Stay ahead of the curve as a political insider with deep policy analysis, daily briefings and policy-shaping tools.
Request a DemoThe Gist
Flush with billions in cash and a AAA bond rating, Georgia faces a pivotal moment in its fiscal future.
For more than a quarter of a century, Georgia has maintained an enviable reputation when it comes to managing its money. That’s how long the Peach State has had a AAA-bond rating from the U.S.’s top three credit-rating agencies. In layman’s terms, that’s like having an 850 credit score that gets you the best interest rate when buying a car or home. Similarly, the state of Georgia gets the best rates when borrowing money or issuing bonds to build things like roads, prisons, or buildings on a college campus.
Currently, only 14 states belong to the AAA bond rating club.
“The fact [that] we have maintained these coveted ratings for so long is a testament to our conservative approach to budgeting and governance, our pro-business policies, and especially the hardworking Georgians who make up our robust workforce,” said Gov. Brian Kemp, adding, “Job creators will continue to bring opportunities to the Peach State because they, like the rating agencies, know we are a safe bet.”
That safe bet is buoyed by nearly $12 billion sitting in state coffers — $5.2 billion in the state’s Revenue Shortfall Reserve and another $6.6 billion in unreserved, undesignated surplus.
With the 2023 legislative session set to convene in less than a month and the state’s fiscal year 2023 budget slated for fine-tuning, some say it’s a good time for the state to review how it sets its budget — and how it spends, or doesn’t spend, its money.
What’s Happening
While Georgia’s reveling in its stellar credit-rating and record $12 billion surplus, some state agencies have been operating in recent years with smaller budgets and fewer full-time staff. Education and health care, for instance, bore the brunt of budget cuts in fiscal year 2021 to the combined tune of nearly $1 billion.
“Undeniably, our current level of spending is much lower than what we're collecting, and what we're likely to continue to collect in tax revenue,” said Danny Kanso, director of legislative strategy and senior fiscal analyst at The Georgia Budget & Policy Institute.
Kanso, who wrote a report in August analyzing the state’s record surplus, said the state “has considerable room to adjust its revenue estimate upward,” to spend more.
But fiscal conservatives point to the money the state has spent: $1 billion for 10 months worth of gas tax holidays and another $2 billion in income tax rebates and cash assistance to low-income residents who receive Medicaid, PeachCare for Kids, Supplemental Nutrition Assistance Program or the state’s Temporary Assistance for Needy Families.
In addition, Kemp is promising another tax refund in 2023, pending legislative approval.
While the state is flush with cash that state officials insist is necessary to address unforeseen emergencies, Georgians are struggling with the fallout of inflation and are facing a possible recession next year.
The question for some, then, is: Why should I care?
The Frugal Uncle
Think of Georgia as a frugal uncle who’s lived below his means for years even when times didn’t call for it. He pays for that fishing trip or vacation with cash, not credit — much to the chagrin of his family who needle him about his frugalness.
When times get tough, this frugal Georgian keeps trips to the grocery store and utility usage to a minimum, and as such, his austerity has helped him build a healthy savings and a respectable investment portfolio while also socking away money for emergencies. In addition, his carefulness and frugality has enabled him to maintain an impeccable credit score that affords him the best interest rate on the family’s mortgage.
“The state does a good job of not biting off more than it can chew when it comes to spending,” said Kyle Wingfield, president and chief executive of the Atlanta-based conservative think tank Georgia Public Policy Foundation. “The bond rating agencies believe the state is well-managed. It also reflects that we have a very stable fiscal environment.”
State government bond ratings give banks and other lenders a sense of whether a state or municipality can pay its debts. The higher the rating — AAA is the highest — the less chance of default. Georgia has had a AAA bond from the three major rating agencies — Fitch Group, Moody’s Investor Services and Standard and Poor’s — for more than 25 years. In addition to bragging rights, Georgia’s stellar credit rating allows the state to get the best possible rates when it goes to market to sell state bonds.
Tony West, deputy state director for Americans for Prosperity Georgia, agrees. “It’s an enviable position to be in,” West said. “It shows most of the country that we carefully manage the people’s money.”
As Georgia’s fiscal economist, Jeff Dorfman is one of Kemp’s key advisors. The state’s cautious money management is sacrosanct, he says.
“One thing that's very important, and the governor insists on this, is it [spending the reserves] has to be a one-time thing,” Dorfman said. “We can't take these extra monies and spend them on an annual recurring thing because then when the money's gone, now you're burdening the taxpayers and you're gonna have to raise taxes to keep paying for that.”
