Slow revenues lead to mid-year budget reductions from Georgia House

Georgia House cuts $159 million from FY2020 budget with mid-year amendments – falling short of cuts requested by Governor Brian Kemp. Senate will now take up the mid-year budget amendments.




Each year under the Gold Dome in Atlanta, a main task of the Georgia General Assembly is crafting, debating, amending and adopting a state budget for the coming fiscal year, which begins July 1. But before lawmakers focus their full budgetary attention on the coming Fiscal Year, they must first revisit the current year’s budget.


“Each annual appropriations act is amended the following year to allow the state to adjust the budget to meet school enrollment growth, actual tax revenue collections, and spending changes not known when the original budget was passed,” states a report by the Georgia Budget and Policy Institute.


On Feb. 19, the Georgia House of Representatives passed House Bill 792, the amended FY 2020 budget, by a vote of 126 to 46. The bill now comes before the Senate. The $27.5 billion FY2020 budget adopted last year complied with a 4 percent spending reduction mandated by Kemp, and the amended budget passed by the House last week included an additional $159 million in cuts – granting some, but not all, of the additional spending cuts requested by Kemp in January as a result of slow revenue collections.


Some of Kemp’s requested cuts that the House kept in the amended budget include a several-million dollar reduction in funding for the state’s K-12 education system, by way of an updated funding formula. The elimination of more than 1,250 currently-vacant state agency positions also added to the savings


The House, however, ignored Kemp’s request to cut funding for the state’s accountability courts, mental health services, rural agriculture programs and food safety inspectors. One of the reasons behind the necessity for additional cuts in spending come from the quarter of a percent cut in individual income taxes that was approved by the legislature in 2018 – a cut that has resulted in a $30 million drop in collections during the first six months of the 2020 fiscal year.


An additional quarter of a percent reduction in income tax is being considered for the FY2021 budget. A $75 million reduction in projected sales tax collections for FY2020 also contributed to Kemp’s proposed FY2020 budget amendment.


Midyear budget adjustments adopted by the House include some additional appropriations – a typical practice especially in connection with the education budget to take into account typically rising enrollment numbers – as well as significant cuts.



Education:

  • $113 million increase in appropriations for public K-12 and state charger schools required by the Quality Basic Education (QBE) funding formularies

  • $27 million increase for the State Charter Schools Commission

  • $15 million in cuts to University System of Georgia, including cuts of $1.7 million to public libraries, $6.2 million to the agricultural Experiment Station and Cooperative Extension Services, $1.3 million to the Medical College of Georgia Hospital and Clinics, and 1.1 million to the Enterprise Innovation Institute

  • $7 million in cuts to the Department of Eduction, including cuts of $600,000 to the Chief Turnaround Officer program and $600,000 for Regional Education Service Agencies (RESAs)

  • $743,000 in cuts to the Bright from the Start Department of Early Care and Learning.

  • $2.1 million in cuts to the Technical College System of Georgia.

Health Care

  • $23 million additional spending for Indigent Care Trust

  • $10.7 million additional spending for Medicare patients

  • $200,000 additional spending to establish the Georgia Access to Medical Cannabis Commission.

  • $33.3 million reduction for the Department of Behavioral Health and Disabilities, including $12.8 million from Child and Adolescent Mental Heath Services, $5 million from adult addictive diseases services, and $4.1 million from direct care support services.

  • $4.3 million in cuts to Department of Community health grant programs

  • $6.2 million in cuts to the Department of Public Health, including $7.3 million in reduced grant funding for county boards of health, $590,000 from Infectious Disease Control and $410,000 from Infant and Child Essential Health Treatment Services.

Public Safety and Criminal Justice

  • $47 million in cuts to the Department of Corrections, including $35.3 million from state prisons, $7.6 million from healthcare, and $1.8 million from Transitional Centers.

  • $14.7 million in cuts to the Department of Juvenile Justice, including $12.2 million from Youth Detention Centers and $2.2 million from community service programs.

