ATLANTA – The state’s fiscal economist says he still has a “positive” outlook for Georgia’s economy in spite of a softening housing market, a volatile stock market and whispers of a possible recession.

“My takeaway still is an economy outlook that is still quite positive, although gradually slowing,” Kenneth Heaghney, director of the Georgia State University’s Fiscal Research Center, told lawmakers this week. “Not necessarily ending up in a recession two years down the road, but one that will be growing slower than it is today.”

Heaghney said Georgia now has about $2.5 billion in savings to lean on when the next recession does hit. Rebuilding the state’s reserves, which were drained down to about $100 million nearly a decade ago, was a major priority of former Gov. Nathan Deal.

These were likely reassuring words for lawmakers who must now hash out the details of Gov. Brian Kemp’s first budget, which is $27.5 billion. Kemp has proposed some sizable spending hikes, most notably $600 million in raises for teachers and state workers.

Aside from the economy growing revenues, such as through increased sales tax collections, the state’s coffers have seen a boost from two measures that passed last session: one that changed the state’s income tax law and another that required online retailers charge a sales tax.

Heaghney said he is worried that global factors – such as slowing economic growth in China – could become a drag on the U.S. economy. But for now, unemployment remains low and jobs continue being added.

But much of the economic growth in Georgia is still occurring in metro Atlanta, he said.

“In terms of job growth, it’s still kind of a story of Atlanta, Gainesville, mostly north Georgia growing at pretty good rates and a lot of the smaller metro areas – and particularly a lot of the South Georgia areas – are still fairly weak,” Heaghney said. 

“Unfortunately, I think the metro area is still the key driver of our economy,” he said.

In addition to the pay hikes, the first-year governor has proposed bulking up the state’s spending on school security. He has proposed $69 million for one-time $30,000 grants for every school and $8.4 million for support counselors at high schools, where they will focus on struggling students.

“For teachers and students to succeed in the classroom, they need to feel secure in their learning environment,” Kemp said Wednesday.

He’s also proposed $150 million for new voting equipment, $4.3 million to go toward the continued expansion of the state’s accountability courts and a half million to start an anti-gang task force with the Georgia Bureau of Investigation.

There’s $1 million proposed for the state to explore a Medicaid waiver, which is a proposal that has already triggered debate among lawmakers. Democrats argue traditional expansion is the more effective route.

Jill Nolin covers the Georgia Statehouse for The Valdosta Daily Times, CNHI’s newspapers and websites.