Contact:

Ines Owens, Director

Elisabeth Fletcher, Communications Specialist

elisabeth.fletcher@senate.ga.gov

404.656.0028

 

Sen. Tillery Quarterly Update: Budget Hearings

 

By: Sen. Blake Tillery (R – Vidalia)

 

Earlier this month, Governor Brian Kemp announced budget reduction instructions to executive agencies, comprised of a 4% cut to the current budget and a 6% cut to next year’s budget.  The Legislature responded with the relatively rare out-of-session convening of the Joint Senate and House Appropriations Committees on Thursday and Friday of last week to assess the strength of the State’s economy.

The Good

  • Unemployment for Georgia is at a historic low. Recognizing a certain number of citizens are unable to work (injury, disability, in school, etc.), economists consider a 5% or less unemployment rate to be full employment.  In Georgia, our current unemployment rate is 3.6%.  Even our Heart of Georgia-Altamaha Region, which typically carries the highest unemployment rate in the state due to being the only region without a metropolitan statistical area, has an unemployment rate of 5.1%.  Reaching essentially full employment means an increase in wages will likely soon follow.
  • Manufacturing in our area (Savannah region) recently reached a thirty-year high. Americans are manufacturing value-added products and they are doing this in our area of the state at a rate not seen since 1989.
  • On the nearby coast, visitor traffic is soaring.  Those visitors are crossing through our area and spending their tax dollars on the way.
  • The Ports of Savannah and Brunswick, two of our area’s largest economic drivers are still increasing in traffic and now boast 56 million square feet of warehouse space, with 11 million square feet in additional space set to come online in our area back to Savannah in the next twelve months.

The Bad

  • Agriculture, our state’s leading industry, is just now seeing the flow of approximately $2.5 billion in federal disaster aid from last year’s hurricanes. (The State’s aid of over $100 million began flowing in late 2018). The stressors of storms, trade, and a strong U.S. dollar (see below) are making agricultural production difficult with more than usual uncertainty.
  • Leading economists predict we have a 1 in 3 chance of a recession next year.  The good news is this is down from a prediction of a 1 in 2 chance earlier this year (though one economist still kept the chances at 50%).
  • Even the Atlanta area is predicting a decline in the retail sector.
  • The percentage of younger employees (18-24) involved in the workforce continues to decline.  In the 1990’s, 53% of younger individuals held jobs.  Today that rate has fallen to 35%.
  • Georgia is trailing all other southeastern states in revenue growth and has been doing so for the past eleven months.
  • State revenues are currently $97 million under budget this year.

The Mixed

  • The U.S. Dollar is incredibly strong when compared to other currencies.  Now is your time to travel overseas!  But that strong dollar makes U.S. exports (cotton, peanuts, timber, poultry, all important to our area) more expensive comparatively on export markets.

In total, last week’s hearings found ample justification for Governor Kemp’s mandated reductions.  Perhaps the best news to share is all the economists agreed that even if we see a recession in 2020, it will not be of the severity seen in 2007-2008.  Outside of state employees and state contractors, I’ve heard little concern for these cuts.  Most believe there is some amount of government waste, though very few can say which area to cut first.   With 77% of the state budget in two areas (education and healthcare) it will be very difficult to make future cuts without affects these areas, though they are largely exempt from the Governor’s current budget cut directive.

If you have any questions or comments, please don’t hesitate to reach me at blake.tillery@senate.ga.gov or in Vidalia at (912) 537-3030.  We will continue to monitor the state’s budget throughout the end of this year and into January’s legislative session. Thank you so much again for the privilege of representing you in Atlanta.

 

Sen. Blake Tillery represents the 19th Senate District, which includes Appling, Jeff Davis, Long, Montgomery, Telfair, Toombs, Treutlen, Wayne, and Wheeler counties and a portion of Liberty and Tattnall counties.  He can be reached at 404.656.0089 or by email at blake.tillery@senate.ga.gov.