Explains Dorfman, “That's why we're looking at water and sewer systems and rural broadband and a lot of things like that where we can pay upfront costs with the money we have now. If we can do infrastructure investments and lower our ongoing expense structure, this is our ultimate goal.”
Why It Matters
In August, the Georgia Budget and Policy Institute (GBPI), a liberal Atlanta-based nonprofit that analyzes tax policies and proposed budgets, released a report on the state’s record surplus.
“The state has prioritized growing surplus accounts over funding for programs, services and workforce,” states the August 2 report, “With Record Surplus, Georgia Stands at a Crossroads Ahead of Pivotal Budget Session,” written by Kanso.
Even though Georgia is expected to see continued revenue growth, it continues to spend less per resident than it did before the Great Recession 14 years ago, Kanso wrote in the report. “Even after accounting for a potential economic recession and the effects of tapering federal spending, it appears that consecutive years of conservative revenue estimates have compounded such that Georgia could raise significantly more than it currently plans to spend in the upcoming year.”
According to the report, in fiscal year 2023, Georgia plans to spend about $1.3 billion less, or about $121 less per resident, than it did before the Great Recession, when Georgia’s budget was upended by spending cuts the state made in response to weakened revenue collections.
The report urged state leaders “to make long-deferred investments and make up ground lost to over a decade of austerity.
“This means that even if state revenue collections come in below the revenue estimate set by the governor, Georgia’s existing reserves are almost certain to be more than sufficient to cover the difference,” the report said.
When asked if Georgia is hoarding money, Kanso replied: “that remains to be seen in how we are going to adjust [the budget] in the upcoming legislative session.”
Former state lawmaker Eric Johnson sees it differently.
“You've got to be prepared to have some savings for your emergencies,” Johnson, former president pro tem of the state senate, told State Affairs. “The economy is booming now, but I've been through two downturns where we've had to cut and that's a painful process. Look how long it took to get the education funding back up.
“The state’s got the resources now but everybody’s anticipating a recession in the next year or so. You’ve got to be able to live through the downturns without the minimal amount of cuts to programs,” said Johnson.
While Georgia's large surplus is not usual, this year’s record surplus has emerged from other unexpected circumstances.
Georgia – like the rest of the country – saw unprecedented surpluses last year, thanks to a booming stock market that led to higher-than-expected tax revenues, especially in capital gains taxes, Dorfman said.
“The stock market did tremendously well in 2021. In April 2022 when everybody filed their 2021 taxes, we collected an extra $3 billion in capital gains taxes on stock market profits. And literally, I mean that came in like a week or so right around the filing deadline.
“It happened to every state and to the federal government,” he added. “Everybody got more taxes than they predicted because of the stock market profits.”
Billions in federal pandemic aid also helped grow reserves.
Of the $5.2 trillion the U.S. government committed in response to the pandemic since early 2020, about one-sixth went to state governments for the public health emergency and to boost their economic recovery, according to Pew Trust. The federal government gave more than $800 billion in grants to states through six pieces of COVID-19 legislation. Georgia received more than $17 billion in COVID-related relief.
States saw their collective rainy day funds grow by $37.7 billion, about 50 percent from the previous year, “driving the total held among all states to a record of $114.6 billion,” according to Pew.
What’s Next
While it’s tempting to take the $12 billion surplus and splurge, “We don’t just spend the money because we have the money,” Dorfman said, citing California as a cautionary tale.
Flush with a record $98 billion surplus last year, California now faces a $25 billion deficit next fiscal year. “They gave a ton of it away and they spent a lot of it, including some on continuing expenses, and as our [U.S.] economy slowed down, they got less revenue than they thought and now they’re short,” Dorfman said, adding, “We certainly don't need to have $12 billion to get the AAA bond rating because we had it when we had $2 billion but we're much better off with the larger reserves we have now.”
A AAA-rating is so sacred that some states refuse to spend their largesse for fear of losing their impeccable standing.
Research by Pew found that “even in states with the highest rating, policymakers often are unsure about how best to manage their rainy-day funds to earn or keep high credit ratings. As a result, some state officials are reluctant to tap reserves even during recessions for fear of a ratings downgrade.”
Former Baltimore state Sen. Barbara Hoffman said in Pew’s 2017 report, “Rainy Day Funds and State Credit Ratings”: “We never use ours, and that’s one of the reasons we have a triple-A rating in good economic times and bad.”
Maryland is one of the 14 states with a AAA rating. In addition to Georgia and Maryland, the other states are Indiana, Delaware, Iowa, Florida, Tennessee, South Dakota, Virginia, North Carolina, Utah, Texas, Virginia and Missouri.
