Georgia Gov. Brian Kemp wants to use $1.6 billion of the state’s $2.2 billion in spare cash to give rebates in April on state income taxes.
The Republican told the Georgia Chamber of Commerce on Wednesday that he wants to give a $250 rebate to every single person filing state income taxes, and $500 to every household filing jointly. Kemp also wants to cut fees at universities, bolster HOPE scholarships and end state income taxes on military retirement income.
The tax rebates would be paid from the huge budget surplus Georgia accumulated in the budget year ended June 30, when tax revenues propped up by federal stimulus far exceeded the low expectations that led lawmakers to adopt a constrained spending plan. Even after filling Georgia’s rainy day fund to its legal limit of $4.3 billion, the state had $2.2 billion in cash left over.
The rebates are the centerpiece of Kemp’s emerging strategy to put cash in the hands of as many voters as possible, as quickly as possible, as he tries to get reelected this year. Kemp faces a tough GOP primary ahead of a challenging general election campaign against likely Democratic nominee Stacey Abrams.
“We’re simply giving the money back to the people that pay the taxes,” Kemp told reporters after his speech. “We’re trying to help people that are in the workforce combat rising inflation and other things.”
Kemp also proposed $5,000 pay raises for employees of state agencies, a move endorsed Wednesday by Republican House Speaker David Ralston of Blue Ridge. And he wants to push his proposed $2,000 pay raise for teachers into the current budget year by paying a onetime $2,000 bonus now, according to advance remarks from Thursday’s state of the state, obtained Monday by The Associated Press.
Both the tax rebate and the teacher bonus could reach voters before the May 24 Republican primary, when Kemp faces former U.S. Sen. David Perdue, former state lawmaker Vernon Jones and others for his party’s nomination.
There have been other ideas for how to spend the surplus, including using the money to pay for construction projects that Georgia would normally borrow to finance, or using it to shore up the state’s pension and retiree health funds.
Some people with lower incomes pay little to no state income tax. The liberal-leaning Georgia Budget and Policy Institute has proposed using the money for direct payments to the 3.5 million lowest-income Georgians, and said that “strategically targeted relief for those who need it the most” would be preferable to “modest one-time payments.”
“The state should pursue lasting opportunities to invest in our people rather than forgoing our surplus,” Senior Policy Analyst Danny Kanso said in a statement.
Kemp also said that the University System of Georgia will cut special fees added in 2009 during the recession if lawmakers agree to restore funding cut from university budgets. A state Senate report last year found that the fees collect $230 million a year across all 26 state universities and colleges, which range from $200 to $500 a semester, depending on the school. In November, acting Chancellor Teresa MacCartney told a Senate study committee on fees that the system wanted to retain the institutional fee because of how much revenue it brings it.
The committee, though, recommended abolishing the fee, even if universities had to raise tuition to make up for it, because tuition is eligible for the HOPE scholarship, while that source of aid doesn’t cover fees.
“In reality, the special institutional fee is nothing but tuition by another name,” the committee concluded.
Kemp also said he wants the lottery-funded HOPE Scholarship program to increase spending by $25 million to cover at least 90% of tuition costs for all recipients at all public technical colleges, colleges and universities.
Finally, Kemp said he wants to exempt military retirement income for veterans from state income taxation, a proposal he has made previously.