  • $7.5 million reduction in Department of Community Supervision funding

  • $4.9 million in cuts for the Georgia Bureau of Investigation, including $693,000 from Forensics Scientific Services, $1.7 million from Regional Investigative Services, and $2.1 million from Criminal Justice Coordinating Council, which funds state grants to local accountability courts.

  • $7.4 million cut in Department of Public Safety, including a $5 million reduction for Field Offices and Services.

  • $1.9 million reduction for the Georgia Public Defender Council.

  • $920,000 cuts to the Georgia Public Safety Training Center and Georgia Peace Officer Standards and Training Council.

Essential Services/Rural/Low Income

  • $25.4million reduction for Department of Human Services, including $6.l8 million for Child Welfare Services, $4.9 million for Federal Eligibility Benefit Services and $1.2 million in cuts to 67 child support services agent positions

  • $3.8 million reduction for the Department of Natural Resources, including $1.2 million form Environmental Protection and $700,000 from Wildlife resources.

  • $3.6 million for the Department of Revenue for Tax Compliance

  • $1.8 million cut for the Department of Agriculture

  • $5.3 million reduction for the Department of Community Affairs

  • $3.8 million in cuts to Insurance Regulations

  • $1.7 million reduction for the Department of Economic Developmental

  • 1.5million reduction for the Department of Veterans Services


FIY

The development of the state budget occurs in several distinct and cyclical phases each year.


Phase One: All state agencies are required to submit their budget requests to the Office of Planning and Budget (OPB) in September of each year using guidelines issued by the Governor earlier in the year. These requests contain the funding needs of agencies, such as salaries of employees, operational costs, technologies, and rent for office space, among other things. Agencies are also required to submit strategic plans alongside their budget request. These plans detail how the agencies will use their funds to improve services, increase employee retention, and enhance overall efficiency.


Phase Two: At the beginning of the budget process, the Governor sets the revenue estimate, which projects how much revenue the state will accrue during that fiscal year, subsequently determining how much money the state can spend. Once the revenue estimate is set, OPB then carefully analyzes all agency budget requests to ensure that they further the state’s policy goals in a cost-effective manner.


Phase Three: After reviewing all agency budget requests, OPB analysts meet with the Governor and his staff to brief him on the requests and also offer preliminary recommendations based on their in-depth analyses. The Governor then uses this information to formulate his own formal recommendations for the General Assembly, which are published in the Governor’s Budget Report.


Phase Four: The General Assembly must have the Governor’s budget report within five days of convening in January. After receiving the report, the legislature reviews the Governor’s recommendations and develops an appropriations bill. The bill must begin in the House of Representatives and it specifies how much money will be appropriated to each agency at a program-level. Once the bill passes in the House, it is then transmitted to the Senate.

The Senate reviews the bill and adopts a substitute, which is then sent back to the House for acceptance or rejection. More often then not, the two chambers will not be able to agree on one version of the bill. As a result, a conference committee is convened, which is made up of members from both chambers. The conference committee eventually comes to a compromise on appropriations, and the newest version of the bill is sent to both chambers for a vote.


Phase Five: Once the same version of the bill has passed both the House and Senate, it is sent to the Governor, who has 40 days to sign it before it automatically becomes law. The Governor maintains the constitutional right to strike out portions of the bill with his line-item veto.

An example of a signed appropriations bill can be found here. Once the bill is signed into law, OPB then works to compile a document that summarizes all budgetary changes, known as the Budget in Brief. This document contains financial summaries and budget highlights.


Phase Six: Once the bill becomes law, OPB works to ensure that each agency’s spending does not exceed the amount appropriated for each of its programs. OPB does this by reviewing and authorizing annual operating budgets, as well as monthly allotments, and projecting and analyzing agency expenditures.


Phase Seven: Once the fiscal year ends on June 30, the State Auditor is responsible for auditing the expenditures of each state agency. This includes all departments, colleges and universities, authorities, and school districts.

SOURCE: Georgia Governor’s Office of Planning and Budget


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