ATLANTA — Among Gov. Brian Kemp’s $300 million worth of vetoes this week were money for reforestation, land conservation, historic building restoration, the arts and live performances and short-line railroads.
The reason he gave in most instances: “The General Assembly failed to account for this loss of revenue in the appropriations process, instead prioritizing general taxpayer relief.”
Kemp was referring to the income tax cuts he signed into law on Monday.
He had called for a reduction of the state income tax to 4.99% from 5.19% this year, building that into the budget. But the General Assembly went further.
House Bill 463 not only drops the rate to 4.99% this year but will continue dropping it an eighth of a percentage point each year for eight years, if state revenues continue to grow.
The new law, which Kemp supported despite the impact on the budget, also increased standard deductions. They rise 25% this year and are scheduled to go up an eighth as much each year over the next eight years. The law also waived some overtime pay and cash tips and increased the amount of retirement income excluded from taxation for Georgians 65 and older.
All of this affected the budget lawmakers passed for the fiscal year that starts in July. They wanted to spend at least $1 billion more than the state is expecting to collect.
So on Tuesday Kemp used his line-item veto authority to cut $300 million in new spending.
“We had to do a little fine-tuning to make sure that we can pay for all those tax cuts,” he said before he signed the 156-page budgeton Tuesday.
Kemp’s budget team expects increasing revenue collections to close some part of the rest of the gap. If not, Georgia’s next governor and Legislature will have to balance the budget with cuts or by spending down some of the billions in remaining reserves.
That’s a worry for down the road.
But there was an immediate impact of those income tax cuts in the newly passed tax credits and exemptions that Kemp vetoed.
House Bill 376 would have doubled to $60 million the cap in tax credits for restoring historic buildings.
House Bill 1070 would have increased the tax credit for maintenance of short-line railroads that connect industrial sites with major railways. The current $3,500 credit per mile of track expires at year’s end, and the legislation Kemp deleted would have extended it through 2027 while increasing it to $5,000.
Efficient railways drive shipping costs, so deferred maintenance could eventually affect consumers.
House Bill 1077 would have extended for five years the existing sales tax exemptions for fine arts performances and museum exhibitions that expire at the end of 2027.
This could affect ticket prices for the symphony, art exhibits and other events, including the Georgia National Fair at the Georgia National Fairgrounds and Agricenter, which the bill sought to include in the exemption.
Senate Bill 478 would have increased to 60% from the current 40% the amount of sales tax revenue from outdoor recreational equipment sales that go to the Georgia Outdoor Stewardship Trust Fund.
Money from the fund helps to acquire lands that are critical to wildlife and clean water and for outdoor recreation. And it pays for parks and trails.
Kemp also vetoed House Bill 14, which would have established a Georgia Music Office to promote the growth of the industry. And he struck out House Bill 519, which would have created a $10 million annual taxpayer credit to match the federal Work Opportunity Tax Credit. Kemp wrote that the federal tax credit does not yet exist, so Georgia does not need HB 519.
Among the large line items he vetoed was Senate Bill 59. The measure sought to further buttress the state’s efforts to address timber lost from Hurricane Helene in 2024.
Georgia had allocated $200 million toward that project, but timber producers have already absorbed the money. SB 59 would have added another $50 million for them, raising the cap to $250 million.