Policy Analysts Call For Medicaid, Direct Payments With Federal Relief Money

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Volunteers in Macon pass out food at a drive-through location in 2020. As aid from the federal government begins to flow into the state, questions rise as to how to apply the funds.

Credit: Grant Blankenship

A Georgia think tank that analyzes budgets and policy is calling on state lawmakers to use federal COVID relief money to send direct payments to Georgians.

The state government is expecting $4.7 billion in federal funding. Local governments will get additional money.

The Georgia Budget and Policy Institute said Wednesday that the state money should be spent on expanding Medicaid, reversing state budget cuts and sending relief money to low-income Georgians.

Shaunae Motley of the United Way of Southwest Georgia said the poor families she serves need both immediate help and permanent solutions.

“Should another pandemic come, should another tornado come, should another hurricane come, we want to make sure that our families are stable and they have the resources that they need,” she said. 

According to GBPI, during the pandemic Georgia has made some of the deepest budget cuts in the country. 

The federal funding could help reverse those cuts. The money, part of the $1.9 trillion American Rescue Plan signed into law by President Biden, can also be used for Medicaid expansion and direct payments.

But the law imposes a penalty for states that use the funds to implement bills resulting in a loss of revenue. In other words, it’s not for tax cuts.

Republican state attorneys general, including Georgia’s Chris Carr, are opposing that provision. They sent a letter asking the Biden administration to make it clear they can proceed with tax cut plans, calling the penalty “the greatest invasion of state sovereignty by Congress in the history of our Republic,” according to the Washington Post.

As it stands, if the state cuts taxes without replacing the lost revenue in some other way, the state would have to pay the lost amount back to the federal government.

For instance, GBPI estimates that HB593, which would increase the standard deduction for Georgians, would cost the state $200 million. 

“So we could expect that bill to result in a penalty of at least $200 million over the next two years. That's $200 million that will not go to Georgians,” GBPI’s Danny Kanso said.

Kanso also pointed out that Georgia taxpayers would not benefit from that cut until a year from now, when they file 2021 tax returns.