The Amended Fiscal Year (AFY) 2026 Budget as Passed by the Senate
Today the state Senate passed its version of the AFY 2026 Budget. Key changes in the Senate’s version of the budget include:
- $200 million cut from the DREAMS Scholarship endowment as proposed by Gov. Kemp. This scholarship is intended to help students with low incomes to attend college. Gov. Kemp’s original proposal included a $300 million endowment to seed the program and $25 million for initial scholarships. The House eliminated $25 million in funds for scholarships. Now, the Senate has cut the funds allocated for the endowment by 67%, down to a total of $100 million.
- $229.4 million cut from one-time salary enhancements for full-time state employees and PreK-12th grade school employees. Gov. Kemp and the House supported allocating $611.8 million for a $2,000 pay supplement. The Senate has revised that down to $382.4 million for a $1,250 supplement, a 38% reduction.
- $382 million added (on top of $27 million) in one-time funding for the design and construction of a new Georgia Regional Hospital in Atlanta to address mental health and forensic bed capacity. These funds could be used to address the mental health needs of Georgians if they were invested in expanding community-based services instead.
- Adding back Gov. Kemp’s proposal for one-time non-refundable income tax rebates of up to $250 for single filers and $500 for married couples, in addition to an agreement with the House plan of issuing $850 million in one-time homestead exemption increases. Together, these proposals would commit about $2 billion in undesignated surplus funds. This is in addition to $3.3 billion in other surplus funds released as part of the AFY 2026 budget to fund transportation and capital projects.
- $40 million cut from Gov. Kemp’s recommendation of $50 million for the State Housing Trust Fund to address homelessness. In addition to the $10 million remaining, the Senate added $15 million to the Department of Veterans Services specifically for homeless veterans.
- $50 million addition to the Employees’ Retirement System of Georgia for a total of $100 million over Gov. Kemp’s proposed AFY 2026 budget to support state retirees through the pension system.
Now, the two chambers need to reconcile the differences between their versions of the AFY 2026 budget through a Conference Committee. This committee is consists of the appropriations chair, the majority leader and the president pro tempore from each chamber. Once both chambers agree on a conference committee version, the budget will head to Gov. Kemp’s desk for his signature.
Other Legislative Updates:
House Bill (HB) 947 was heard and passed in the House Agriculture and Consumer Affairs committee. It is now on its way to be voted on in the House before it moves to the Senate.
This bill is an extreme SNAP eligibility verification bill, which will harm families and likely increase error rates. This latest version is harsher than previous iterations. In addition to limiting state flexibility and adding more administrative burdens for SNAP recipients and DFCS caseworkers, the bill adds another provision that conflicts with federal law. The current version requires families or individuals who are applying for or renewing SNAP benefits to submit documentation from household members who are not seeking SNAP benefits. This means children could lose SNAP benefits if a non-applicant household member does not or cannot submit documents. Furthermore, if a case manager does receive all the documentation from a household and then misidentifies who is on the SNAP case, the state would be responsible for an error.
HB 1192 was heard and passed in the House Health Committee this week. It is now on its way to be voted on in the House before it moves to the Senate.
This bill would create greater fiscal oversight of the Department of Community Health and Department of Human Services by requiring each agency to submit an annual report to the General Assembly that identifies costs savings and operational efficiency opportunities. We are watching this bill as this oversight might help prevent future shortfalls that we’ve seen at the Department of Human Services. The bill also prohibits the two agencies, which split contracting and administration of the state’s eligibility and enrollment system for all public benefits, from comingling state funds.
Senate Bill (SB) 440 was voted on and passed in the Senate. It has now crossed over to be discussed in the House.
This bill cleans up old state code related to the Department of Public Health. An amendment to expand Medicaid was added on Friday. While the bill passed Senate, the amendment for Medicaid expansion failed.
Income Tax Threats Remain in House After SB 476 and SB 477 Pass Senate
HB 880 was recommitted to the Ways and Means Committee. GBPI estimates the legislation would reduce income tax revenues by more than 25% by lowering the top personal and corporate income tax rate to 3.99%, increasing the standard deduction by $3,000/$6,000 (single/married), increasing the dependent exemption by $1,000 and increasing the retirement exclusion by $5,000 per person. About 63% of $5.8 billion in benefits ($3.7 billion) would go to those with incomes in the top 20%, who make more than $150,000 per year. We oppose this bill.
SB 476 (HB 134) and SB 477 (HB 463)
Last week, members of the Senate voted to pass a partial income tax elimination package that includes Senate Bill 476 and Senate Bill 477. The same measures were also passed through the Senate as House Bill 134 and House Bill 463 to satisfy potential constitutional constraints. The legislative package would cut the personal income tax rate from 5.19% to 3.99% (Senate Bill 477), cut the corporate income tax rate from 5.19% to 4.99% (Senate Bill 476) and increase the state standard deduction from $12,000 for individuals and $24,000 for married couples to $50,000 and $100,000, respectively (Senate Bill 476). Now, all four bills go to the House.
Despite the legislation’s sweeping impact, the measures still do not have fiscal notes. Instead, the legislation’s sponsors used their own estimates to project that the revenue raising provisions included would generate about $2.8 billion by eliminating a series of corporate and sales tax expenditures.
GBPI estimates that the package’s tax cut provisions would cost $9.5 billion if fully implemented, meaning that Georgia could see an annual budget deficit of more than $6.7 billion if these bills are enacted. That is more than Georgia spends on Medicaid to insure more than two million residents. It’s also more than the state spends on higher education programs to educate more than 500,000 students. Not only would this legislative package jeopardize funding for programs that all Georgians rely on by creating the largest budget deficit in modern state history, but the majority of tax cuts ($4.8 billion annually) would go to benefit those with incomes in the top 20% who make more than $150,000 per year. We oppose these bills.
SB 520 was introduced this week and has been assigned to the Senate Finance Committee. The bill would improve Georgia’s tax code through several measures. It would shift Georgia from a flat tax system to a graduated personal income tax rate of between 2% to 6%. It would increase the standard deduction by $5,000/$10,000 (single/married). It would increase Georgia’s Child Tax Credit by $1,000 per child and make it fully refundable and create a refundable Earned Income Tax Credit (EITC) worth 20% of the federal level (up to $1,600). GBPI estimates that the legislation would reduce income taxes on the first $50,000/$100,000 (single/married) by 43%, while providing up to $4,000 in additional tax credits for a family of four. The revenue neutral plan also includes lifting Georgia’s tobacco tax to the national average, eliminating the state’s tax credit for vouchers and taxing corporations and incomes over $200,000/$400,000 at 6%. We support this bill.