Georgia’s Budget Adjustments: Governor Kemp Reduces Spending
ATLANTA — Governor Brian Kemp has enacted a significant reduction in Georgia’s fiscal year 2027 budget, cutting $300 million from the legislature’s proposed spending plan. The budget, originally set at $38.5 billion, was trimmed in response to revenue estimates predicting collections of only $36.6 billion for the upcoming fiscal year.
On Tuesday, Kemp signed House Bill 974, reflecting the revised budget that takes effect in July. “They may not be happy, but they also realize we’ve got a hole in the budget that we’ve got to fix,” Kemp remarked regarding the legislative adjustments.
The shortfall largely stems from recent income tax cuts approved by lawmakers in the final hours of their legislative session. These tax cuts, signed into law by Kemp on Monday, have contributed to a $1.3 billion structural deficit, according to Richard Dunn, director of the Governor’s Office of Planning and Budget.
Efforts to bridge the gap include Kemp’s $300 million budget cut and anticipated revenue growth. However, the state may need to utilize its surplus to cover any remaining deficit, depending on economic growth rates.
Kemp acknowledged, “The state must now address a reduction in revenue for the coming fiscal year of nearly $1 billion, and that’s assuming we don’t have an economic downturn.”
The tax reforms, part of House Bill 463, decreased the income tax rate to 4.99% from 5.19% for the current year. The bill also exempts the first $1,750 of overtime pay and cash tips from income tax, retroactive to the start of the year, and raises the excluded retirement income for seniors by $5,000.
The legislation aims for further tax rate reductions, contingent on revenue stability, targeting a rate of 3.99% over eight years. The rate is set to drop by 0.125 percentage points next year.
House Bill 463 also enhances deductions; the standard deduction for single filers has increased from $12,000 to $15,000, with a planned rise to $18,000 over eight years. The dependent deduction has grown from $4,000 to $5,000, with an ultimate goal of $6,000.
