Georgia Gov. Brian Kemp proposed Friday for lawmakers to increase teachers' and state agency employees' yearly pay.
He suggested providing teachers with an extra $2,000 to meet his goal of a $5,000 raise over four years. He also proposed bumping up pay for state agency employees by $5,000.
The raises would be possible because Georgia's revenues in November reached over $1 billion more than the $27.3 billion it had budgeted for.
The teacher raise is expected to cost the state $461 million. Overall, the state is expected to spend $49.9 billion in the budget year that began July 1.
However, according to House Appropriations Committee Chairman Terry England, increasing teacher salaries could prove complicated this year due to school districts paying some employees with local funds. Generally, school officials want to match state-granted raises for those paid with the local funds.
Kemp proposed the increase in full-time, benefit-eligible state employees' salaries in a Friday letter to state agency leaders. He said the agency leaders had often suggested increasing the pay would help to reduce employee turnover. He added that under his plan, the state employees could see the raises as soon as April 1.
"I am confident that these strategic investments in our state government workforce will enhance our ability to serve hardworking Georgians," Kemp wrote.
It would cost $383 million to bring the state's K-12 funding formula to the full amount that it says the state should provide for schools. The state could also restore austerity cuts to universities.
"The one thing I'm pretty sure of is that the austerity budget will be restored," England said.
England said a plan to overhaul mental health is likely to cost an additional $75 million and senators want to spend more on foster care. But other state agencies may not recoup cuts that were made in 2021 at the beginning of the pandemic.
Democrats would like to fully expand Medicaid, but Republicans still oppose that. Lawmakers budgeted for a smaller Medicaid expansion that Kemp proposed, but it has been blocked by federal authorities and it's unclear what will happen to the money set aside for it.
Both England and Senate Appropriations Committee Chairman Blake Tillery, a Vidalia Republican, said the state may need to raise pay for non-education employees because of inflation and competition for labor. Lt. Gov. Geoff Duncan is calling for pay increases for prison employees. Tillery said a general pay raise may be considered on top of additional increases for employee shortage areas. But Ralston warns there may not be enough money for everyone.
"I'm trying to keep count of how many groups were promising pay raises to. The list gets longer every day," Ralston said. "And I know that we're in a fairly good budget situation, but at some point, you know, we are going to run out before we get to everybody."
A tax cut is likely to focus on the income tax. Senate President Pro Tem Butch Miller, a Gainesville Republican running for lieutenant governor, has joined primary opponent Sen. Butch Jones, a Jackson Republican, in proposing to abolish the state income tax.
House Speaker David Ralston is rejecting that plan, saying the state can't afford to sacrifice nearly half its revenue.
"That's become one of those things that sounds good on a bumper sticker or a soundbite or maybe even a campaign ad," Ralston told reporters Thursday. "But we have to govern; we have to make decisions. I think going at it in an incremental way is a much more desirable way to do it."
Georgia's top income tax rate remains 5.75%. Before the pandemic, House Republicans had wanted to cut that rate by a quarter point to 5.5%, which was projected to cost more than $500 million. Other approaches could include further increasing the standard deduction someone can earn before starting to pay tax, making Georgia's income tax a flat rate, or a combination of all three. Last year lawmakers increased the standard deduction, a $140 million tax cut.
Lawmakers may also be called on to decide how to spend a $2.2 billion surplus that built up even after the state's rainy day fund was filled to the legal limit of $4.3 billion. England said the state could choose to pay for some capital improvement projects directly instead of borrowing through bonds.
The Associated Press contributed to this report.
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