William Ratchford, former director of the Maryland General Assembly’s fiscal services department, noted in the report that to most legislators, the purpose of the rainy-day fund is to maintain the AAA rating. “If we have future needs, we’ll deal with that. But it’s never been, ‘Well we can always use the rainy day fund.’ It just isn’t how they approach it,” he said.
But Georgia’s not going to keep its $12 billion reserves forever, Dorfman said. “We’ll take our time and spend it wisely and make sure we are very clear-eyed and realistic in our revenue forecasts.”
In Case You Missed It
TEACHERS, BRIDGES, TAX REFUNDS: WHAT GEORGIA’S $5 BILLION SURPLUS CAN BUY
GEORGIA’S RECORD $5B BUDGET SURPLUS SETS UP HIGH STAKES LEGISLATIVE SESSION
Have questions or comments about the state’s AAA bond rating? Contact Tammy Joyner on Twitter @LVJOYNER.
And Subscribe to State Affairs today!
Twitter @STATEAFFAIRSGA
Facebook @STATEAFFAIRSUS
LinkedIn @STATEAFFAIRS
Read this story for free.
Create AccountRead this story for free
By submitting your information, you agree to the Terms of Service and acknowledge our Privacy Policy.
House speaker Jon Burns hires new communications director
House speaker Jon Burns, R-Newington, announced today that he has hired a new communications director. Kayla Roberson, who has served as press secretary at the Georgia Chamber for the past year or so, will now oversee all external communications, media relations and strategic messaging for Burns.
“I’m excited to welcome Kayla to our team,” Burns said in a statement. “Kayla has an excellent background, deep skill set and strong work ethic, and we’re excited to have her on board to continue getting our message out and sharing the House’s priorities ahead of and into the next session.”
A double major in political science and journalism at the University of Georgia, where she graduated in 2022, Roberson interned for U.S. Rep. Andrew Clyde, a Republican in north Georgia’s 9th Congressional District, and worked as a consultant for GOP political candidates before joining the Georgia Chamber.
“I’m beyond grateful for the opportunity to work under the leadership of speaker Burns,” Roberson told State Affairs. “Whether it’s improving education opportunities, putting money back in the pockets of hardworking Georgians, creating jobs or supporting our rural communities, speaker Burns always prioritizes doing what is best, and what is right, for Georgia.”
Political strategist Stephen Lawson, who has held the top communications role for the speaker since last December, announced he’s joining Dentons, where starting today he’ll lead the global law firm’s public affairs efforts.
Have questions or comments? Contact Jill Jordan Sieder on X @journalistajill or at [email protected].
Global bird flu disrupts Georgia exports, costing chicken producers millions
ATLANTA — A global bird flu that has rapidly spread from birds to dairy cows, milk supplies and humans has cost untold millions of dollars in lost export business in Georgia, the nation’s leading poultry producer, officials with the state Department of Agriculture and poultry industry said.
Georgia has had only three reported cases of H5N1 avian influenza since it reemerged in 2022. The last of those cases was resolved in November 2023 but ramifications of those outbreaks continue to have a big effect on the state’s ability to export chicken and chicken parts, such as chicken feet, to different countries, including China, one of Georgia’s biggest export markets for chicken feet.
In 2022, frozen chicken feet, for example, accounted for more than 85% of all U.S. poultry exported to China, according to Farm Progress, publisher of 22 farming and ranching magazines.
The $30 billion poultry industry is Georgia’s largest segment in its No. 1 industry — agriculture.
China has also placed a ban on the import of chicken products from 41 other American states. The ban on Georgia products went into effect Nov. 21, 2023. Efforts to reach the Chinese Embassy in Washington, D.C. were unsuccessful.
Georgia Poultry Federation President Mike Giles estimates the state’s loss at “well into the millions of dollars.”
“It’s a significant amount in a significant export market for us,” he said. “Poultry paws [feet] immediately lose value because of the loss of demand.”
The ban has forced Georgia poultry producers to find alternative markets for their products that would normally be headed to China.
“Some are sold domestically, some are frozen and stored, hopefully to find markets later on, and some go to other countries,” Giles said.
This isn’t the first time China has banned U.S.-produced poultry products due to a bird flu outbreak. The country instituted a ban in January 2015 which lasted until November 2019 — even though U.S. poultry products were deemed free of the disease by August 2017.
After that ban was lifted, China’s appetite for American-produced chicken products became voracious.
In 2022, U.S. producers shipped nearly $6 billion in poultry meat and related products (excluding eggs) to over 130 countries. China has emerged as the second largest destination for U.S. poultry exports, increasing from $10 million in 2019 to a record $1.1 billion in 2022, according to Southern Ag Today.
