2023 BudgetGeorgiaPrimer GBPI Georgia Budget & Policy Institute
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and Policy Institute
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July 2022 Georgia Budget and Policy Institute
Racist
Shaped by History
Georgia Budget Primer 2023 | Page 2 Table of Contents About GBPI Letter from the President
Budget HealthEducationTrends The
By the RevenueNumbers Georgia’s Revenue
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About
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SCAN If you would like to make a donation or find out more about us, please visit gbpi.org/donate
We3 examine the state’s budget, taxes and public policies to provide thoughtful analysis and responsible solutions that address inequities in our state. We educate the public about complex issues confronting Georgia and activate Georgians to call for policy solutions that put people first. We aim to inspire informed debate and decision-making, advancing our vision of a fair and inclusive Georgia where everyone can prosper. The Georgia Budget and Policy Institute (GBPI) strives to be an anti-racist research and advocacy organization that advances lasting solutions to expand economic opportunity and well-being for all Georgians.
Georgia Budget Primer 2023 | Page 4
A state budget is a statement of values. As I begin my tenure as the third leader of GBPI, our state ushers in a budget that restores deep cuts enacted during COVID-19. It also marks a missed opportunity to further support the wellbeing of every Georgian by centering the needs of people who are most Georgiamarginalized.hasthethird
Unfortunately, the budget failed to invest more state dollars in the safety net, provide additional dollars to schools to better educate students in poverty, create a state Earned Income Tax Credit to support people working for low wages, or expand Medicaid to provide access to health coverage for roughly 490,000 LawmakersGeorgians.passed
Staci Fox (she/her) President and CEO
highest Black population among states. Yet, as GBPI consistently documents, systematic racial and gender inequities driven by policies have perpetuated unfair outcomes for Black people and especially Black women. Georgia’s Black women-led households are more likely to live in poverty, more likely to work in jobs that pay low-wages, and less likely to have access to health insurance than white households. Due to longstanding structural inequities, they were more vulnerable to the pandemic and economic downturn and face a slower recovery.
some policies that support Black women—such as extending postpartum Medicaid, which provides health care coverage to parents after giving birth; creating college completion grants, which could benefit Black women specifically as they are forced to rely heavily on student loans; and implementing a $5,000 COLA for state workers, many of whom are Black women. However, with funding from the federal government and a rare revenue surplus, more could be done to advance recovery for Georgia’s most vulnerable communities.
The information in this 68-page booklet and associated online resources summarizes Georgia’s 168-page appropriations bill so that you can better understand the effects of state spending on our communities and your life. Only by advancing economic opportunities for Georgia’s most marginalized residents can we witness the advancement of economic opportunities for all.
Letter from the President
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The 2023 Georgia Budget Primer is GBPI’s signature annual publication that connects the dots between state revenues; investments in education, health care, human services and the justice system; and the effects of the budget on the people of Georgia.
Introduction
Georgia received unprecedented federal funding and saw a rare revenue surplus this year. Lawmakers then faced a choice: they could build a more resilient state by addressing systemic barriers that have left Black women, communities of color and other Georgians behind or they could further skew the tax code further in favor of the wealthy, risking Georgia’s long-term potential. Although they passed policies that helped advance the former, like extending post-partum Medicaid coverage to parents for one year, overall, lawmakers fell short of making full use of available resources to ensure all Georgians can thrive. The pages that follow provide a clear explanation of the state’s spending plan and illuminate opportunities to pursue a more equitable future.
The 2023 Budget Primer is an authoritative reference for the fiscal year that began July 1, 2023. It can help seasoned observers and novices alike understand the budget’s complexities. The governor proposed the 2023 state budget in January 2022. State lawmakers then modified it before Governor Kemp signed the budget into law in May 2022. Lawmakers will amend the 2023 state budget after the next Legislative Session starts in January 2023. Please visit www.gbpi.org for updates.
Georgia plans to spend $30.2 billion in state money raised through taxes and fees for the 2023 fiscal year. This budget largely reflects a restoration of previous COVID-era budget cuts and represented a unique opportunity to invest in state fiscal policies that advance racial equity and economic opportunity, and to help Georgia families from the Black Belt to Blue Ridge make ends meet.
The budget process is ongoing and requires yearround engagement from advocates. Even as Georgia is implementing its current budget, it is auditing the previous year’s budget and planning for the next one. Beyond the General Assembly, many others participate in the process, including the governor, state budget director, state economist, agency leaders and budget officials, state auditors and the public.
Budget Basics
Georgia Budget Primer 2023 | Page 6
Georgia’s 2023 fiscal year runs from July 1, 2022 through June 30, 2023. The total available funding to the state is $57.9 billion. That includes $30.2 billion in state funding, $17.7 billion in federal funding and $10 billion in agency funds and state employee benefit plan transfers. Before the effects of the Great Recession took hold, adjusting for inflation, the state of Georgia spent about $2,918 per person in FY 2008. Under the 2023 budget, the state will spend about $121 less per person, a total of about $1.3 billion less than if spending kept pace with growth.
The state budget outlines Georgia’s priorities, how it plans to spend money and how much revenue it expects to collect. It is the most important piece of legislation lawmakers pass.
In fact, the budget is the only legislation that the General Assembly is legally required to pass each year. The Georgia Constitution also requires the state to maintain a balanced budget. If it raises more than it spends, remaining funds are automatically added to the state’s Revenue Shortfall Reserve savings account until it reaches 15 percent of prior year collections, at which point the funds shift to an ‘undesignated surplus’ account that can be tapped under the governor’s authority to set Georgia’s revenue estimate.
Steps Along Georgia’s Budget Path
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Georgia Budget Primer 2023 | Page 8
Each day, Georgia’s budget for 2023 touches the lives of millions of people across the state. The spending plan directly affects the quality of life for all 10.8 million Georgians across the state’s many diverse communities. The lion’s share of that money is allocated to core investments in the state’s economic future, including education, health care and transportation. Here are some examples of the way the state budget affects the lives of Georgians: 2.3 million+ Georgians who are seniors, disabled, children or parents with low incomes receive health care coverage and services ($4.1 billion in the 2023 state budget)
1.73 million students, supported by 132,000 teachers and administrators, enroll in Georgia’s 2,300 K-12 public schools ($10.7 billion in the 2023 state budget)
434,000 students enroll in Georgia public colleges, universities or technical colleges ($4.7 billion in the 2023 state budget) 246,500 adult Georgians live under correctional control, including 181,000 on probation, 47,000 individuals who are incarcerated and 28,500 Georgians on parole ($1.5 billion in 2023 state budget) 18,000 miles of state highway are overseen by the Department of Transportation, which will also direct $201 million in FY 2023 to help maintain and improve more than 100,000 miles of county roads and city streets ($2 billion total in 2023 state budget)
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Source: U.S. Census; Georgia Department of Community Health; Georgia Department of Corrections, January 2022 Average Counts; State Board of Pardons and Paroles, population under supervision as of January 2022; Georgia Department of Community Supervision, annual population as of January 2022; Georgia Department of Education; Georgia Department of Transportation, Fact Book; Board of Regents, University System of Georgia Semester Enrollment Report, 2022; Technical College System of Georgia, total enrollment Fall 2022.
By
the Numbers
Revenue
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At the beginning of the twentieth century, Georgia generated most of its revenue from a state property tax, which in the intervening decades was weaponized to systematically disenfranchise, intimidate and economically harm Black Georgians. The property tax was implemented alongside the state’s poll tax— which was maintained until 1945.
Georgia’s Revenue System Shaped by History of Racist Policies
The structure of Georgia’s modern revenue system—which determines how much money the state can use to fund Georgia’s budget—developed during the turbulent decades of the 1930s through 1960s, a period during which the state was largely governed by segregationists who resisted New Deal-era federal assistance and struggled to finance basic government programs and services.
Property tax assessors were given wide latitude to favorably value white landowners’ property while leveraging tax assessments to push Black land and business owners into poverty and, in many cases, eventually seize their property. In 1929, the state adopted corporate and individual income taxes, and in 1937, established the relatively flat individual income tax bracket structure that continues to form the basis for the current tax code. In 1951, the state enacted a sales and use tax at a rate of 3 percent, which was increased to its current level of 4 percent in 1989.
