Gov. Brian Kemp is ordering state agencies to freeze spending at current levels during this fiscal year and fiscal 2027 to protect the state from federal funding cuts in the budget bill Congress passed this month.
"While the governor remains committed to meeting the needs of our growing state, conservative fiscal management means prioritizing spending to live within our means and keeping more tax dollars in the pocketbooks of our citizens," Rick Dunn, director of the Governor's Office of Planning and Budget (OPB)," wrote state agency heads in letter dated last Friday.
President Donald Trump's budget bill, which the Republican-controlled Congress passed July 3, contains about $1.5 trillion in spending reductions aimed at partly offsetting a $4 trillion tax cut Democrats argue will primarily benefit the wealthy. Those cuts are expected to filter down to the state and local levels of government, affecting health-care services and education programs.
The state ended fiscal year 2025 with a healthy budget surplus, but the impact of the federal cuts remains uncertain. As a result, Dunn's letter calls on agency heads to develop plans for dealing with the loss of federal funding.
"While we believe our current revenue projections are sufficient to meet our spending requirements, prudent fiscal management requires that agencies be prepared if conditions were to change," the budget director wrote. "We are asking that all agencies internally prepare thoughtful plans for a state funds holdback contingency as we continue to monitor economic trends and policy changes at the national level."
There will be some wiggle room in the spending freeze. Agencies with "mandatory" needs that cannot be met by redirecting fund from the current fiscal year without hurting service delivery will be allow to discuss those needs with the OPB.
Some legislative Democrats are calling on Kemp to call a special session of the General Assembly to consider providing state funds to fill the gaps caused by federal spending reductions. However, the Republican governor thus far has shown no inclination to reconvene lawmakers under the Gold Dome before the start of the 2026 legislative session in January.
The state began fiscal 2026 July 1 with a budget of $37.7 billion. State agency heads must submit their spending requests for the 2026 mid-year budget and the fiscal 2027 spending plan by Sept. 5.