Chicken paws, for instance, are eaten in many Asian countries, including the Philippines, Thailand, Indonesia and Korea.They can also be found on Chinese dim sum menus throughout the U.S. and are also popular in Jamaica, Trinidad, Russia and Ukraine in everything from soups and curries to fried snacks.
Three Georgia counties have reported H5N1 outbreaks since 2022. The most recent case was late last year. Henry, Sumter and Toombs counties each reported one case of H5N1 bird flu. Those outbreaks are resolved, poultry and state agriculture officials say.
“When HPAI cases are found in any state, that state is given a designation that could lead to foreign countries halting trade on poultry products from that state,” Georgia Department of Agriculture spokesman Matthew Agvent told State Affairs.
Not since 2016 has the United States experienced such a fast-moving case of the H5N1 avian influenza. In the last two months, the virus has spread in parts of the United States from birds to dairy cows, some milk supplies and humans. Two people — a Texas dairy worker and a prison inmate in Colorado who was killing infected birds at a poultry farm — are reported to have caught the virus, according to news reports. The outbreak is the largest in recent history, impacting both domestic poultry and livestock as well as wild birds and some mammal species.
State officials are continuing to monitor the national outbreak and its impact on Georgia.
Georgia’s poultry & egg industry: At A Glance
Annual economic impact: $30.2 billion
Percentage of the Agriculture industry: 58% *
Jobs: 87,900
Counties involved in poultry & egg production: 3 out of 4
National ranking in chicken broiler production: No. 1
Daily production of table eggs: 7.8 million
Daily production of hatching eggs: 6.5 million
Pounds of chicken produced daily: 30.2 million
Pounds of chicken produced annually: 8 billion
Number of chicken broilers processed each day: 5 million
Counties involved in poultry & egg production: 3 out of 4
Source: Georgia Poultry Federation; The Center for Agribusiness & Economic Development, University of Georgia, Ag Snapshots 2024; Georgia Poultry Federation.
Have questions? Contact Tammy Joyner on X @lvjoyner or at [email protected].
Is it safe to eat chicken and eggs and drink milk? Answers to your most pressing questions about the latest bird flu outbreak
A two-year-old strain of bird flu has heightened concerns in Georgia and the rest of the country after the virus recently spread to dairy cows. Here’s what you need to know about the virus and its impact on Georgia and the rest of the country. What are the symptoms of this flu in humans? Eye …
Kemp signs bills on education, health care, taxes
Gov. Brian Kemp signed a slew of bills over the past week or so, including the private school voucher bill long sought by Republicans and a bill that will ease regulations over the construction and expansion of medical facilities in rural areas.
His bill-signing events were clustered into themes: education, health care, military members, human trafficking and Georgia’s coastal communities.
Education
Among the education-related bills Kemp signed was Senate Bill 233, also known as the Georgia Promise Scholarship Act, which provides the families of Georgia students enrolled in underperforming school districts with $6,500 scholarships that can be used toward private school or homeschooling expenses, including tuition, fees, textbooks and tutoring.
“Georgia is affording greater choice to families as to how and where they receive their education, while also continuing our efforts to strengthen public schools, support teachers, and secure our classrooms,” Kemp said, and thanked leadership in the House and Senate for prioritizing passage of the bill, which had failed in a close vote in 2023.
Democrats and many public education advocates who opposed the bill argued it will drain resources from public schools and primarily benefit students from wealthy families.
Kemp also signed Senate Bill 351, sponsored by nine Republican senators, which will require social media companies, as of July 1, 2025, to verify their users are at least 16 years old unless they receive approval from a parent.
House Bill 409, sponsored by Rep. Lauren Daniel, R-Locust Grove, directs school systems to consider not having bus stops where a student would have to cross a roadway with a speed limit of 40 mph or greater. The bill also increases the penalty for passing a stopped school bus to $1,000 from $250.
Kemp noted that Ashley Pierce, the mother of Addy Pierce, an 8-year-old who was fatally struck by a motorist as she boarded her school bus, “passionately advocated for and was instrumental in the passage of this legislation.”
Senate Bill 395, sponsored by Sen. Clint Dixon, R-Gwinnett, states that no school visitor or personnel can be prohibited from possessing an opioid reversal drug such as Narcan and directs schools to maintain a supply. It also allows opioid antagonists to be sold in vending machines and directs certain government buildings to maintain a supply of at least three doses.
Senate Bill 464, also sponsored by Dixon, creates the School Supplies for Teachers Program to financially and technically support teachers purchasing school supplies online. It also creates an executive committee of five voting members within the Georgia Council on Literacy and limits the number of approved literacy screeners to five, one of whom must be available to schools for free.