As revenues from income and sales taxes increased, the state phased out its property tax and eliminated it in 2016; local property taxes remain. Historic injustices and harmful policy choices have resulted in vast disparities in income across race and ethnicity in Georgia. Regressive tax policies at the state and local level worsen those disparities by asking those making the lowest incomes to pay the largest share in taxes. Structural racism exists when racist policies, practices, attitudes and other factors combine to create or perpetuate inequities. For example, racist policies such as mass incarceration have worked alongside racism in hiring to exacerbate occupational segregation, where many people of color work in jobs that do not pay a living wage. As a result, unjust policies like a regressive tax code have a disproportionate impact on workers of color and their families.
White and Asian Georgians Over-Represented Among Top Earners, Black and Hispanic Likeliest To Make the Least Share of total BracketPerBreakdownEthnicityRaceearnedincomeandIncome 62% 18% 11% 6% 3% Income Group Lowest20% Second20% Middle20% Fourth20% Top 20% Income Range Less$29,300than $29,300-$52,900 $52,900-$84,400 $136,000$84,400- $136,000ormore RacesOther/MultipleHispanic/LatinoAsianAmerican/BlackAfricanWhite Source: Institute on Taxation and Economic Policy, May 2022. 45%37%9% 1%2% 35%47%10% 2%1% 9%33%49% 1%3% 57%27%7% 4%1% 1%5% 5% 66%18% Georgia Budget Primer 2023 | Page 12
Sales taxes provide a less consistent source of yearly revenue, and they fall more sharply on middle-class families and people with lower incomes. However, sales taxes remain a core funding source that allows the state to generate revenue from consumption and economic inputs that would otherwise be exempt from taxation. In recent years, lawmakers have enacted several measures to ensure sales taxes are applied to online marketplaces. The state’s sales tax, however, is not assessed on the purchase of most services and large parts of Georgia’s economy, such as construction labor, the finance industry, attorneys or physicians. Some sales tax exemptions were intentionally created to avoid taxing products families rely on, such as groceries, while sales of items like digital downloads are not taxed because lawmakers have not proactively updated the tax code to include them.
Georgia’s fiscal health depends on the state’s ability to raise money from a variety of sources in a reliable way. Like most states, Georgia collects revenue from a mix of personal and corporate income taxes; sales taxes; gas and vehicle taxes as well as various other levies and fees. Income taxes are the cornerstone of Georgia’s revenue system, accounting for half of all state funds. Sales taxes are the second-largest revenue source, representing slightly less than a quarter of annual collections. A fair and reliable revenue system requires both types of taxes.
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Where Does Georgia’s Money Come From?
Income taxes help balance the regressive effects of sales taxes and fees by allowing the state to collect a proportionate share of revenue from the wealthiest earners and most profitable corporations. A healthy income tax is also less sensitive to economic trends, which can boost revenue growth during good times but decline sharply when recessions occur.
Income Tax Largest Source of State Revenue Income Taxes: $15,497,453,347 Other Taxes and Fees: $3,730,961,387 Sales Tax: $7,402,314,196 Designated Funds: $3,571,751,780 Revenue Estimate, 2023 Fiscal Year Income Taxes 15,497,453,347 51% Personal Income Tax 14,101,897,565 47% Corporate Income Tax 1,395,555,782 5% Sales Tax 7,402,314,196 25% Other Taxes and Fees 3,730,961,387 12% Motor Vehicle Title Tax (TAVT) 650,000,000 2% Insurance Premium Tax 560,000,000 2% Motor Vehicle License Fee 370,000,000 1% Hospital Provider Payments 380,916,567 1% Tobacco Tax 237,000,000 1% Alcohol Beverage Tax 245,000,000 1% Nursing Home Provider Fees 162,388,579 1% Designated Funds 3,571,751,780 12% Motor Fuel Tax & Interest 2,002,887,881 7% Lottery Funds 1,418,726,951 5% Tobacco Settlement Funds 148,525,344 <1% Brain & Spinal Injury Trust Fund 1,611,604 <1% Safe Harbor for Sexually Exploited IIIIIChildren Fund 110,586 <1% Total 30,202,480,710 100% Source: Governor’s Budget Report Amended FY 2022 and FY 2023; Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Georgia Budget Primer 2023 | Page 14
Note: Tobacco Settlement Funds or Grants account for $148,525,344 of the 2023 budget, a number too low to appear on this chart.
Federal Funds–A large share of Georgia’s overall spending for health care, K-12 education, transportation and other services is paid through the administration of $17.7 billion in federal funds.
Lottery Funds–These $1.4 billion in revenue are dedicated to preKindergarten programs and scholarships for higher education.
Lottery Funds: $1,418,726,951 Motor Fuel Funds: $2,008,887,881 Agency Funds: $5,707,336,619 Federal Funds: $17,689,658,992 State General Funds: $25,879,561,140 Other State Funds: $748,212,006
Georgia’s total 2023 budget, including federal funds, is $57.9 billion and is made up of six major funding sources:
General Funds–The state-funded portions of education, Medicaid and most other traditional state services are paid for through the $25.9 billion General Fund, which includes money raised by income taxes, sales taxes and a variety of other taxes and fees.
Intrastate Transfers–The $4.3 billion of intrastate transfers include payments from the health benefit plan for state employees.
Agency Funds–These $5.7 billion in revenue include tuition and fees from colleges and university system research funds, in addition to regulatory fees and revenue raised directly by individual state agencies.
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Funding Sources
General and Federal Funds Make Up Most of $57.9 Billion 2023 Budget
Tobacco Settlement Funds or Grants–This ongoing annual payment, $149 million in FY 2023, resulting from a legal settlement with the country’s four largest tobacco companies over health care costs, can be used for anything in the budget.
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• Health Care (21 cents)
More than 94 cents of every dollar appropriated by the state pays for eight core priorities:
• Higher Education (16 cents)
General Funds $25.9 Billion (45 Percent of Georgia’s Budget)
Georgia’s Constitution restricts spending revenue from state motor fuel taxes to roads and bridges. The money is dedicated to a mix of new construction, maintenance of existing infrastructure and debt service on past investments.
Georgia’s General Fund derives largely from income taxes on personal and corporate earnings and sales taxes on consumer transactions. The state also taxes motor fuel and assesses provider fees on hospitals and nursing homes.
Georgia’s 2023 motor fuel rates are 29.1 cents per gallon of gas and 32.6 cents per gallon of diesel, a slight uptick from last year. As of July 1, Gov. Kemp has suspended Georgia’s gas tax via executive order through at least August 13, 2022, to offer relief to consumers facing recent spikes in energy prices. While the state taxes aviation gasoline at 1 cent per gallon, the state’s Department of Revenue has recognized a permanent tax exemption on the sale of jet fuel, which will cost the state an estimated $50 million in FY 2023. The state’s budget includes a total of $2 billion in motor fuel revenue.
Georgia Budget Primer 2023 | Page 16
• Transportation (7 cents)
• Corrections, Juvenile Justice and Re-entry (6 cents)
• Debt Service (4 cents)
The remaining General Fund spending is for state agencies, boards and commissions dedicated to activities such as economic development, agriculture and forestry as well as grant programs. The General Fund also covers the costs of operating the legislative, judicial and executive branches of state government. Not included in Georgia’s General Fund are dedicated taxes and fees that are collected into several other funds. Lottery proceeds are also not included in the General Fund and account for about 5 percent of total state funds or $1.4 billion.
Motor Fuel Funds $2 Billion (3 Percent of Georgia’s Budget)
• Department of Human Services (3 cents)
• Pre-K-12 Education (37 cents of every dollar spent)
and Education:K-12 $11.2 B Health Care: $6.2 B Education:Higher
Agency
Agency funds include $3.5 billion in tuition and fees collected by the University System of Georgia and the Technical College System of Georgia.
Pre-K $4.7 B
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Funds $5.7 Billion (10 Percent of Georgia’s Budget)
Other Public Safety: $0.4 B Human Services: $0.9 B Debt Service: $1.2 B General Government: $1.6 B Corrections: $1.8 B Transportation: $2.1 B
Overall, the University System of Georgia accounts for $4.5 billion in Agency and Research funds. The money is retained by the individual schools.
