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2009 Georgia General Assembly struggles with budget, gridlock



It's a shame Gov. Sonny Perdue's penchant for prayer doesn't work as well for deficits as it did for drought. If that were the case, Georgia would literally be swimming in greenbacks.

With revenues plummeting in an economic landscape akin to Mad Max, the state is currently facing a $2 billion shortfall, the deepest hole anyone at the Gold Dome says they've ever seen. In response last week, Perdue delivered a cost-cutting whack, slashing nearly all state agencies and programs – many of which state Democrats say help the most vulnerable of Georgians in this most precarious of times.

The Department of Labor, the state agency that's been the first stop for pink-slipped residents? Nearly 13 percent cut. The Public Defender Standards Council, the arm of government that provides indigent defense attorneys in an attempt to ensure justice for both defendant and victims? Almost 11 percent cut. The departments of Education, Community Health and Human Resources? Cut, cut, and cut. State employees' salaries? Frozen – and vacant positions eliminated.

Add to that the $350 million slashed from K-12 educational funding, and you're left with a budget that has little wiggle room. From lobbyists to lawmakers, behind-the-scenes staffers to Gold Dome shoeshine men, everyone we queried agrees: The 2009 legislative session will be about money, and what little of it the state has.

Or, as Perdue said in his state of the state address: "While we have worked for six years to do more with less, at some point, in business or in government, it becomes less with less."

State Democrats have jumped on the offensive and say Perdue's blueprint of a down-on-her-luck Georgia puts the state's most vulnerable populations at risk and only adds to what one financial expert says is a pattern of myopic budget-setting. Such strategies will only hurt the Peach State in the long run, they say.

Even some Republicans disagree with Perdue's game plan – particularly when it comes to fees that would boost medical care programs and property tax increases that would eliminate subsidies for local government.

Included in the governor's budget proposal is a fee on hospitals and health care providers – which opponents have branded a "sick tax" – that will help fund the state's woeful trauma program and avoid cuts to Medicaid and PeachCare. The governor also wants to dip into the state's $1.2 billion "rainy day" reserve fund. He seeks $50 million this year and $408 million in 2010.

Perdue also has stolen a page from President Barack Obama's playbook. He's proposing a $1.2 billion stimulus plan that would build schools, technical colleges and other educational institutions. Perdue says the projects will create 20,000 construction and support jobs and provide a shot in the arm for the economy.

What'll be most painful to homeownersis the elimination of a Perdue-despised homeowners' tax credit that, if approved, means you'll no longer receive an average $200 to $300 discount on your tax bill. Statewide, the tax credit saves homeowners – and costs the state – $428 million.

Lawmakers of both parties are less than enthralled with Perdue's proposals. For the remainder of the 40-day session, the General Assembly will face the difficult choice of cutting other programs and agencies to fund what the governor sliced –as well as some pet projects of their own, it being their habit.

House Minority Leader DuBose Porter of Dublin called Perdue's elimination of the homeowner tax credit the largest proposed property tax increase in the state's history and said the governor was only thinking short-term.

Porter complains that Perdue didn't propose any measures that would raise revenues or do away with exemptions other than the property tax credit.

"He's not willing to look at anything enhancement-wise or deferral-wise," Porter, the House's highest-ranking Democrat, says. "And if you take all that off the table, all you have is cuts and shifting things to local government."

Alan Essig, executive director of the Georgia Budget and Policy Institute, commends Perdue for working under considerable financial constraints – "It's as good a budget you can get with the circumstances we're in," he says – but believes the state's leadership needs to think long-term and be honest about its inability to fund key programs and agencies.

Essig says Georgia, which has one of the lowest tax burdens in the nation, is in a "structural deficit." For the past 10 years, the Gold Dome's addiction to cutting taxes while doling out incentives to businesses cost the state an estimated $1.5 billion annually.

Contrary to what most GOP power-hitters say, Georgia has a revenue problem, Essig says, not a spending problem, and the decades-old habit of bending over backward in terms of tax credits, incentives and exemptions has left the state no better off.

Senate Minority Leader Robert Brown of Macon agrees with Essig. He compares Perdue's budget and the state leadership's lack of vision to "rearranging the deck chairs on the Titanic." He says it's a politically endearing move that's only helped "erode public education, health care funding and veterans' care."

