinos and horse racing.
“I just don’t think casino gambling is something we need to do in our state,” he said. “On horse racing/pari-mutuel, I haven’t seen an economic model that makes that viable without somebody or something subsidizing it with some other form of gambling.”
While legalized gambling has significant support in both the state House and Senate, other bills the legislature is expected to revisit this year bear the imprint of one chamber or the other.
Legislation the House passed last year aimed at creating a steady stream of funding for rural transit in Georgia couldn’t get through the Senate.
“I’m hoping [the Senate] will see the value of partnering with us this session,” Ralston said.
On the other hand, a Senate-passed bill calling for the state to take over operations at Hartsfield-Jackson Atlanta International Airport fizzled in the House.
The measure’s chief sponsor, Sen. Burt Jones, R-Jackson, said he will continue pushing it with House leaders this year.
Supporters say a history of corruption casting a shadow on vendor procurement at the airport cries out for new management. Opponents say under Atlanta Mayor Keisha Lance Bottoms’ leadership, the city has instituted reforms to clean up the process.
A potential compromise would put the airport under state oversight through a committee similar to the legislative panel that performs that function for MARTA.
Jones said any oversight panel the General Assembly creates must have enforcement rights.
“It would need to have subpoena powers, auditing powers,” he said. “It needs to have a hand in who’s doing business down there.”
Since 2020 is an election year, lawmakers will be motivated to get through the session as quickly as possible so they can hit the campaign trail.
Ralston predicts that’s not going to happen because of the difficult decisions that must be made to balance the budget.
“This is going to be an interesting session,” he said. “We have members in both chambers who like to make speeches about cutting the budget. I think they’re going to find out it’s little easier said than done.”