Georgia agencies told to slash budgets by $3.6 billion

A memo from Gov. Brian Kemp’s budget director and chairs of the House and Senate Appropriation Committees went out May 1 to all state agencies including the Department of Education telling them to cut their fiscal year 2021 budget plans by 14%. The revised budgets are due by May 20.

“We find ourselves in unprecedented times. Covid-19 has dealt a blow to our local, state, national and world economy,” says the memo from House Appropriations Chair Terry England (R-Auburn); Senate Appropriations Chair Blake Tillery (R-Vidalia); and Kemp’s budget director Kelly Farr.

“While the Great Recession of 2008 was considered then to be a ‘once in a lifetime’ event, our current situation will certainly overshadow it,” the memo says. “That is why this request is being made to ALL areas of the state budget with no exceptions.”

Georgia’s constitution requires the General Assembly to pass a balanced budget each year. The 2020 fiscal year ends June 30 and the state is facing dire financial losses due to the coronavirus pandemic that included a month-long statewide shutdown that forced the closures of many businesses.

More than 1.3 million Georgia workers have filed initial unemployment claims since the middle of March due to the pandemic. A Georgia State University study estimated the state could lose more than $1 billion in sales tax revenue this year due to fallout from the pandemic.

Georgia’s budget impacts all of the approximate 10.5 million people living in the state. Funding from the state budget goes to agencies that oversee everything from public K-12 schools to colleges and universities; elections; building and paving roads and interstates; covering health care costs for children; paying salaries for police officers; maintaining parks; funding the Department of Labor and the Department of Public Health; and covering costs for courts.

Rep. England said in an email the agencies are handling their cuts themselves, including decisions on whether they would lay off or furlough employees. He said the Appropriations Committee would likely provide guidance to the agencies after receiving their initial plans on May 20.

“My hope is that the agencies will be able to get by without layoffs and manage as best possible with furloughs,” he said.

“I have also been suggesting to the agency heads I have talked to, to consider continue using telework if it has been working well for their agency,” England said. “That would help them reduce expense for office space and utilities while also helping the employees reduce commute time and expense helping them offset the losses due to possible furloughs.”

But England said he didn’t know if many agencies could withstand more layoffs.

“After the Great Recession, we reduced employee count significantly across all of state government and have added back very few positions and only then in very critical areas,” he said. “

With our increase in population since then and increased demand for services, I ‘m not sure there are any agencies at this point that can withstand significant cuts in personnel and maintain their current level of service,” England said. “I do believe we will see agencies come with creative ways to deliver their services that may mean they can reduce personnel though.”

The nonprofit and nonpartisan Georgia Budget and Policy Institute predicts the state could lose close to $4 billion over the next year-and-a-half without federal relief. But a call for 14% budget cuts for FY 2021 at all state agencies is concerning, GBPI Policy Analyst Danny Kanso told Atlanta Business Chronicle.

“Those cuts would be absolutely devastating to the state,” he said. “That number is a greater level of austerity than we’ve really seen in Georgia ever. It outweighs basically all of the gains that we’ve made in trying to restore our budget since the Great Recession, which we still haven’t completely done.”

Georgia already spends less per resident than the state did before the last recession, Kanso said. Lawmakers cannot make nearly $3.6 billion in cuts with no effort to raise revenue without accelerating a massive economic downturn, severely underfunding schools and negatively affecting the lives of the more than 10 million Georgians in every community across the state, according to Kanso.

The private sector and state government are “undeniably tied together,” he added. Major cuts to education and an already stressed healthcare system could even have larger impacts in rural Georgia where school systems, prisons and hospitals are often the largest employers, Kanso said.

“That 14% is largely going to translate into folks who are employed by the state of Georgia, who in a lot of cases are doing very essential jobs, like teachers,” he said. “And that is going to have a tremendous downward effect into other sectors of the economy. There are the areas that are more directly supported with state funds, like economic development, agriculture, community affairs and state parks.

“Those sectors have traditionally faced the deepest cuts, so I think that we can expect probably significantly more than 14% for some of those agencies that are providing critical business for our farmers and for different communities,” Kanso said.

The legislature suspended this year’s session on March 13 due to the coronavirus pandemic with 11 days remaining in the session. Kemp signed March 17 a nearly $28 billion mid-year budget to last through June 30 that included $100 million in emergency funding to combat the pandemic. The emergency funding was taken from the state’s $2.8 billion reserves.

The Georgia Department of Public Health reported May 1 there have been 1,147 deaths due to Covid-19, the disease caused by the coronavirus. There are nearly 28,000 cases and more than 5,000 people hospitalized with the disease, according to the DPH.

Updated May 5 with comments from Rep. Terry England.

 

By Dyana Bagby  – Reporter, Atlanta Business Chronicle, Atlanta Business Chronicle
https://www.bizjournals.com/atlanta/news/2020/05/01/georgia-agencies-told-to-slash-budgets-by-3-6.html

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