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Georgia's budget cut redux: What we know, what we can do

(Image: Benjamin Miller)

Because of the COVID-19 outbreak and the economic fallout it’s created, the State of Georgia is prepping for what’s expected to be the biggest budget shortfall in modern history: nearly $4 billion over the next four months.

That’s according to Georgia Budget and Policy Institute (GBPI) Senior Vice President Jennifer Owens. In a May 7 webinar for GCN, Owens pulled back the curtain on the latest State budget developments – in particular, the 14 percent across-the-board budget cuts requested by Governor Kemp – and what they could mean for the sector.

The shortfall and its effects

The $4 billion figure comes from the GBPI’s new analysis, conducted in the wake of COVID-19’s arrival in Georgia, and has also been echoed in the State House; indeed, revenue is already down by $1 billion over the first month of the crisis.

“Georgia has received about $3.5 billion in fiscal relief – which is good – but it has strings attached,” said Owens. For instance, they can only be used for expenses not accounted for in previous State budgets, and it’s possible the Fed might ask for some funds to be repaid. Georgia has also been dipping into its own “rainy-day funds,” said Owens, “but there’s restrictions on that too.”

Thus, the order for State agencies to plan for 14 percent cuts: Because Georgia is required by law to balance its budget, the shortfall must be addressed.

“Of course, not all cuts are going to be equal,” said Owens. “Some programs can’t be cut because to do so would risk losing federal matching funds. So we may see much steeper cuts to programs that aren’t tied to a federal funding source.”

“Not all cuts are going to be equal… We may see much steeper cuts to programs that aren’t tied to a federal funding source.”

In addition, programs that would normally be exempt from “across-the-board” cuts – those with funding tied to growth, like an increase in students – are expected to submit cuts as well. Owens said that the GBPI is concerned that the brunt of these cuts will fall on education and healthcare, which account for the majority of State spending.

In education, the GBPI expects to see measures similar to those taken following the Great Recession that started in 2008, such as mass teacher furloughs, shortened school years, and larger class sizes – “Ironic, as we’ll likely need to limit the number of people in one space going forward,” noted Owens.

In healthcare, Owens said it’s possible that programs already on the chopping block will be subject to further cuts, including rural programs and county health boards. She also worries that the State will shift more healthcare costs to workers like teachers – something else they did in the Great Recession. 

What nonprofits can do

The GBPI and GCN are both encouraging every nonprofit to engage in budget advocacy: Reach out to the elected representatives for your service area and educate them about the need you are seeing on the ground, the impact your COVID-19 response has made, and the support your organization needs to help Georgia make a successful recovery.

The stakes could not be greater, especially for the people who depend on nonprofit services. Following the crash in 2008, noted Owens, it took more than 6 years for Georgia’s unemployment rate to return to pre-recession levels – and not all demographics and regions recovered. “Before COVID-19 hit, there were still Georgia counties facing unemployment at double the national level,” she said.

Now, all signs point to an even more protracted recovery. More than 1.8 million unemployment claims have been filed in Georgia since the start of the crisis; over the worst 15 weeks of the Great Recession, that figure was 361,000. SNAP applications are also up sharply, from 7,700 over the last week of January to more than 51,000 in the first week of April. Further, additional outbreaks are predicted by the CDC for the fall and winter, especially in states like Georgia that are reopening without rigorous tracking systems in place.

Nonprofits, too, are facing economic peril: National experts are warning that nonprofit revenue will be down 20 to 40 percent this year.

“It’s hugely powerful to have a conversation with lawmakers when they’re not in session.”

GCN EVP and Senior Consultant Kathy Keeley notes that, though it might be obvious to anyone working in the sector that our work will be critical to the hardest-hit Georgians, “there’s a huge lack of understanding and knowledge about what nonprofits do” among lawmakers.

“It’s hugely powerful to have a conversation with lawmakers when they’re not in session," said Keeley. "Make sure legislators know about you, the services you provide, and what you need protected. Have a couple good statistics. Get local people to speak on your behalf. It makes a real difference.”

We saw that difference recently, noted Owens, when proposed cuts in healthcare and disability funding drew statewide outcry, resulting in a reversal from legislators. “Telling your representatives about what’s happening on the front lines can be a real help,” said Owens. “What they see on the news doesn’t necessarily bring it home.”

For more information on the State budget, see this summary of the GBPI budget analysis. Be sure to check out the recommendations they developed for a FY21 that prioritizes long-term recovery, which may bolster your case for investment in areas like health, education, and the economic safety net. (They’ve even included ideas for recovering a measure of the expected shortfall, such as raising the tobacco tax and rethinking tax breaks for special interests.)

Marc Schultz is communications editor at GCN.

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