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Largest Share of Agency Funds Go to University System of Georgia University System of Georgia Board of Regents Agency Funds $3,134,278,644 University System of Georgia Board of Regents Research Funds $1,320,680,211 Indigent Care Trust Fund–Public Hospital Authorities $139,386,524 All Other Agency Funds $1,112,991,240 Total $5,707,336,619
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Make Up 73 Percent of
Education and Health Care
State Budget
changes
to support Georgia’s Universities and Technical Colleges • $1.6
Source: 2023 Budget 911), signed by the governor. Billion Percent of Georgia’s Budget)
Federal Funds $17.7
low incomes and support for students with disabilities • $1.8
state funding levels typically track changes
federal
for Medicaid and many other investments that benefit Georgians. As
and
Georgia spends
match
$17.7 Billion in Federal Funds Mostly Pays for Health Care, Education, Transportation and Human Services Health Care: $10 B Pre-K and Education:K-12$2.6 B Education:Higher $1.8 B Other: $0.6 B Department of Human Services: $1.1 B Department Transportation:of $1.6 B Georgia Budget Primer 2023 | Page 18
for Pre-K-12 education, which
for the Georgia Department of Transportation • $1.1 billion for human services, Temporary Assistance for Needy Families (TANF, or cash assistance) and child welfare programs Federal
care programs • $2.6
Fiscal Year
for Medicaid, PeachCare and other
programs, services for students
(HB
Georgia’s
(31
• $10
school
families
Money from the federal government flows to a range of state programs services. the vast majority of federal money on the following: billion health billion includes nutrition from with billion billion rules require the state to federal funding a result, in in funding.
American Rescue Plan Act
“(C) for the provision of government services to the extent of the reduction in revenue of such State…government due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year...; “(D)or to make necessary investments in water, sewer, or broadband Ininfrastructure.”additiontoproviding
for on-going needs related to the COVID-19 pandemic, state funding could go towards priorities like improving outcomes for public school students living in poverty or providing direct payments to low-and-moderate income families. The state could also allocate funds to help jump-start efforts to address gaps in access to health care services or address other long-standing inequities.
$5 Billion (State Fiscal Relief Fund and Capital Fund Project)
“(A) to respond to the public health emergency with respect to [COVID–19] or its negative economic impacts, including assistance to households, small businesses and nonprofits, or aid to impacted industries such as tourism, travel and hospitality;
“(B) to respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the State…government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
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Through the beginning of FY 2023, Georgia has allocated approximately $1.6 billion of these funds and retains about $3.4 billion in its State Fiscal Relief and Capital Fund Project accounts. Going forward, Georgia’s Governor retains full authority and wide latitude to allocate these funds across four core areas set forward by the ARP:
Enacted as part of the sweeping ARP legislation that was signed into law by President Biden in March 2021, Georgia is set to receive nearly $5 billion in federal funding. The funding includes $4.7 billion in flexible relief funding, along with $262 million in aid for capital projects to stimulate the state’s economy and address long-overdue needs like rural broadband. This federal aid can be used from the point when it is received until December 31, 2024.
Purpose AllocatedAmount(Millions) Date Announced Address backlogs of court cases in state judicial branch $110 October 28, 2021 Expand broadband infrastructure across 70 counties $408 February 1, 2022 Water and sewer infractructure grants $422 February 22, 2022 Grants to hospitals, assisted living communities, and personal care homes $217 March 11, 2022 Economic impact grants to non-profits, government organizations and businesses $415 May 16, 2022 Total Allocated $1,572 Funds Remaining $3,390 Source: Governor’s Office of Planning and Budget; Office of the Governor, “Press Releases” Georgia Budget Primer 2023 | Page 20
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Most Tobacco Funds Used for Health Services
2023 Tobacco Settlement Fund Budget Medicaid $124,062,351 Public Health $13,774,072 Adult Developmental Disabilities Waiver Services $10,255,138 Other $433,783 Total $148,525,344
$149 Million (0.2 Percent of Georgia’s Budget)
Intrastate Transfers
$4.3 Billion (Included for Reference)
Intrastate transfers are primarily payments from the State Health Benefit Plan, which insures about 625,000 Georgians.
Georgia receives annual payments from a large settlement signed in 1998 with four of the country’s largest tobacco companies, known as the Tobacco Master Settlement Agreement. Georgia is not required to dedicate these payments for specific purposes. As a result, the use of tobacco settlement money can vary from year to year, though most of the money in the current year budget is allocated to health care. Health Payments Make Up Most Intrastate Transfers State Health Benefit Plan Payments $3,766,590,935 Medicaid Services Payments–Other Agencies $280,857,262
Other Intrastate Government Payments $296,438,627 Total $4,343,886,824
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. 21
2023 Tobacco Settlement Fund Budget
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TrendsBudget
Entering fiscal year 2023, Georgia stands at a key inflection point, with an unprecedented level of resources on-hand, along with a current-year revenue estimate that is significantly below prior year collections. All of these indicators demonstrate the clear opportunity available to state leaders to respond to long-standing needs across public education, access to health care, and economic mobility during the 2023-2024 session of the General
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Budget Trends
The $30.2 billion state budget signed into law by Gov. Kemp for FY 2023, which started July 1, 2022, represents a return to pre-pandemic levels of spending across most areas of government, albeit with state government employing nearly 5,800 fewer full-time staff in FY 2021 than it did in 2019, down nearly 9 percent, and struggling to combat an all-time high overall employee turnover of over 23 percent in a challenging economic Georgia’senvironment.governor holds unilateral authority to set the state’s revenue estimate. As such, under Gov. Kemp, the state responded to the 2020 pandemic-induced downturn by cutting spending and predicting relatively low levels of year-over-year growth in Georgia’s FY 2021 and 2022 revenue estimates. Simultaneously, the unprecedented, strong fiscal response at the federal level helped to create a rapid rebound and surge in economic activity, which was reflected in higher-than-expected state tax collections across both 2021 and 2022. The combination of these dueling responses has produced a cycle in which state revenue collections continue to significantly outpace spending, adding to an already historic level of un-obligated reserves available for allocation above the state’s Revenue Shortfall Reserve. Furthermore, the majority of the state’s $4.9 billion in flexible American Rescue Plan federal funds also remain available for use. However, decisions of whether to release federal funds for appropriation, or to spend them unilaterally, fall under the exclusive authority of the office of Georgia’s governor. On the other hand, while Georgia’s governor holds authority over whether to make surplus funds available for appropriation through the revenue estimate, responsibility for appropriating such funds falls under the jurisdiction of the General Assembly.
The Revenue Shortfall Reserve (RSR), Georgia’s rainy day fund, provides stability in economic downturns. The fund is like a savings account to pay expenses and maintain services when revenues decline unexpectedly.
Maintaining adequate reserve money helps Georgia keep its AAA bond rating, allowing the state to borrow on favorable terms and save millions in interest. Money is not appropriated into the RSR; the balance grows at the end of each fiscal year if there is surplus state revenue (up to 15 percent of prior year revenue). The governor is also authorized to release for appropriation any amount over the minimum balance required—4 percent of prior year revenues—in case of a fiscal emergency or if tax collections have outpaced estimates. Since the end of FY 2021, Georgia’s Revenue Shortfall Reserve has remained full at its maximum level, with consistently conservative revenue estimates issued by Gov. Kemp also resulting in an additional unobligated surplus.
State Savings Account Remains Full as Georgians Struggle
At the close of 2022, the balance of Georgia’s Revenue Shortfall Reserve stands at approximately $5.2 billion, equivalent to 15 percent of prior year revenues, or enough to fund the state’s operations for approximately 74 days. After the RSR is filled to 15 percent of prior year revenues, any remaining funds are categorized as “unobligated surplus.” As of the conclusion of FY 2022, GBPI estimates the balance of the state’s unobligated surplus account to be in excess of $5 billion. Shortfall Surges Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor.
