(The Center Square) – Georgia state agencies will have to reduce their fiscal year 2021 budgets by 11 percent in response to revenue shortfalls resulting from the COVID-19 pandemic, instead of the 14 percent previously requested by budget officials, Gov. Brian Kemp said.
Although it may take up until the beginning of fiscal year 2021, which starts July 1, to get a better scope on the impact of the pandemic on the state's revenue, Kemp said the economy looks like it will be more resilient than predicted.
"The foundation of our economy is strong and ready for consumer confidence to return," Kemp said in a video to state agencies. "However, as a small business owner and former executive agency leader, I know that any cut can be difficult. But thanks to conservative leadership over the last decade, I'm hopeful that our state will be able to avoid the draconian cuts and measures that many others across the country will be forced to make."
Budget Director Kelly Farr and House and Senate appropriations leaders directed agency leaders May 1 to reduce spending by 14 percent – a total of about $3.6 billion – to fill revenue gaps caused by the pandemic.
Year-to-date net tax collections through April have totaled $19.23 billion for the fiscal year, a decrease of nearly $680 million – or 3.4 percent – compared with the same time last year.
The state collected $1.8 billion in April, which was 36 percent less than April 2019.
State Economist Jeffrey Dorfman told lawmakers May 13 the tax filing deadline deferral to July 15 has delayed an estimated $1.35 billion of tax revenue.
"I expect us to eventually recoup somewhere between $1 billion and $1.5 billion of that," said Dorfman, who also told lawmakers the economy might be closer to normal by the second quarter of fiscal 2021.
Kemp's announcement may offer some relief for agency leaders, who have been discussing their proposed cuts and priorities at budget committee meetings for the past few weeks. Many are looking at furloughs, pay cuts, layoffs and reductions in administrative costs.
"I know there are real people behind these numbers, and I trust that you will do whatever it takes to preserve the mission of your agency and protect those who we are honored to serve in this great state I know that challenging days are ahead," Kemp said.
Kemp plans to send updated revenue projections to House Appropriations Committee Chairman Terry England, R-Auburn, and Senate Appropriations Committee Chairman Blake Tillery, R-Vidalia, in the coming weeks. He also reaffirmed his priorities for the state's spending plan, which include improving education and health care, adoption and gang reform, and combating human trafficking.
Senate and House leaders announced Wednesday the legislative session will resume June 15. The 2021 budget will be lawmakers' top priority. The session was suspended in mid-March because of the public health crisis.