With a nearly $23 billion budget, Georgia lawmakers have as much money to spend as ever.
Revenues are estimated to increase 8.8 percent, bringing in $1.9 billion more this fiscal year.
But expenses are growing, too, as an aging and growing population emerges statewide.
Education is the top spending priority in the state, followed closely by health care.
Gov. Nathan Deal will unveil his budget recommendations this week after the Georgia General Assembly kicks off the 2017 legislative session Monday.
Sen. John Wilkinson, R-Toccoa, said new education spending likely is needed to hire additional teachers and build new schools to meet the demands of a growing population.
Education is perhaps the biggest component of economic development. Wilkinson, whose district covers a small portion of Hall County, said committing funds for public schools and technical colleges is vital if Georgia is to remain attractive to business and industry.
“I think we’re going to have to continue to increase our commitment and funding to education,” he added.
Lawmakers roundly agree changes are needed to the 31-year-old formula the state uses to distribute funding among its 180 public school districts, but changes aren’t likely this year. Deal said Friday he wants to postpone that discussion a year and instead focus on helping underachieving students.
Health care spending, meanwhile, is likely in for major changes as Republican lawmakers in Washington, D.C., look to repeal the Affordable Care Act.
But just what impact that will have on Georgia is unclear, said Rep. Lee Hawkins, R-Gainesville. One thing he is sure of, however, is that there’s never enough money to go around.
Economic development may start and end with education and a healthy populous, but in between there are many other needs to be met.
Sen. Butch Miller, R-Gainesville, one of Deal’s top floor leaders, said legislators likely will revisit the hospital bed tax and other initiatives aimed at shoring up the viability of rural hospitals throughout the state.
In addition, expanding broadband internet access to both urban centers and rural counties, while also funding transportation improvement projects, is crucial to growing industry and jobs, Miller said.
“Those are two real challenges,” he said.
State Republicans have also renewed calls to lower personal income taxes and offset that lost revenue with increases in the sales tax.
Already, the state’s income tax rate has been capped. Now Republican lawmakers want to take a steady approach to zeroing it out.
Rep. Emory Dunahoo, R-Gainesville, is leading the charge to implement a “Fair Tax” with this priority in mind. But he is unsure just how far the ball will be pushed this year.
He is working on a bill, but said more work needs to be done on it.
“I want to perfect it to where it’s understood,” he said.
Rep. Tim Barr, R-Lawrenceville, said he expects a “sliding scale” of changes to be made that incrementally lowers the income tax rate.
“We do know this is going to be a process,” Barr said. “It’s not going to happen in one year.”
One of the benefits of reducing income taxes is that it costs tens of millions of dollars to enforce that provision of the tax code, Barr said.
But while proponents argue sales taxes are a more equitable way for government to generate revenue because everyone pays the same percentage, opponents say it unfairly shifts the tax burden to lower income residents who may spend a larger percentage of their income on necessities.
One option to limit this potential impact is the earned income tax credit, which is modeled on a similar federal credit. It is available in 26 states and the District of Columbia to incentivize work for lower-income families.
The Georgia Budget and Policy Institute reports that about 1.1 million Georgia households, or 28 percent of all state income tax filers, received the federal EITC in 2013.
Barr said making exemptions for where sales taxes will increase, such as groceries and other basic needs, could also help level the playing field.
“I think that’s very important,” he added.