WEEKLY LEGISLATIVE REPORT – March 6, 2009

Budget problems mount; tax increases move forward

By Rep. Alan Powell

There was more discouraging news on the economic front last week for members of the House Appropriations Committee to consider as we continue to work on the annual budget proposal for fiscal year 2010.

State revenues hit rock bottom in February as tax collections were off by 35 percent from the same month last year, one of the largest decreases ever. According to the state Department of Revenue, total revenues for last month were $629.4 million, compared to $965.8 million in February 2008. 

The state’s unemployment rate, meanwhile, hit a record high of 8.3 percent. Mounting job losses caused individual income tax revenues to plummet by 63.6 percent. Sales tax collections were down 24 percent, motor fuel taxes dropped by 25.4 percent and corporate income taxes fell 66.3 percent. State revenues are now down by 7.3 percent for the current fiscal year.

In response to these dismal numbers, the governor lowered his revenue estimate for the next fiscal year to $18.6 billion, another decrease of $1.6 billion. After some original hesitation, the governor announced he has decided to accept Georgia’s full allotment of federal stimulus/bailout money for the state’s unemployment trust fund. 

This will mean another $150 million to help pay jobless benefits for Georgians who have been laid off. The governor also said he has abandoned his effort to impose a 1.6 percent provider tax on hospitals and health insurers, in part because of stimulus/bailout funding for Medicaid and in part because of near-unanimous opposition from legislators to the new tax. The governor is still proposing to cut $81 million in Medicaid funding.

While the news talk shows are consumed with criticism of the stimulus plan, one does not hear a single negative word in the halls of state leadership at the Capitol these days. Both the administration and the legislative majority leaped at the opportunity to balance the state’s budget using “free money” from Washington, D.C. The legislative leadership, which had planned to hold off until late June before finalizing the 2010 budget, has now changed that schedule, and the final day of the session is slated for April 3, now that the amount of stimulus funding is known.

However, what they fail to acknowledge that this is only a temporary fix to Georgia’s budget problems which have been festering for the past six years and have come to full fruition this year. When the bailout money is gone, these systemic problems brought on by a culture of fiscal irresponsibility will remain. 

Until our governor and legislature implement a zero-based budgeting system, under which every spending program and every private contract receives the utmost scrutiny, Georgia’s big budget problems will compound. Until these problems are properly handled, the state will continue to fail to adequately fund our top priorities like health care and education, and the local taxpayer will continue to be forced to make up the difference.

The tax-shift-and-spend culture continued at the State Capitollast week when a majority of House members passed a 10-year, $25 billion statewide sales tax increase for transportation spending. The Senate had previously adopted a regional sales tax increase for transportation. Both plans will likely have to go through a conference committee before going to the voters for ratification in the 2010 general election.

In addition to the utility rate hikes approved by the Senate and House already this session, a number of other tax increases are still on the table this session. This Thursday, March 12, is the 30^th day of the session and the deadline for legislation to pass in either the House or the Senate and still be considered by the other body before the end of the session. So time may be on the taxpayer’s side.

Among the measures passed by the House and sent to the Senate last week were:

• HB 45, which requires Georgians to provide documentation of U.S. citizenship when registering to vote.

• HB 86, which would require county election boards to tabulate and report the totals of absentee and advance ballots by precinct.

• HB 280, which addresses the state's shortage of math and science teachers. Under the legislation, new educators in Georgia public schools who certified in math or science would receive higher pay.

• HB 304, which would prohibit a tax appraiser from entering your property until he has given reasonable notice as to why he is entering your property.

• HB 312, which would incorporate provisions of the federal SAFE Mortgage Licensing Act of 2008 into state financial institutions law.

Meanwhile, a proposal to increase the homestead exemption from $2,000 to $4,000 by statewide referendum, SB 83, failed to receive the necessary two-thirds approval in the House.

• Rep. Alan Powell (D-Hartwell) represents the 29^th District (Franklin, Hart and Madison counties) in the Georgia House of Representatives. Contact him at 507 Coverdell Office Building, Atlanta, GA  30334; by phone at 404-656-0202 or by e-mail at alanpowell23@hotmail.com. For more information, visit www.alanpowell.net.