Georgia Revenue
Reserve Balance
$4.5 B $4.0 B $3.5 B $3.0 B $2.5 B $2.0 B $1.5 B $1.0 B $0.5$0B Georgia Budget Primer 2023 | Page 24
Georgia offers a wide array of tax credits, deductions and other tax breaks, also known as tax expenditures, that give preferential treatment to certain taxpayers and corporations to achieve policy goals. The tax breaks will cost the state greater than $10 billion in lost revenue in the 2023 fiscal year. Some tax breaks provide key protections for families, such as the sales tax exemption on groceries, while others provide credits or incentives to specific industries or special interest groups. Several of Georgia’s largest tax breaks deliver outsized gains to select groups or industries—such as manufacturing, film or insurance—often with questionable benefit to the state or its people.
Georgia lacks a standardized review process to measure and compare costs and benefits of all existing and proposed tax breaks. During the 2021-2022 session, however, the state enacted legislation that allows the chairs of the General Assembly’s tax-writing committees to request individual analyses on a limited number of tax expenditures. The costliest industry-specific tax break offered is Georgia’s Film Tax Credit, which is designed to attract film production by subsidizing as much as 30 percent of the costs and ranks as the largest tax subsidy of its kind nationally at an annual cost greater than $1 billion. The state also offers major tax breaks targeted to insurance companies, multinational corporations and an array of individual industries. As state leaders commit billions in taxpayer dollars to finance an increasingly expansive ecosystem of tax credits, subsidies and indirect expenditures under the promise of accomplishing specific policy goals, such as job creation, greater transparency is urgently needed to provide a basic level of accountability and help safeguard future resources.
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Tax Breaks Erode Georgia’s Budget: $10 Billion in Foregone Revenue Collections in FY 2023
Film Industry, Insurance Companies Receive Largest Special-Interest Tax Breaks Agribusiness Tax Credit Sales of engines, parts, equipment and other tangible personal property used in the maintenance or repair of military aircraft, vehicles or missiles Exemption for the sale and use of jet fuel Credit for retraining employees Revenues from amusementcoin-operatedmachinesBankTaxCredit Manufacturer’s Investment Tax Credit Qualified Education Expense Credit (SSOs for private school voucher programs) Film Tax Credit Special deductions for insurance companies Jobs Tax Credit/Quality Jobs Tax Credit Research Tax Credit Exclusion of global income (GILTI) $50M$50M$33M$14M$55M$67M$72M$83M$201M$212M$290M$398M $1,002M Source: Georgia Department of Audits and Accounts, “Georgia Tax Expenditure Report for FY 2023” Georgia Budget Primer 2023 | Page 26
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Due in part to policies historic and systemic that have contributed to lower levels of income and wealth for Black Georgians and people of color, these tax changes would worsen racial inequities and expand the racial wealth gap. White Georgians (55 percent of tax filers) would see 66 percent of total benefits, and Asian Georgians (3.2 percent) would gain 4.6 percent of savings, while Black Georgians (32 percent) would see just 22 percent, and Hispanic Georgians (8 percent) benefit from 6 percent of the total tax cuts.
The flat tax plan requires overall revenue growth of at least three percent— with a 5-year look-back—to proceed without interruption through seven steps to achieve full implementation by 2030. However, forgoing $2 billion in annual personal income tax revenues threatens the long-term stability of Georgia’s revenue system and places a continued burden on the state’s ability to meet the needs of its residents. Already, Georgia ranks No. 48 out of 50 in the amount of general state revenues it raises per person (FY 2019).
State Plans to Begin Risky Income Tax Shift in 2024 House Bill 1437, signed into law by Gov. Kemp after a final version emerged during the last hours of Sine Die 2022, sets Georgia on course to adopt a flat personal income tax that primarily benefits the state’s highest earners at an annual cost greater than $2 billion when fully implemented.
For Georgia families earning the median income or less, these pending tax changes would offer little to lift incomes or meaningfully increase economic opportunity. Rather, the changes may redirect resources from programs and services that could otherwise support working families to instead widen disparities across income, race and ethnicity. Unless further action is taken, the tax changes will become effective beginning on January 1, 2024, and are set to be implemented over a period of at least 7 years. If the state’s revenue estimate does not meet the prescribed benchmarks, the implementation of each prospective tax change would be delayed by one-year.
Costly Tax Plan Designed to Cut Taxes from the Top-Down, Centering Benefits on Top Earners Year1 Year2 Year3 Year4 Year5 Year6 Year7 Middle-IncomeTop1PercentHouseholdBottom20PercentChangeTaxAverage(Millions)CostTotal (%)BenefitsofShareFirst 80 Percent of earners Top 20 Percent of earners Source: Institute on Taxation and Economic Policy, May 2022. -$9,470-$193-$27-$2,881-$47-$19 Georgia Budget Primer 2023 | Page 28
Notes Page 29
Education
Georgia’s schools are financed by a mix of state, federal and local dollars—a typical practice in the United States. The state paid $306 million less in FY 2023 due to formula requirements in the equalization and local five mill share grants.
Georgia’s 2023 Education Budget
Lawmakers appropriated $1.4 billion from lottery sales to fund and administer Georgia’s Pre-K, HOPE and student loan programs. The state has about $1.7 billion in lottery reserves.
Page 31
The state budget for K-12 public schools is $10.7 billion in FY 2023. After years of budgets with dedicated cuts to the state’s education system, lawmakers met the school funding requirement within the Quality Basic Education (QBE) Act for AFY 2022 and FY 2023. Additionally, this year’s budget includes $287 million to provide a $2,000 raise for certified teachers and employees, starting September 1. The fact that this start date comes two months after the beginning of the fiscal year will leave districts to find the $300 gap per employee in local property taxes. Along with strong revenue collection and federal COVID relief, the K-12 budget benefited from increased property tax collection that grew more in low-property-wealth school systems compared to high-wealth systems.
The budget for the University System of Georgia and its associated programs like agricultural extension services is $3.1 billion. The budget for the Technical College System of Georgia and associated programs like Adult Education is $444 million, with this year’s budget restoring funding to pre-pandemic levels.
Concerning the large federal investments, state lawmakers had an opportunity to move state fiscal policy towards racial equity. The additional funds in education reversed some of the most harmful cuts of the past year but fell far short of meaningful investment for the future of the state.
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor.
Equalization Grant Lowers for First Time in a Decade
Georgia Budget Primer 2023 | Page 32
Equalization Grant Shows Rare Progressive Growth
Since local taxes make up a significant portion of school budgets, and property values vary greatly across the state, the equalization grant provides more state funding to those districts that cannot rely on local sources. A reduction means that lower-wealth districts’ property tax collection has grown faster per student than their higher-wealth district counterparts. Another possibility is districts have, on average, lowered property tax rates— the formula is tied to local effort. The $164 million drop in formula earnings is a 21 percent decrease—the formula had increased 7 percent annually for the nine years prior.
The K-12 budget includes a formula grant for low-property-wealth districts that required $164 million less in FY 2023 than the year prior. The state has only lowered the amount provided to this grant twice since FY 2006, and both were due to budget constraints and not the formula calculation.
Strong Growth, Little to No Accountability
Page 33
This year lawmakers passed a $20 million increase to the Qualified Education Expense Tax Credit (QEETC)—a voucher that the Georgia Department of Audits and Accounts found is lacking in transparency and oversight. This program provides a tax credit to those that donate to pass-through organizations that then pay private school tuition for parents who apply. Georgians have no assurances of how students perform once they enter this program, as these schools are not held to state standards or tested to measure performance. The QEETC is one of two state vouchers that funnel public funds to private schools—institutions that can reject students by income, ability, language proficiency, sexual orientation or religion. Georgia is projected to lose $155 million to these vouchers in 2022, with $1.3 billion diverted since 2008.
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Projected
Private School Vouchers Cost Accelerates
State Funding for Private School Education Enjoys
The FY 2023 budget for Georgia’s Pre-Kindergarten program is $401 million, an increase of $18.3 million from the previous year. The program saved $2.1 million from formula reductions as less was needed to pay for teacher training and experience, a possible sign of teacher attrition. Lawmakers this session committed $19.4 million to raise lead and assistant teacher pay by $2,000. With 84,000 Pre-K slots available the FY 2023 budget provides $4,773 per child, the most provided since the program’s inception. Children one grade older in public kindergarten are allotted $6,450 per student in state funds, a difference of $1,677 a child. If Georgia were to fund Pre-K at the same rate as kindergarten, the program would need an additional $141 million annually.
