Georgia economist gives upbeat take on state economy

ATLANTA (AP) — The paradox of the current recession — decreased economic output but plenty of household income for many thanks to federal aid — leaves Georgia poised for a quick rebound once the coronavirus pandemic eases, Georgia’s state economist said Tuesday.

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“Really the economy’s doing quite well,” Jeffrey Dorfman told Georgia lawmakers during joint House-Senate budget hearings. "If we could just get the virus under control, things will be fine.”

Dorfman, a University of Georgia professor, said federal aid has flowed into Georgia's economy through individuals and businesses, bolstering sales tax and income tax collections.

“The short answer is that the federal government has passed out a lot of free money," Dorfman said.

The economist said he shares the concerns of others that there could be larger-than-normal state income tax refunds in the coming months, saying many people who were laid off probably have had too much income tax withheld from their paychecks in months when they were working.

Still, state tax collections are on track to run as much as $1.5 billion ahead of projections this year. That's allowing Gov. Brian Kemp to propose boosting spending by $650 million in the current budget year, bringing total state spending to $26.3 billion. Kemp is proposing a $27.2 billion budget for the 2022 year beginning July 1, $935 million above current spending levels.

Kemp would restore more than half the cuts to Georgia's K-12 school funding formula, and also include money to cover enrollment growth for universities and technical colleges.

“The budgets before you will help drive that economic recovery by restoring resources through our K-12 and higher education school systems to develop a skilled and labor-ready workforce, continuing to expand and maintain our critical transportation and logistics infrastructure and providing financial assistance to rural communities to support innovation and economic development in all parts of our state,” Kemp told lawmakers Tuesday.

Kemp's most noteworthy new spending initiative, a $1,000 bonus payment to all K-12 teachers and education employees, would come from federal coronavirus relief money. Kemp is also proposing 10% pay increases for corrections and juvenile justice officers “using existing resources within our correctional systems.”

He wants to let mental health programs keep $28 million the state has saved because the federal government is paying a larger share of the state-federal Medicaid health insurance program, and let adoption services keep $3.5 million from the same pot of savings. Kemp also wants to set aside $40 million in the 2022 budget for a rural innovation fund and $30 million over the 2021 and 2022 budget to expand high-speed internet in rural areas.

The governor also is proposing higher spending on Medicaid, including $76 million to partially expand health insurance to some low-income adults.

But Kemp is not proposing efforts to systematically restore last year's cuts to other agencies, which usually averaged nearly 10%.

“We are doing more with what we already have,” he said.

Lawmakers will face pressure to spend more, though. Agriculture Commissioner Gary Black, who can vary publicly from Kemp's recommendations because he's separately elected, asked lawmakers Tuesday for an additional $1.25 million for employee pay raises, expansions to the Georgia's hemp-growing programs, and more outreach to farmers. ___

Follow Jeff Amy on Twitter at http://twitter.com/jeffamy