ATLANTA — Georgia’s financial outlook for the final quarter of the current budget year reveals a notable increase in spending, amounting to an additional $4.4 billion, as announced by Governor Brian Kemp in a recent financial proposal.
However, as the 2026 budget year approaches—beginning on July 1—the governor anticipates only a slight change in state revenue.
Originally, state lawmakers had set a budget of $36.1 billion for this year. Kemp’s adjustments would raise this figure to $40.6 billion, reflecting a growth of 12%. While part of this funding increase would stem from tax revenue enhancements, the governor also plans to dip into state savings, allocating an extra $3.1 billion. Georgia currently holds over $16 billion in reserves, with $5.5 billion in a rainy day fund and $11 billion in surplus assets.
One of the key points of Kemp’s strategy is to manage the introduction of new ongoing expenditures. Throughout his six-year tenure, he has consistently attempted to limit commitments to lasting state budget costs. Despite plans for robust spending from surplus funds, including an income tax rebate and other initiatives, Kemp’s projections suggest that the state will record less revenue in both the current year and 2026, compared to 2024. This caution is partially due to potential ongoing income tax cuts that Kemp prioritizes, with an accelerated cut possibly leading to an estimated loss of over $1 billion in revenue by June 2026.
“Just because we take in more money doesn’t imply we need to expand big government programs indefinitely,” stated Kemp during his address.
In the wake of Hurricane Helene’s devastation, there is a proposed relief package that could exceed $1 billion. Recognizing the need for assistance for local communities and individuals affected by the hurricane that struck the state in September, Kemp aims to allocate $615 million for aid, along with tax relief for farmers and timber producers, projected at around $450 million.
Additionally, the budget sets aside $200 million to reimburse the Georgia Department of Transportation for repairs due to Helene and other storms; this is expected to be compensated by the federal government in due course. Furthermore, $150 million is earmarked for state and local matching funds needed to access federal disaster assistance. The budget also allows for a transfer of $75 million to provide disaster relief loans for agricultural sectors and $25 million for timber cleanup initiatives, drawing from funds originally intended for construction or debt service. Moreover, Kemp proposes a $99 million allocation for the Georgia Department of Transportation to offset a temporary pause on gas and diesel taxes.
The governor’s proposal includes tax incentives for timber replanting and rebuilding poultry houses, as well as exempting federal disaster relief for farmers from state income taxes; these provisions could lead to approximately $450 million in lost revenue.
In a significant move to avoid incurring debt for construction projects, Kemp plans to finance capital improvements from the state’s surplus funds. His proposal includes an additional $709 million for the amended 2025 budget and $867 million for the forthcoming 2026 budget, which is projected to save Georgia $1.5 billion in interest over two decades. Planned projects include $100 million for a medical research facility at Augusta University, $25 million for a new medical school building at Mercer University, and an investment of $25 million in an academic structure at the Morehouse School of Medicine.
Moreover, $47 million is allocated for new ballot scanners and printers to replace outdated technology used for ballot counting.
On the infrastructure front, Kemp intends to dedicate $502 million to a project aimed at sourcing surface water from the Savannah River, which will support Savannah and its surrounding areas, including the Hyundai Motor Group’s new plant in Ellabell. This project aims to address concerns regarding the sustainability of underground water supplies that are critical to coastal Georgia and South Carolina.
In addition, $530 million is earmarked for transportation initiatives focused on enhancing freight movement, alongside $250 million to assist local governments in maintaining roads and bridges, $60 million set aside for grants and loans for local transportation projects, and another $250 million for local water and sewer upgrades.