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor.
Pre-Kindergarten Program Grows, Still Lags Next Grade
Georgia Pre-K Provided $1,700 Less Per Student than Public Kindergarten
Georgia Budget Primer 2023 | Page 34
FY 2023 Budget for Child Care Services
$57,726,235$61,436,817$61,841,364 Page 35
The FY 2023 budget includes $61 million for Child Care Services in the Department of Early Care and Learning (DECAL). Child care services makes up 13 percent of the DECAL budget with Pre-K taking up the rest of the state funds. The FY 2023 Child Care Services budget is about $3.7 million more than the FY 2022 budget. However, state funding for child care is not quite where it was before the pandemic. Much of the increase, $3.1 million, will go towards the state’s match for the federal Child Care and Development Fund (CCDF). This will allow it to draw down all available resources from the CCDF, which is a key funding resource for Childcare and Parent Services (CAPS) scholarships, Georgia’s child care subsidy program. An additional $500,000 for child care will go towards increasing provider reimbursement rates for child care providers participating in FederalCAPS.relief legislation provided an additional hundreds of millions of dollars to stabilize the state’s child care system.
Child Care Services
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. FY 2023 FY 2022 FY 2020
The 2023 budget for the University System of Georgia (USG) is $3.1 billion. The vast majority, $2.8 billion, is allocated to USG’s 26 colleges and universities for student instruction, support services and basic college operations. The remaining funds go to cooperative extension services, public libraries and programs. This year’s budget restores the university system’s funding to its pre-pandemic trajectory. Per-student amounts are similar to FY 2009 and FY 2010 levels, adjusted for inflation. Increases include $100 million of enrollment-driven formula increases and $207 million for a $5,000 cost-of-living adjustment for full-time employees.
University of Georgia/Board of Regents
One of the biggest changes is a $230 million addition to eliminate the Special Institutional Fee (SIF). The university system adopted the SIF in 2009 to make up for revenue loss from state budget cuts. The SIF made up about 40 percent of student mandatory fees.
FY 2023 Budget Puts University System Back on Pre-Pandemic Path
Source: GBPI analysis of HB 911 and Governor’s Budget Reports, FY 2016‒FY 2022. Enrollment for 2023 projected at 1 percent increase.
Last, the budget includes $65.9 million for capital maintenance and repairs at colleges and universities, which is normally funded through bonds.
inflation)for(AdjustedFundingState $12,544 $8,497 $9,717 $10,599 Georgia Budget Primer 2023 | Page 36
FY 2023 Budget Restores Technical College System to PrePandemic Levels While
The technical college system (TCSG) includes 22 colleges that provide both technical and core academic education. The 2023 budget for TCSG is $444 million. About $383 million is allocated to technical education, and the remainder is for programs like Adult Education for individuals without a high school diploma and customized training for businesses. This year’s budget restores TCSG’s funding to its pre-pandemic trajectory. Per-student amounts are similar to FY 2007 and FY 2008 levels, adjusted for inflation, assuming a 3 percent enrollment decrease in 2021-2022 and steady enrollment in 2022-2023. A 10 percent enrollment decrease in 2020-2021 resulted in a $23 million decrease in formula funding for the FY 2023 budget.
Enrollment Continues to Drop
Technical College System of Georgia
Source: GBPI analysis of HB 911 and Governor’s Budget Reports, FY 2016–FY 2022. Adjusted for inflation. AFY 2022 academic year enrollment based on 3.1 percent decrease in fall semester. Enrollment for FY 2023 projected to be flat.
EnrollmentFTE FTEperFundingState $6,499 $6,183 $6,457 Page 37
The budget adds $25 million for a $5,000 cost-of-living adjustment for fulltime, benefit-eligible employees. It also adds $33 million to expand Allied Health, Commercial Truck Driving and Manufacturing programs. The budget includes $22.5 million for major repairs and renovations at technical colleges, which is normally funded through bonds.
Lawmakers made several important policy changes to lottery-funded programs in the FY 2023 budget.
HOPE and Zell Miller Scholarships (Private and Public) are for students pursuing bachelor’s or associate degrees. $901 million
Lawmakers appropriated $1.4 billion from lottery sales to fund and administer education programs. The 2023 budget increases awards funding for HOPE scholarships and grants by $78 million, or 9 percent. Pre-K funds grew by $18 million (5 percent) to fund $2,000 salary increases for certified teachers and a $5,000 cost-of-living adjustment for other full-time employees.
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor.
Georgia’s Pre-Kindergarten program provides access to high-quality early learning for 4-year-olds. $401 million Lottery-Funded Programs
Lottery Funds Support Georgia Pre-K, HOPE and New College Completion Grants
HOPE, Zell Miller and HOPE Career Grants are for students pursuing certificates or diplomas in technical colleges. $77 million (NEW) College Completion Grants provide needs-based grants to students with account balances who have completed most of the requirements for their postsecondary credential. $10 million HOPE High School Equivalency (HSE) Grants, formerly HOPE GED Grants, pay for GED and HiSET exams for students. $1.3 million
Student Access Loans provide low-interest loans to college students. $16 million lottery funds + $8 million other funds
• HOPE Grants and Scholarships now cover 90 percent of tuition at all technical colleges and university system colleges and universities.
Georgia Budget Primer 2023 | Page 38
• HOPE GED is renamed HOPE High School Equivalency (HSE) and now pays for GED and HiSET exams for students, up to $200.
Georgia’s lottery funds are constitutionally dedicated to support education and are accounted for separately in the budget.
• $10 million transfer from Student Access Loans to a new program, College Completion Grants.
Student Finance Commission (Millions)ExpendituresHOPE $51$275$433$44$18 Page 39
Zell Miller Scholarship recipients at public colleges and universities are 70 percent white, 6 percent Black, 6 percent Hispanic/Latinx and 12 percent Asian. Thirty-one percent of Zell Miller Scholarship recipients are from families with more than $120,000 annual income. HOPE Grant recipients are 46 percent white, 43 percent Black, 7 percent Hispanic/Latinx and one percent Asian. HOPE Scholarship Spending Grows, And HOPE Grant Spending Declines
Setting HOPE Scholarships and Grants at 90 percent of tuition increases spending for these programs. It is unclear how this will affect future growth.
HOPE Expenditures Vary by Program
HOPE spending has changed at different rates. Zell Miller Scholarships grew fastest, averaging 16 percent annual growth from 2014-2021. HOPE Scholarships averaged 4 percent growth over the same period. HOPE Grant spending on technical college students declined by two percent annually from 2014-2021, and the HOPE GED Grant (now HOPE HSE) decreased the most, an average of 20 percent annually.
Source: Georgia
Source: State Accounting Office, 2014-2021 Georgia Revenues and Reserves Reports, 20112013 Selected Summary Financial Information.
Every year unspent lottery dollars transfer to reserves managed by the State Treasury. At the end of the 2021 fiscal year, about $71 million in surplus transferred to the lottery reserves. Since 2011, state law requires the lottery shortfall reserve to hold an amount equal to 50 percent of the previous year’s net lottery proceeds. If lottery ticket sales underperform, the state can draw on this reserve to fund HOPE. After reaching the 50 percent target, additional reserves are considered unrestricted. At the end of FY 2021, the required Shortfall Reserve Balance was $619 million, and the state exceeded that balance by more than $1 billion. Total lottery reserves now stand at $1.67 billion, or 108 percent of lottery proceeds. Total Lottery Reserves Top $1.67 Billion
No Cap on Lottery Reserves
(Millions)ReservesLottery $618,672,500$1,050,068,254 Georgia Budget Primer 2023 | Page 40
Notes Page 41
Health
Georgia’s 2023 Health Budget Page 43
The Departments of Behavioral Health and Developmental Disabilities, Community Health, and Public Health are the three primary agencies focused on the state’s health care and public health systems. Georgia plans to provide $6.2 billion in total state funds for these three agencies in the 2023 budget year, or about 20 percent of overall state spending. General Fund appropriations account for $5.5 billion, or about 89 percent, of the total state funds for these three agencies; other sources, like tobacco settlement funds, account for the remaining $708 million of state health spending. General Fund dollars for these three agencies increased by $559 million from 2022 to 2023. A resilient Georgia must have the capacity to recover and adjust amid fresh challenges and ever-shifting conditions. The COVID-19 pandemic has shown us that a flexible, well-resourced and integrated public health infrastructure and health care system is a key building block for a more resilient Georgia. Unfortunately, Georgia’s health system performance consistently ranks near the bottom, and Georgia was ranked 47th in how our health systems responded to the pandemic—based on measures like hospital and intensive care unit capacity, vaccination rates, and COVID-19 death rates. Increasing our investment in our state health agencies can prepare us for the next health emergency.
Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor.
The Department of Community Health (DCH) accounts for $4.4 billion, or 71 percent, of total state health spending. It operates Georgia’s Medicaid and PeachCare programs, conducts some planning and regulatory functions and administers the State Health Benefit Plan that provides health care to teachers and state employees.
Health Spending by Agency
The Department of Public Health (DPH) accounts for $384 million, or about 6 percent, of total state spending on health. It operates a variety of populationbased programs, such as immunizations, infectious disease control and health promotion.
Georgia’s 2022 Health Budget
The Department of Behavioral Health and Developmental Disabilities (DBHDD) accounts for $1.4 billion, or 22 percent, of total state spending on health. This includes some services funded through federal Medicaid dollars, but largely relies on state funds to provide services for uninsured and underinsured Georgians living with behavioral health conditions and/or developmental disabilities.
DPH:$1,381,037,863DBHDD:$383,823,356 DCH: $4,402,416,155100%90%80%70%60%50%40%30%20%10%0% State Funds Georgia Budget Primer 2023 | Page 44
Unequal Access to Health Care
Georgia continues to be impacted by unequal access to affordable, highquality health care. Historically, Georgia has ranked near the bottom in terms of Medicaid spending per enrollee. Georgia spent about $5,037 per full benefit enrollee compared to the United States average of $7,106 in 2019 (the most recent data available). Georgia expects to spend $4.1 billion in state funds in 2023 to serve Georgians covered by Medicaid. The 2023 budget reflects some modest increases in Medicaid reimbursement—for example, $10.7 million for reimbursement of therapeutic services. Ranking third nationally in the number of uninsured people, Georgia continues to struggle with the impact of not expanding Medicaid—a decision that reflects an inequitable distribution of power and history of oppression. While more than 1 in 10 Georgians do not have health care coverage, the burden is heaviest on Georgians living in rural communities and Georgians of color—particularly Latinx Georgians.
Latinx and Rural Georgians Face High Uninsured Rates Uninsured Rates by Race/Ethnicity, 0-64 years old, 2019 Uninsured Rates by County, 0-64 years old, 2019 Source: Kaiser Family Foundation; United States Census Bureau Page 45
Medicaid and PeachCare serve about 2.3 million Georgians, or about 1 in 5 residents. Low-income Medicaid serves children, pregnant women and some parents with very low incomes. The Aged, Blind and Disabled portion of the program serves older adults with low incomes and people with physical and developmental disabilities. Medicaid is the main source of health coverage for Georgians with longterm health care needs, both in nursing homes and in community-based settings. Medicaid also helps pay Medicare premiums for more than 258,000 Georgians aged 65 and older and younger adults with long-term disabilities. Medicaid and PeachCare cover about 1.6 million children—representing almost 70% of Medicaid beneficiaries in the state. Medicaid also pays for more than half of Georgia births. PeachCare is a separate program serving children from families with incomes above the Medicaid threshold, but who often lack access to other forms of coverage.
Over Half of Medicaid Spending Goes to Older Adults and Individuals with Disabilities Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Aged, Blind $2,179,667,833Disabled:and $1,832,591,046Low-Income: PeachCare for Kids: $90,961,474SpendingState 0% 20% 40% 60% 80% 100% Georgia Budget Primer 2023 | Page 46
Medicaid and PeachCare Enrollment Spending
Medicaid is a partnership between the state and federal government, with the federal government paying about 66 percent of the state’s total Medicaid costs. This federal support is beneficial for the states when facing emergencies or economic downturns, and the federal government can provide relief by paying more or giving states the opportunity to test new Sinceapproaches.thebeginning
Georgia is taking advantage of the flexibility provided by the federal Medicaid program to better serve Georgia’s pregnant women and children. The 2023 budget includes about $28 million to extend Medicaid coverage to birthing parents for up to one year after the end of pregnancy. The 2023 budget also includes $39 million in state funds for the implementation of express lane enrollment, which can help uninsured children get streamlined access to Medicaid and PeachCare by using eligibility findings from other programs, like Supplemental Nutrition Assistance Program (SNAP), to do automatic enrollments and renewals.
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Georgia also saw about $544 million in savings in last year’s budget thanks to the enhanced federal match and will continue to produce savings in the 2023 budget year.
Medicaid Provides Flexibility to Meet Critical Health Needs
of the COVID-19 pandemic in March 2020, Georgia has received more federal money for Medicaid (a higher matching rate of 72 percent) and has not been allowed to disenroll anyone. That means that millions of Georgians have had uninterrupted access to affordable health care coverage during a time of widespread health and economic instability.
Closing the Coverage Gap Improves
Center on
and
Priorities Georgia Budget Primer 2023 | Page 48
Throughworkforce.theMental
improvespsychologicalindistressandmentalhealth healthbehavioralIncreasesproviderparticipationinMedicaid
Behavioral Health
Source: Budget Policy
Access to affordable health care—including behavioral health care—is a critical component of one’s overall resilience. Unfortunately, thousands of Georgians fall into the coverage gap with incomes too high for Georgia’s Medicaid eligibility but too low to qualify for marketplace subsidies. Overdose and suicide are the 1st and 5th leading Georgia causes of early death, and more than 1 in 4 Georgians in the coverage gap are believed to have a behavioral health condition. States that expanded Medicaid have improved access to behavioral health care; lowered rates of suicide; and reduced stress among people with low incomes. Expanding Medicaid can also boost the behavioral health
Contributes to reductions
accessIncreasestomentalhealthsevicesandsubstanceusedisordertreatment
Health Parity Act, Georgia made a historic step forward to improving the lives of Georgians living with behavioral health conditions. Fully expanding Medicaid could build upon that momentum by closing the coverage gap and delivering behavioral healthcare to more Georgians.
In 2019, state legislators convened the Behavioral Health Reform and Innovation Commission, and, in 2022, House Speaker David Ralston introduced legislation that built upon the findings of that commission and declared that “no issue is more important to me this session than mental health.” That legislation, known as the Mental Health Parity Act, passed with unanimous bipartisan support.
The Year of Mental Health
The bill itself is expansive with provisions that touch on everything from police-mental health co-response teams to workforce development to assisted outpatient treatment. One of the centerpieces is the first section of the bill on mental health parity, which requires insurers to treat mental health as they do physical health. The 2023 budget includes funding that corresponds to key components of that bill, and the table below highlights some of that funding.