Health care
The governor chose his hometown of Athens as the venue to sign several bills aimed at improving health care in rural and underserved communities.
Among them was House Bill 1339, sponsored by Rep. Butch Parrish, R-Swainsboro, which revises the Certificate of Need process by which the state determines if and how new medical facilities can be built or expanded. The bill provides for several new exemptions, including psychiatric or substance abuse inpatient programs, basic perinatal services in rural counties, birthing centers and new general acute hospitals in rural counties. It also raises the total limit on tax credits for donations to rural hospital organizations to $100 million from $75 million.
Senate Bill 480, sponsored by Sen. Mike Hodges, R-Brunswick, establishes student loan repayments for mental health and substance use professionals serving underserved youth in the state or in unserved geographic areas disproportionately impacted by social determinants of health.
House Bill 872, sponsored by Rep. Lee Hawkins, R-Gainesville, chair of the House Health and Human Services Committee, expands cancelable loans for certain health care professionals to dental students who agree to practice in rural areas.
Senate Bill 293, sponsored by Sen. Ben Watson, R-Savannah, chair of the Senate Health and Human Services Committee, reorganizes county boards of public health and opens the qualifications for the CEO of each county board of health to include either licensed physicians or people with a master’s degree in public health or a related field.
Military members and veterans
Kemp on Wednesday focused on bills to improve military recruitment and provide more work opportunities for veterans and military family members.
House Bill 880, sponsored by Rep. Bethany Ballard, R-Warner Robins, allows spouses of military service members to work under a license they hold in good standing in another state while under the supervision of an existing Georgia medical facility or provider.
Senate Bill 449, sponsored by Sen. Larry Walker, allows military medical personnel to practice for 12 months while a license application is pending, including working as a certified nursing aide, certified emergency medical technician, paramedic or licensed practical nurse. The bill also creates a new advanced practice registered nurse license and makes it a misdemeanor to practice advanced nursing without a license.
Human trafficking
The governor on Wednesday was accompanied by first lady Marty Kemp and other members of the GRACE Commission for the signing of an anti-human trafficking package. It includes Senate Bill 370, which adds certain businesses to the list of organizations that must post human trafficking notices, including convenience stores, body art studios, businesses that employ licensed massage therapists and manufacturing facilities.
Sponsored by Sen. Mike Hodges, R-Brunswick, the bill also allows the Georgia Board of Massage Therapy to initiate inspections of massage therapy businesses and educational programs without notice and requires massage therapy board members to complete yearly human trafficking awareness training.
House Bill 993, sponsored by Rep. Alan Powell, R-Hartwell, creates the felony offense of grooming of a minor and creates new penalties for offenses relating to visual mediums depicting minors engaged in sexually explicit conduct.
House Bill 1201, sponsored by Rep. Houston Gaines, R-Athens, allows human trafficking survivors who received first offender or conditional discharge status to vacate that status for certain crimes, as long as the crime was a direct result of being a victim of human trafficking.
Coastal communities
Earlier today in Brunswick, Kemp signed legislation impacting Georgia coastal communities, including House Bill 244, which amends the laws around how wild game can be hunted and how seafood dealers operate, and House Bill 1341, which designates white shrimp as the state’s official crustacean.
Taxes
Earlier this month Kemp signed several bills related to taxation, including House Bill 1015, sponsored by Rep. Lauren McDonald, R-Cumming, which lowers the state income tax for tax year 2024 to 5.39%, accelerating a multiyear drop in state income taxes that started at 5.75% in 2023 and will continue through 2029.
The Governor’s Office of Planning and Budget estimates the tax cut acceleration will save Georgia taxpayers approximately $1.1 billion in calendar year 2024 and about $3 billion over the next 10 years.
Kemp also signed House Bill 1021, sponsored by Rep. Lauren Daniel, R-Locust Grove, which increases the state’s income tax dependent exemption to $4,000 from $3,000.
House Bill 581, sponsored by Reps. Shaw Blackmon, R-Bonaire, and Clint Crowe, R-Jackson, enables a constitutional amendment (House Resolution 1022) to let voters decide whether counties can provide a statewide homestead valuation freeze, which limits the increase in property values to the inflation rate.
The governor has until May 7 to sign or veto bills passed during the legislative session that ended on March 28. Those he takes no action on will automatically become law.
Legislation signed by Kemp is posted on the governor’s website.
Read these related stories:
Have questions, comments or tips on education in Georgia? Contact Jill Jordan Sieder on X @journalistajill or at [email protected].
Facebook @STATEAFFAIRSGA
Instagram @STATEAFFAIRSGA
LinkedIn @STATEAFFAIRS