If Congress is looking for a model of fiscal sanity, it could do worse than to study Georgia.
By now, most Georgians know their state is more fiscally responsible than the federal government. If not, Washington is doing everything it can to prove the point.
Unlike the federal government, states are generally prohibited from running deficits. Georgia is one of 49 states with a constitutional or statutory requirement to balance its budget each year. That means lawmakers must live within their means — and can’t simply print money or sell unlimited debt to kick the can down the road.
The Framers of the Constitution didn’t explicitly ban federal deficit spending, but they clearly feared its potential abuse. Thomas Jefferson, in an 1816 letter, warned: “To preserve our independence, we must not let our rulers load us with perpetual debt.” James Madison called public debt “a public curse,” particularly when used to fund ordinary expenditures rather than temporary emergencies like war. As for the states, the Founders generally expected them to handle day-to-day governance and spending. It’s no surprise that over time, most state constitutions evolved to include balanced-budget mandates to safeguard taxpayers from exactly the kind of long-term obligations the federal government now accumulates daily.
To see how it’s done right, look no further than Georgia.
Georgia not only balances its books, it’s going above and beyond by avoiding even the kind of long-term borrowing that has been standard practice for decades in the Peach State. Historically, the state has issued general obligation bonds to pay for infrastructure projects like roads, bridges, and new college classrooms. Bonding for capital expenditures is widely accepted as a reasonable practice — much like taking out a mortgage to buy a home. But even that debt, however prudent, still comes with a cost: interest payments that taxpayers must cover for years to come.
Lately, Georgia has chosen a better way.
Beginning with the fiscal year 2024 budget and continuing into the upcoming fiscal year that begins July 1, Georgia has eschewed bonding and instead paid cash for infrastructure investments. Over this three-year stretch, the state will have funded $3.45 billion in capital projects without issuing bonds.
This wasn’t done on a whim. In 2023, with surpluses building and revenues exceeding projections, Governor Brian Kemp and the general assembly made a deliberate decision: Rather than increase spending or expand government programs, they prioritized long-term savings. While no formal law was passed to mandate cash funding for capital projects, the policy was clearly articulated in budget documents and appropriations acts. The state simply chose to appropriate from its surplus rather than issue debt.
That choice has saved taxpayers an estimated $2.81 billion in future interest payments, according to figures from the governor’s office. That’s the difference between the $6.26 billion total cost of borrowing to fund the projects and the $3.45 billion cost of paying up front. Averaged out over 23 years, that’s roughly $120 million per year that future Georgians won’t have to pay in debt service.
And all of this was accomplished while also cutting taxes, issuing rebates, and expanding the rainy-day fund.
Georgia currently holds nearly $19 billion in reserves: designated rainy-day and reserve funds of $8 billion, and another $11 billion in surplus cash. That fiscal discipline — spending less than the state takes in — has enabled lawmakers to invest in infrastructure, give money back to taxpayers, and prepare for the next downturn.
Now that preparation should include creating a dedicated taxpayer relief fund.
Just as rainy-day funds cushion the budget during recessions, a taxpayer relief fund would help lawmakers responsibly reduce taxes in the future. If revenues came in lower than expected after a tax cut, money in the fund could offset the shortfall, preventing sudden cuts to essential services. It would give lawmakers the flexibility to trim rates today with greater confidence in fiscal sustainability tomorrow.
Such a fund could also serve as a vehicle to return excess revenues to the public in a structured, consistent manner — preferably through reductions in marginal rates or other pro-growth reforms. It would institutionalize fiscal prudence while maximizing taxpayer benefit.
That combination — paying cash for investments and building tax relief into the budget — would reinforce itself. Lower debt-service costs mean less tax revenue needed in the future. And lower taxes help attract new residents, grow the economy, and expand the tax base — relieving pressure on everyone else.
It’s a virtuous cycle, and one Georgia has embraced. It’s part of the reason the state routinely ranks among the best for business and sees continued population growth.
If Congress is looking for a model of fiscal sanity, it could do worse than to study Georgia. While Washington invents new gimmicks to disguise deficits, Georgia is quietly showing how to build, save, and cut taxes — without passing the bill to the next generation.
Maybe one day, the folks in D.C. will take notice.