Mental Health Parity Bill Sections Key Components Agency StateAmountFunding Part One – Parity/ Hospital and ShortTerm Care Facilities Position to initiativesmentalimplementationoverseeofhealthparityandrepository Office of the CommissionerInsurance $127K Part Two DevelopmentandWorkforce–System Behavioral Health Care Workforce Database DBHDD $400K Service cancelable loans for Georgia residents enrolled in degree programs in qualified behavioral health professions StudentCommissionFinance ($10M$0in nonstate funding) Part Three CommitmentInvoluntary– Three treatmentassistedadditionaloutpatientprograms DBHDD $2.2M Part Four – Mental Health Courts and Corrections Technical accountabilityforcoordinationassistancecentermentalhealthcourts DBHDD $220K Page 49
Mental Health Parity Bill Sections Key Components Agency StateAmountFunding Part Four – Mental Health Courts and Corrections Five boardcommunityadditionalservicecaseworkers for five new mental health accountability courts DBHDD $282K Co-responder mobile crisis team expansion to 10 new sites DBHDD $897K Treatment monitor, technical assistance specialist and data analyst to ensure fidelity across behavioral health programs Georgia Bureau of Investigation –CriminalCoordinatingJusticeCouncil $680K Five new mental health accountability courts and court managers Georgia Bureau of Investigation –CriminalCoordinatingJusticeCouncil $1.1M Part Six CommissionandHealthBehavioral–ReformInnovation Behavioral health provider rate study DBHDD $932K 15 additional forensic peer mentors DBHDD $1.2M Mental health studyreimbursementproviderrate DCH $1M Total (in addition to $10M in non-state funding) $9M Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Georgia Budget Primer 2023 | Page 50
Behavioral Health and Developmental Disabilities
The Department of Health
and Developmental Disabilities (DBHDD) operates state hospitals and provides community-based services through contracted providers to Georgians living with mental health conditions, substance use disorders and/or developmental disabilities. The department also operates programs for forensic evaluation and treatment under the court system’s jurisdiction. Georgia plans to dedicate almost $1.4 billion in General Funds along with $10 million in Tobacco Settlement Funds to DBHDD, a $122 million increase in state funding compared to 2022. Mental Health, Developmental Disabilities Nearly Three-Fourths of DBHDD Budget Source: Georgia’s 2023 Fiscal Year Budget (HB 911), signed by the governor. Mental $583,907,969Services:Health DevelopmentalDisabilityServices: $421,120,563 Administration: $30,436,284 Addictive Disease and Substance Abuse Services: $57,376,744 Forensic Services: $136,695,722 Direct Care Support Services: $146,226,104 Page 51
Behavioral
Georgia’s public health programs also receive federal support. Federal money comprises 50 percent of the department’s $792 million budget, while state and other funds comprise the rest. Of those federal funds, more the half is accounted for by the program known as WIC, which provides supplemental food, breastfeeding support, information on healthy eating, and referrals to health care for pregnant and postpartum women and children up to age five. 911), signed by the governor.
About Half of Public Health Funding Flows to County Health Departments Source: Georgia’s 2023 Fiscal Year Budget (HB
The Department of Public Health (DPH) operates programs focused on disease and injury prevention, health promotion, and health-related disaster response and preparedness. The department receives almost $357 million from the General Fund and $14 million in Tobacco Settlement funds. The largest state-funded programs provide funding to 159 county health departments, help prevent the spread of infectious disease and provide services for children. The department’s 2023 budget increased by $48 million compared to 2022.
Immunization: $2,434,464 Funding to County Departments:Health $185,381,977 Administration & Vital Records: $45,403,404 Infectious Disease Control: $44,010,602 Infant & Child Health Programs: $40,264,004 Adolescent & Adult Programs: $28,670,676 Emergency Preparedness & Trauma Improvement:System$10,710,230 Inspections & Environmental Health: $9,035,921 Epidemiology: $7,113,470 Georgia Budget Primer 2023 | Page 52
Public Health
Budget Reflects Health Agencies’ Recruitment and Retention Needs
ofDepartmentCommunityHealth Department of Behavioral Health and DisabilitiesDevelopmental Department of Public Health Additional funds to cover withdrawals of up to 40 hours of earned annual leave for staff Yes Yes Yes $5,000 cost-ofliving increases for staff Yes $7.6 million total Yes $73 million total Yes $40 million total Salary increases for staff No Yes for aidesnursespsychiatricstatehospitalandhealth $15 million total Yes for healthandepidemiologistshealthaspositionscertainsuchpublicnurses,environmentalspecialists $16 million total Total (% stateagency’softotalfunds) $7.6 (0.2%)million $88 million (6%) $56 million (15%) Page 53
Fiscal Year Budget (HB 911),
Like other states, Georgia’s health agencies have experienced significant staffing shortages over the past two years, and the 2023 budget reflects efforts to address recruitment and retention. While the increases are encouraging, additional investments are needed to ensure that compensation is competitive and that the state’s health agencies can fully staff critical positions. For example, environmental health specialists, who perform a diverse array of vital functions from food safety inspections to home-based lead investigations, will receive a much-needed salary increase that is still just 85% of the market average. 2023 signed by the governor.
Compensation and Benefit Increases Reflect Recruitment and Retention Efforts Source: Georgia’s
Notes Georgia Budget Primer 2023 | Page 54
ServicesHuman
Georgia’s 2023 Human Services Budget
Source: Georgia’s 2023 (HB 911), signed by the governor.
State lawmakers approved $920 million for the Department of Human Services (DHS). The DHS budget restores cuts from previous years and includes more state resources than in FY 2020, the last pre-pandemic budget. About $38 million in the DHS budget is attributed to a $5,000 increase in the cost-of-living adjustment (COLA) for full-time employees. The Child Care Services budget also restores cuts, but still falls just shy of where it was in FY 2020. Foster care and child welfare services together are 63 percent of the DHS budget. Low-income family support programs and services make up the next largest share (15 percent of the total DHS budget). This includes eligibility determinations for public benefits, refugee assistance and out-of-school care.
Fiscal Year Budget
Foster Care & Adoptions Child Welfare Service Low Income Family Support Department Administration Elder Care Services Child Support Services Georgia Vocational RehabilitationAgency Safe Harbor for Sexually Exploited Children Fund Commission Family Connection $355,502,812 $110,586$9,763,639$25,085,798$31,674,130$60,403,470$61,730,188$135,121,020$228,264,359GeorgiaBudgetPrimer 2023 | Page 56
FY 2023 Budget Sends $920 Million to the Department of Human Services
Additional supports for foster care parents and providers to address the high costs of caring for children $28 million for a 10 percent increase in the provider rate for foster parents and group home providers. $3 million to increase funds for the annual foster care clothing allowance by $275 per child.
Additional salary increases for Special Assistance Attorneys General (SAAGs)
•
◦
◦
Nearly $3 million for pilots and programming for children in or at risk of foster care and children with autism in the child welfare system $1.5 million to pilot new foster care prevention strategies and provide additional supports to foster care children. $452,000 for an autism diagnosis pilot for foster care children in Region 12. $1 million for autism respite care to provide short-term help for caregivers in caring for a child with unique needs.
The FY 2023 budget includes $356 million for foster care and adoptions and $228 million for child welfare services. Combined, this is 10 percent more than the FY 2022 budget for these services and 9 percent more than the FY 2020 budget.
•
◦
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In addition to the COLA, Georgia lawmakers approved several improvements to foster care and child welfare services.
Budget for Child Welfare and Foster Care Services Makes Key Improvements
$6.3 million to increase the hourly earnings by case for SAAGs, which represent the state in juvenile court proceedings, and SAAG paralegals. This increase is to help retain SAAGs and paralegals and to address the case backlogs.
◦
•
◦
Georgia Budget Primer 2023 | Page 58
While the COLA is significant, it will not make up for all the staffing shortages. Robust workforce investments will be critical to stop the decline. For example, the FY 2023 budget does not add back the positions defunded in previous budget cycles. DHS saw a decline in staffing from 9,762 in FY 2019 to 9,165 in FY 2021, a 600-worker difference. There are indicators that the workforce shortage continues to get worse in 2022. DHS Commissioner Candice Broce said in a public interview in March 2022 that staffing levels at DHS were around 8,300. Low staffing levels among frontline eligibility staff may be of great concern in the next year. During the pandemic, the federal government granted temporary flexibilities that allowed more people experiencing financial hardship to access and maintain public benefits while mitigating some of the administrative burdens for eligibility staff. Those flexibilities may end later this year and eligibility staff will have to re-determine Medicaid and SNAP eligibility for millions of Georgians. Without robust investments to increase the eligibility workforce, staff will have limited capacity to handle the unprecedented influx of re-determinations, which could lead to Georgians experiencing harmful temporary losses in benefits. There could also be longer processing benefits for current clients or new applicants. If eligibility determinations take too long, the state could be subject to legal action like it was in the Furthermore,mid-2010s.therecould be disproportional impact on Black recipients who make up a significant proportion of SNAP, TANF and Medicaid recipients. Longer wait times could exacerbate the nutritional and financial hardship and limited health care access Black families are already more likely to experience than white families.
