More than 130 cities and counties across Georgia are now ineligible for state funding after failing to meet financial reporting requirements, and state officials say they want fixes to ease the burden on rural areas.
A panel of Georgia lawmakers met at the Mercer University School of Medicine on Thursday to discuss challenges that rural areas of the state face, particularly around audit reporting requirements that can leave local governments without the support of state funding.
Georgia State Auditor Greg Griffin presented data on local governments’ financial reporting over the past year.
“We had identified a problem … we saw a growing trend of cities and counties that weren’t meeting their annual financial reporting requirements, primarily cities,” Griffin said. He said his Office identified barriers caused by the complex Generally Accepted Accounting Principles (GAAP) requirements, particularly for smaller governments, as one of the main reasons for noncompliance.
Cities and counties that do not comply with audit requirements are penalized by losing eligibility for state funding. According to the Georgia Department of Audits & Accounts’ (GDAA) Local Government Compliance Dashboard, 133 cities and counties are marked as ineligible for state funding.
Griffin further pointed out that for cities and counties to be eligible for state funding, which is used for everything from transportation to sewer and water, the city or county must submit audit reports on time for at least five consecutive years.
In 2024, the Rural Development Council recommended that legislation be implemented to reduce barriers for smaller governments, to establish appropriate reporting thresholds, and to develop legislation for the 2025 Legislative Session with the ultimate goal of boosting compliance.
HB 244 was introduced this year by Ellaville Republican Rep. Charles Cannon, and while the bill passed the House, it stalled before passing through the Senate.
The bill would have increased the full GAAP audit requirement from $550,000 to $2.5 million for expenditures, introduced a “little GAAP” option for cities under that threshold, and would be used as an alternative to eliminate the most complex requirements, while maintaining accountability and transparency, and significantly reducing costs to both preparers and auditors.
Griffin said there are plans to reintroduce the bill during the 2026 Legislative Session, in hopes more cities and counties come into compliance so they are once again eligible for state funds. The framework to support the bill will be developed by the GDAA.
If introduced and passed, cities and counties will be able to use the new reporting system in January 2027 and submit those reports in June 2028.
