Gov. Brian Kemp recently announced he has directed state agencies to cut 4% from this year’s state budget and an additional 6% next year. This cut would not include education, Medicare/Medicaid and transportation, which accounts for about 80% of the overall budget. (Education at 55%, health at 15% and transportation at 10%.) Thus, only $5.5 billion of our $27.5 billion budget is subject to this cut. As a member of the House Appropriations Committee, I wanted to inform you of how we look.
Georgia has experienced record growth over the past decade, (fourth-best in the nation) far out-pacing our Southern neighbors. Georgian citizens enjoy the second-lowest per capita tax burden in the nation. The size of our state government is still at 1990’s levels, and we have the second-highest Bond Rating (AAA) of any state. Due to our conservative policies and low taxes, Georgia has been ranked the “Number One State To Do Business In” a record six times in a row. No state has won that award more than twice in a row. Wages are up 5%, our manufacturing employment is at 30-year highs, and thanks in part to Georgia’s excellent universities, we have lots of young talent that is attracting dozens of Fortune 500 companies to headquarter here.
Georgia is still growing, but our neighbors are catching up. Georgia added almost a million jobs over the past decade and our unemployment is at record lows. In fact, it is not a lack of jobs but a lack of skilled labor that is our biggest problem. This is one of the reasons I am so committed to education – workforce development (mostly technical, not college where we are doing great) is our biggest challenge.
Agriculture is still our No. 1 industry with a $73.7 billion impact and 400,000 jobs, but we took a $2.5 billion hit with Hurricane Michael. The U.S. economy is very good, but a strong dollar, unfortunately, makes our goods more expensive to foreign buyers. Exports to China are down, especially in wood, peanuts, pecans and pork; though poultry is still strong. This export picture is particularly harsh as the vast majority of our cotton, peanuts, tree nuts and horticultural products are exported. Mexico is also cutting into our once healthy vegetable, blueberry and fruit markets, with cheap labor and unhealthy amounts of pesticides. On the positive side, our abundance of water and our technological achievements of conserving that water is still one of Georgia’s greatest assets.
Tourism is at record highs (111 million visitors last year!) and expects to continue growing, grossing $56 billion and 300,000 jobs every year. The Mercedes Benz stadium books 70 events every year that are not sports-related, Atlanta is the fourth busiest convention city in the nation, and Atlanta is also the first city - ever - to host three national championships in a row (College Football, Super Bowl and a Final Four). Atlanta also has an excellent chance of hosting the World Cup, which – in terms of dollars and world-wide attention – makes the Super Bowl look like a junior college game. Foreigners – especially Asians – are traveling to Georgia in record numbers, and they are spending seven times more (in shopping) than Americans when they come.
Savannah is now the fourth largest port in America and is growing astronomically. Our Deep Water Ports have tripled their output over the past 20 years, doubled in the past 10 years, and plan to double yet again, with $61 billion in yearly sales. The ATL airport is still the busiest airport in the world with an impact of $58 billion and 450,000 jobs. Augusta has become a Cyber Super Center, attracting lots of technological talent, and the movie industry has not skipped a beat, growing from $40 million to $10 billion impact every year. In fact, 2019 was our best film year ever, with almost 400 new productions.
On the other hand, workforce development is still our biggest problem. Overall, Georgia’s education scores are the best they’ve ever been, both in terms of graduation rates and SAT scores. But south rural Georgia is the fifth poorest part of the nation, with very few examples of upward movement. This is particularly sad, given that Georgia’s Hope Grant Scholarship is completely free for many technical degrees, Georgia’s Hope Scholarship is one of the most generous college scholarships in the nation, and $70 million in Pell Grants are not even used every single year. There are over 7.5 million job openings in America and 6.5 million people looking for work. That’s a lot of opportunities for anyone to succeed, as long as they have the basic educational requirements (and the will) to pursue them. Most of these new jobs are in technical skills like plumbing, electricians, nurses, computers and manufacturing.
While most of this data sounds good for Georgia, we were recently surprised by an unexpected dip in state revenues last quarter. We expected a 2% increase (due to expected economic growth, not a tax increase), but instead we experienced a 0.5% decrease. Given these numbers – and a campaign promise to keep government lean – Gov. Kemp is proactively planning for what the reality might become.
Bottom line: the overall economy looks promising for Georgia, though we are concerned about agriculture exports. However, out of an abundance of caution and an unexpected reduction in tax revenues, we are preparing to cut about $200 million from this year’s budget and $300M more again next year.
I will continue to keep you informed of future developments. As always, you may contact me at dave.belton@house.ga.gov or 706-372-4114.
Dave Belton is a Republican from District 112, serving in the Georgia House of Representatives.