The COLA Alone Won’t Fix the Staffing Shortage
The bulk of FY 2023 state funding for the DOL will go to two divisions: Department Administration, which provides administrative support to each program division within DOL, and Unemployment Insurance (UI), which collects UI taxes from employers in the state and distributes unemployment benefits to eligible claimants. While each DOL division administers programs through a significant portion of federal funding, which will cover 87 percent of total FY 2023 DOL spending, state allocations provide dedicated funding sources to maintain the efficiency of Georgia’s DOL through the ebbs and flows of federal funding.
Georgia’s 2023 Department of Labor Budget
The $6.1 million FY 2023 budget for the Georgia Department of Labor (DOL) decreases spending from FY 2022 levels by $6.8 million, a decrease driven by the upcoming transfer of workforce development program funds to the state’s Technical College System, and staffing capacity cuts that remain in place since FY 2020 spending was amended. Remaining Department spending sits nearly $100,000 below FY 2020 levels, despite the COVID19 economic downturn’s magnification of DOL’s long-term state investment needs.
To stabilize families and the larger economy, DOL processed more than 5.2 million claims and dispersed billions in benefits to involuntarily jobless Georgians following the COVID-19 pandemic economic shockwave, despite claimant access and claims processing challenges. State lawmakers recently allocated some of the first tranche of federal ARP relief funds towards several workforce training initiatives but have yet to utilize any ARP funding to modernize Georgia’s UI system to be more accessible and resilient in protecting dislocated workers, and Georgia’s broader economy, in future downturns.
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Georgia’s state-level public sector employment remains 8 percent below its February 2020 payroll employment levels. Furthermore, unemployment and underemployment disparities persist across race, ethnicity and gender, and gaps among Black and white workers in Georgia remain nearly two to one.
Source: GBPI analysis of Current Population Survey microdata. Latest 3-month Average (March to May Georgia2022)Budget
Georgia’s Pandemic Recovery: Trends in Employment, Unemployment and Underemployment
Despite Record Overall Unemployment Lows, Georgia’s Recovery Remains Slower to Reach Black Women
Year three of the COVID-19 pandemic recovery has been mixed. Georgia workers have experienced steady rises in employment in certain private industries–including Trade; Transportation and Utilities; Financial Activities and Professional and Business Services–which have filled more jobs than they did in pre-pandemic February 2020. Other private industries like Construction as well as Leisure and Hospitality, have yet to fill all of the jobs lost in early 2020, and experienced declining shares of Black and Hispanic women over the last year, which may correspond with their rising employment shares in Trade; Transportation and Utilities; Financial Activities as well as Professional and Business Services industries over nearly the same period.
Primer 2023 | Page 60 Black women Black men White women White men Asian AsianHispanicwomenwomenmenHispanicmen
Notes
SystemsLegalCriminal
Georgia Department of Corrections (GDC) budget for FY 2023 is $1.28 billion. GDC oversees all aspects of the state’s prison system, including contracts carried out by private prisons. Corrections officers make up most of the department’s workforce. Several reform bills since 2012 sought to address issues related to prison length of stay, mandatory minimum sentencing and probation and parole eligibility. Bills passed in 2020 and 2021 included those seeking more costefficiency and better post-incarceration, reentry outcomes.
GDC FY 2023 spending is $71 million higher than FY 2020’s pre-pandemic budget cut levels and nearly $154 million higher than FY 2022 spending. When combined with $511 million in Amended FY 2022 spending increases and $167 million in bond financing given to the Georgia Building Authority to manage prison facility construction, lawmakers added $833 million in GDC spending following the 2022 Legislative Session. This impulse to expand prison construction and staffing to address challenges likely traced to persistent economic inequalities across race and ethnicity–including but not limited to access and outcome gaps in workforce, education, housing, health conditions–are likely to perpetuate the ill effects of mass incarceration.
Georgia’s 2023 Department of Corrections Budget
Furthermore, spending increases fail to reverse AFY 2020 and FY 2021 commissary price increases placed on incarcerated Georgians and supportive loved ones and fail to clarify health co-pay coverage for COVIDrelated medical needs. And while GDC added $10 million for technology projects and $4.4 million to transition centers, questions remain on how those funds could apply to new phone restrictions placed on Georgians in transition centers, whose preparations for reentry will likely be impacted.
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Impoverished Georgians who encounter the criminal legal system, are often unable to afford to pay court fines and fees, leading them into further debt due to surcharges which often include late fees, interest fees and payment plan fees. These vicious cycles too often leave countless Georgians with an impossible choice: pay spiraling fines and fees or take care of basic household needs and risk further penalties or incarceration. Those under probation for failure to pay fines and fees heavily contribute to Georgia’s worst ranking. This criminal legal system involvement presents barriers to successful reentry through employment and economic stability that impacts those with fines and fees obligations and families who support them. Lawmakers nearly restored DCS probation services to pre-pandemic spending levels, reaching $174 million in FY 2023.Georgia
Mixed Impacts and Outcomes Among Correctional Control in Georgia
Georgians under correctional control, as defined by the Prison Policy Initiative, include those in state prison, federal prison, local jail, youth confinement, involuntary confinement, jails in Indian Country or under probation or parole. In 2021, the Department of Community Supervision (DCS) supervised 245,387 people. For every 100,000 Georgians, 3,943 are on probation, ranking Georgia as the leading state for people under correctional control. This represents nearly four times the national rate and at least three times the rate of any other state in the Southeast.
Budget Primer 2023 | Page 64
Notes Page 65
Georgia Budget Primer 2023 | Page 66
Looking Ahead
The tax bill does not start to go into effect until 2024, and there is an opportunity for lawmakers to reverse their decision so that every Georgian pays their fair share in taxes and our state is able to meet the needs of those who call it home. This future can be realized. It all comes down to raising revenues and budgeting priorities. And the prosperity of 10.7 million Georgians is riding on it.
Even with the restoration of budget cuts, Georgia’s FY 2023 budget maintains the persistent underfunding to services and programs meant to support Georgians’ health, education and economic well-being. Although lawmakers did restore most budget cuts enacted during COVID-19, still too little support flows to Georgia’s most vulnerable communities and residents, particularly Black Educationwomen.and health investments account for more than half of state spending year after year. That holds true again for Georgia’s 2023 budget. Still, with no additional support for students living in poverty and no Medicaid expansion for families with low incomes, even these priorities remain underfunded and fail to address longstanding inequities. Moreover, lawmakers passed a risky flat tax bill that endangers Georgia’s ability to maintain these services in the long-term. The flat tax bill skews the tax code further in favor of the wealthy and, if fully implemented, could cost the state up to $2 billion.
Crystal Muñoz, Immigration Policy Analyst cmunoz@gbpi.org
Leah Chan, Senior Health Policy Analyst lchan@gbpi.org
Erin Robinson, Director of Strategic Campaigns & Outreach erobinson@gbpi.org
Crystal Johnson, Director of Administration & Human Resources cjohnson@gbpi.org
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GBPI Leadership Team
Staci Fox, President & CEO sfox@gbpi.org
Stephen Owens, Senior K-12 Education Policy Analyst sowens@gbpi.org
Ife Finch Floyd, Senior Economic Justice Policy Analyst ifinchfloyd@gbpi.org
David Schaefer, Research Director dschaefer@gbpi.org
Danny Kanso, Senior Tax and Budget
Research Team
Jessica Woods, Finance Director jwoods@gbpi.org
Dominique Derbigny Sims, Senior Vice President dderbignysims@gbpi.org
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Contact The Georgia Budget and Policy Institute
Lindsey Garland, Development Director lgarland@gbpi.org
Poilicy Analyst; Legislative Policy Manager dkanso@gbpi.org Ray Khalfani, Worker Justice and Criminal Legal Systems Policy Analyst rkhalfani@gbpi.org
GBPI Staff Kevin Amaya, Development Associate kamaya@gbpi.org Nadia Hicks, Digital and Brand Manager nhicks@gbpi.org Anthony Hill, Communications Coordinator ahill@gbpi.org Tasnim Mosabber, Outreach Manager Georgiatmosabber@gbpi.orgBudgetPrimer2023 | Page 68
