Budget cuts, tax increases proposed by governor

January 16, 2009

Gov. Perdue presented his budget proposals for the remainder of the current fiscal year as well as FY 2010 in address to the General Assembly on Wednesday.

The governor has responded to a $2.2 billion revenue shortfall in the current fiscal year with a 10 percent cut in state spending between now and June 30, followed by a "slimmed-down," $20.2 billion annual budget for fiscal year 2010. The proposals feature significant reductions in state services, $1.2 billion in new state borrowing, use of more than one third of the state's reserve fund and higher taxes for many Georgians.

Under the governor's plan, teachers and other state employees would go without a pay increase. Also, funding for school nurses and supplements to teachers who receive national board certification would be eliminated.

Basic state funding for public schools would be cut by $185.8 million this year and $197 million in FY 2010, shifting those costs to local property taxpayers and bringing the eight-year total of education tax shifts under this administration to more than $2 billion. Property owners would suffer a further tax increase if legislators approve the governor's plan to eliminate $428 million in tax relief grants to local governments.

The governor is also proposing a new 1.6 percent provider tax on hospitals and HMOs to help fund Medicaid reimbursements - a tax that would inevitably be borne by patients.

Other proposed cuts in the governor's budget include $176 million for basic instruction funding at Georgia's colleges and universities, the closing of four state prisons and the elimination of funding for state golf courses and eight state swimming pools at Georgia parks.

The proposed bond package - 20 percent higher than the $1 billion in annual added debt in recent years - is mostly for construction of new schools, college buildings and other facilities. The governor also wants to spend $50 million this year and $408 million next year from the state's reserve fund, which currently amounts to $1.2 billion.

Click here to read the House Democratic response to the governor's address by Minority Leader DuBose Porter.

In addition to the governor's proposal, a wide range of legislative measures have been introduced or announced that would increase state revenues: allowing Sunday alcohol sales, eliminating the sales tax exemption for food, legalizing video and/or casino gambling, a tax increase on tobacco products, raising the state sales tax by a penny and even a special tax on the patrons of adult entertainment establishments.

Some of these ideas seem far fetched and will likely never get out of committee, but in dire circumstances like these, everything appears to be on the table. Over the next several weeks, the job of legislative budget writers will be to determine the right priorities for the people of Georgia and the right path to balancing the budget while still providing the core services demanded of state government.

How the state handles its budget priorities in the current economic environment will be the overriding issue of the 2009 legislative session. Appropriations Committee members will begin consideration of the governor's proposal during budget hearings Jan. 21- 23. Otherwise, lawmakers are in official recess until Jan. 26.

The first week of the new session was devoted largely to organizational matters. House Democrats showed a bipartisan spirit, joining our Republican colleagues in re-electing Speaker Glenn Richardson by acclamation.

This week also saw the introduction of the first legislative proposals to be considered by various committees before they are debated by the full House of Representatives. This year, I am serving on the House Children & Youth, Education, Higher Education and Interstate Cooperation committees.