(The Center Square) – The first day of the Georgia General Assembly began with its usual welcomes and speeches, but a showdown could be looming before the session ends April 2.
Sen. Larry Walker III, R-Perry, took the helm as the Senate President Pro Tempore. Sen John F. Kennedy, R-Macon, held the position last year but has resigned to focus on his campaign for lieutenant governor.
House Speaker Jon Burns showcased renovations to the House Chambers, which he said came under budget and on time.
Both chambers adjourned by midmorning with little foreshadowing of their policy differences on tax cuts.
The Senate Special Committee on Eliminating Georgia’s Income Tax is recommending a plan that phases out the income tax over the next year. It begins with a $3 billion cut for tax year 2027, funded in part by the 2025 surplus in state funds.
Burns said he wants to eliminate property taxes on individual homes, known as the homestead tax. He hasn’t revealed a bill or details yet. Georgia does not collect property taxes – local counties, cities, and school boards do – so it won’t directly affect the state budget.
Lawmakers in both chambers said they don’t see the proposals as competing ideas. Burns said during a news conference that the House wants to hear details of the plan. A bill passed by lawmakers in 2022 is gradually reducing the income tax to 4.99% by 2028.
“The House has always led on that,” Burns said. “We’ve worked with Gov. Kemp very closely reducing on a predictable manner.”
Gov. Brian Kemp has not said where he stands on tax relief as of Monday. He will give his final State of the State address on Thursday.
Sen. Blake Tillery, R-Vidalia, chairman of the Senate Committee on Eliminating the State Income Tax, said he doesn’t see the proposals as a choice between income or property tax.
“We view this as our proposal and what we think affects affordability and what we think helps Georgia families,” Tillery said at the Senate committee’s final meeting. “And we look forward to seeing their proposal on property taxes, too.”
Democrats are questioning how the state would replace the $16 billion in income tax revenue it brings in, even if it is done on a gradual basis, as proposed by the Senate.
The plan would use nearly $2 billion of surplus to cover the part of the first year of $3 billion in tax relief. Kemp told state departments to keep their budget lean. But the budget requests still came in at $1.3 billion over what is currently being spent, according to Dr. Daniel Kanso, director of legislative strategy and senior fiscal analyst for the Georgia Budget and Policy.
“So the idea that because we ran a surplus in 2025 we are automatically going to run a surplus in 2026 and 2027 just is not really based in logic or the kind of realities of the state budget,” Kanso said in an interview with TCS. “So I don’t see it as a viable revenue source.”
The Senate committee said it plans to examine cuts to the state’s $300 billion in tax breaks to offset future revenue losses resulting from the income tax elimination, but did not provide specifics.
A study released in late December by the State Department of Audits and Accounts said only 30% of Georgia’s data center boom can be attributed to a 2018 tax break. Both chambers approved a measure in 2024 that would have put the brakes on the cuts, but Kemp vetoed it.
In fiscal year 2025, Georgia lost $472 million in revenue due to data center tax breaks, according to the university’s report. But the state’s overall economic growth outpaced the loss.
Neither chamber has proposed any cuts to state spending.
