ATLANTA -- Thursday’s release of Gov. Nathan Deal’s proposed budget not only launches weeks of intense scrutiny but also a flood of policy debates about what the state’s priorities should be.
At a forum that evening in Newnan, Ga., most of the six candidates for a special election to fill a House vacancy declared that solving the budget was as simple as cutting out waste rather than raising taxes of any sort. In a conservative district within a conservative state, such comments tend to appeal to voters.
However, Georgia has generally been led by conservatives, certainly over the last 10 years when self-described conservative Republicans have been in power. Their reaction to weak tax collections generally has been to cut spending rather than boosting tax rates.
In his State of the State Address, Deal emphasized it.
“We have spent taxpayer dollars wisely. Using 2012 dollars, our per capita spending of government money is 17 percent less that it was a decade ago,” he said, adding that there are 9,000 fewer state workers than five years ago.
Throughout his 30-minute speech, he repeatedly cited examples of tax-savings strategies, such as the relaxing of criminal sentences so that the state will have to house fewer prisoners. Submitting 57 programs -- 10 percent of all government programs -- to intensive, zero-based budgeting examination yielded about $10 million in savings elimination of a few dozen jobs.
The governor is also requiring every part of government -- except K-12 education -- to cut its spending by 3 percent.
His is calling for at least one revenue measure. He asked lawmakers to indirectly extend a tax on hospital revenues to prevent a nearly $700 million hole in the Medicaid budget.
The Newnan candidates, many junior members of the General Assembly and conservative activists object to that as a tax increase that will harm the economy. Pragmatists like Deal counter by pointing out the size of that hole equals the entire budgets of the judicial branch and more than a dozen agencies combined, including the Georgia Bureau of Investigation and the departments of labor, insurance and agriculture. It’s comparable to the entire budget of the Department of Transportation.
Complicating budget-cutting choices are federal requirements. The state is obligated to administer federal programs like unemployment benefits, environmental regulation and Medicaid itself.
Washington limits how much states can cut those services.
“The benefits we pay are already close to the minimum allowed,” said Richard Dunn, human-services director of the Governor’s Office of Planning and Budget.
One option would be to reduce how much Georgia reimburses doctors and hospitals for treating Medicaid patients in the neighborhood of 20 percent. They already get less than 80 percent of the actual cost, and further reductions would lead more physicians to turn away Medicaid patients, according to a recent survey by the Medical Association of Georgia.
Over the remaining 37 days of the legislative session, lawmakers will review Deal’s recommendations and then vote on them, including any changes they agree to. Typically, they’ll take right up until the final hours to reach agreement even though their changes will amount to less than 1 percent of the $19 billion budget.
By extending the hospital tax, what Deal calls a provider fee, he has money for other projects, including $300 million to cover school-enrollment growth over this year and the next plus $41 million extra for low-income school districts, $85 million for college-enrollment growth, $35 million for services to the mentally ill, and $2 million for creating hospital residencies for new doctors.
Two sources of money allow the governor to propose new spending, the lottery and debt.
From proceeds of the Georgia Lottery Corporation, Deal wants to raise the HOPE Scholarship by 3 percent; sweeten the HOPE Grants to technical colleges for high-demand fields like nursing, truck driving and daycare; and restore 10 days of instruction to the Pre-K Program cut two years ago for cost savings.
Out of a $800 million bond sale to borrow money, he would put $50 million more toward deepening the Savannah River’s shipping channel, $45 million in a cancer research lab at Georgia Regents University, $30 million in Altamaha Technical College’s Brunswick and Kingsland campuses and $65 million to lend to local governments needing more water or sewer facilities.
The rest of the debt would go to roads, buildings, patrol cars and school buses.
Overall, Deal’s budget has few initiatives.
“There was not a lot of new things in there,” said Sen. Tommie Williams, R-Lyons. “There’s not much you can do with that revenue.”
Deal predicts tax collections will grow by 4.6 percent in the coming fiscal year while at the same time revising downward his estimate for the current year.
Such modest growth expectations are likely to set up another round of cuts next January, warns Georgia Budget and Policy Institute Director Alan Essig.
“The problem is that it would take growth of 7 to 8 percent to balance the budget and take the much-needed step of significantly increasing the state’s rainy day fund to cushion future bad times. Without new sources of revenue, additional cuts are likely in next year’s amended budget,” said Essig, whose private think tank advocates for tax increases to boost spending on social programs.
“I think he’s done the very best he could under the circumstances,” said Senate Appropriations Chairman Jack Hill, R-Reidsville.