"It's not a crisis," Brown says. "A crisis is something short-term that's terrible for the moment and you see your way out of it. This is more of a structural problem. We have eroded our support base over time. We are continually giving exemptions and tax breaks to corporate entities, so-called incentives to bring businesses in, and that's caused us to be in a very weak posture when it comes to our budget."

Both Essig and Brown say the proposed budget is but a short-term fix that will cut funds to accommodate the current gaps the state faces, without looking further than two years into the future.

"The problem is [the budget's] lacking any bold vision," Essig says. "The elected leadership has to tell Georgians what it takes to develop first-class health care, first-class education and first-class transportation – and be honest about ways to raise revenues to do it. And if we're not going to do it, then to stop promising that goal."

Essig suggests raising the tobacco tax, which he says would have financial and health benefits. He also says the state needs to expand the sales tax – taxing online sales, for example, which it currently doesn't do – and increase the income tax on Georgians earning higher salaries.

General Assembly leaders such as Lt. Gov. Casey Cagle have stated they're not willing to raise taxes. But some legislators have already proposed revenue-generating measures. State Rep. Ron Stephens, R-Savannah, filed legislation that will raise the cigarette tax by $1, a move that is estimated to generate $350 million a year.

There is one sliver of hope. State lawmakers are crossing their fingers that federal funds from the incoming Obama administration will fill some of the funding gaps. Federal money wouldn't solve the financial riddle, but it would keep the state afloat. At least for a little while.

Amid concern of the state's budget woes, there will be other issues that demand lawmakers' attention -- some say immediate attention.

Chief among them: the ever-pressing challenge of the state's notorious congestion problem.

Last year, a lack of funding to build roads, repair bridges, and introduce much needed public transit to our auto-dependent state was one of the biggest hurdles the General Assembly tried to overcome. Look around and you can see the problem was far from solved.

In the run-up to this year's session, the state's most powerful business leaders echoed their call for lawmakers to create a new funding source for transportation. The most popular idea – a 1 cent sales tax that counties could levy on themselves to fund road, rail and bridge projects – is a slightly altered version of legislation that failed by three votes in the Senate just minutes before the General Assembly adjourned in 2008.

Judging by Perdue's recent speech to lawmakers, however, we'll still be sitting in gridlock come next year. He says he'll support a new transportation tax when such a plan makes "business sense." Last week, the governor proposed a sweeping overhaul of the state's countless transportation agencies, parroting last year's line that the different groups are in need of reform before they receive more money.

Nonetheless, lawmakers are giving transportation funding another go. Last week, Sen. Jeff Mullis, R-Chickamauga, introduced legislation that would revive the regional sales tax funding mechanism. Members of the House want a statewide 1 cent sales tax, a move that Cagle says isn't likely to pass in the Senate, over which he presides. If either moneymaking mechanism were to succeed, it would require a state constitutional referendum on the 2010 ballot. In other words, there won't be any new funds for a while.

To make matters worse, the state's only major metropolitan transit agency is in a serious pinch this year. MARTA faces an estimated $70 million operating budget shortfall. Transit agency's officials say they'll ask the Legislature for permission to use a greater percentage of a 1 cent sales tax in Atlanta and Fulton and DeKalb counties to cover the agency's operating costs. Currently, only 50 percent of the sales tax revenue can be used for operating costs.

Perdue has indicated a willingness to fund public transit, if not MARTA specifically. The Georgia Regional Transit Authority, which Perdue oversees, has been appropriated $11.6 million by the governor for new buses to shuttle commuters from intown to the suburbs. The agency requested the funds last year as well, only to be rebuffed by lawmakers.

In terms of commuter rail, Perdue received a tongue-lashing from U.S. Rep. David Scott, D-Ga., because the governor didn't include in the budget funding for a rail line between Atlanta and Griffin, a project he said he'd support during the state's gas shortage last year.

If lawmakers have any time or energy once they stop arguing about the budget and transportation, they'll likely spend it on bills that would "reform" the death penalty, legalize gambling, and charge residents for nuclear power reactors that haven't been built yet.

The good news: Lawmakers are lining up to support a bill that would allow alcohol to be sold in stores on Sundays. It won't solve the deficit – an additional day of booze revenues would only generate $4.8 million in taxes – but it would at least provide more options for drinking away your economic sorrows.

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