Gov. Brian Kemp has directed Georgia agencies to hold spending flat and prepare for possible reductions as he enters his final months in office amid shrinking reserves and flat revenue.
The Office of Planning and Budget’s fiscal 2028 instructions require agencies to match their current fiscal 2027 funding. New requests are generally limited to enrollment- or workload-driven costs; other priorities must be financed by redirecting existing dollars. Proposals are due Sept. 1.
The Atlanta Journal-Constitution reported Georgia’s combined rainy-day and undesignated reserves peaked at $16.5 billion two years ago, fell to $14.6 billion last year and are estimated at $8 billion this year. State spending increased 40% from fiscal 2020 to $38.5 billion in fiscal 2027, largely for teacher, law-enforcement and state-worker pay.
The tighter outlook follows income-tax legislation Kemp signed in May, which lowered the rate from 5.19% to 4.99%, increased deductions and temporarily exempted portions of tips and overtime pay. When signing the fiscal 2027 budget, Kemp said the tax package reduced expected revenue by nearly $1 billion. He withheld more than $300 million in proposed new spending and warned reserves might cover the remaining gap.
Georgia’s immediate position remains strong. Fitch Ratings, Moody’s Investors Service and S&P Global Ratings renewed the state’s highest possible ratings in June, citing its economy, reserves and fiscal management. But federal changes are expected to reduce Medicaid support and shift more Supplemental Nutrition Assistance Program costs to Georgia.
Agencies will submit proposals to Kemp’s budget office, but his successor will present the fiscal 2028 plan to lawmakers in January. The freeze shapes the starting point for Georgia’s next governor, who may inherit less room for programs or additional tax cuts.
