Raisin’ taxes hurts GOP

Gov. Sonny Perdue’s plan for fixing a hemorrhaging state budget would cost Georgia homeowners upward of an extra 200 bucks a year — but it could end up costing Republicans even more.

With revenue collections now clogging the toilet, Perdue announced earlier this month that projections were indicating a $1.6 billion (yes, that’s a “B”) shortfall in the $20 billion current-year state budget. Part of his proposed remedy – eliminating the state Homeowner Tax Relief Grant – can be viewed as an affront to hardworking Georgia families struggling to make financial ends meet.

Or, if you’re a Democratic strategist, you can dance a jig and thank your nondenominational deity for yet another in a string of priceless political gimmes from a state Republican Party that seems determined to shoot itself in the foot with an AK-47.

But let’s back up a moment for a remedial course on Georgia taxes. The tax-relief grant in question was an initiative passed 10 years ago by then-Gov. Roy Barnes, under which the state reimburses cities, counties and school systems for a large chunk of local property-tax bills. The program has much the same effect as a homestead exemption, saving the typical taxpayer between $200 and $300 a year.

Now that the state government is swimming in an ocean of red ink, Perdue wants to rescind the grants to keep the $428 million the state would otherwise send to local governments. In fact, he has already announced that he will hold the funds back in the state treasury. But he can’t spend the money without approval from the Legislature.

From a financial point of view, the governor’s move has a certain cutthroat logic. From a political perspective, Georgia’s GOP leaders must be wondering which side Sonny is on.

“Nobody is going to push to raise taxes in an election year,” says Rep. Fran Millar, R-Dunwoody, who points out that the plan was not well-received at the House Republican Caucus gathering at Georgia Tech on Aug. 16, even though the guv showed up in person to pitch it.

Indeed, both House and Senate leaders have voiced opposition to the plan, including Lt. Gov. Casey Cagle, usually a Perdue ally. But many of the public comments have been ambivalent, in part because Perdue has cleverly modeled his arguments for killing the tax-relief grants after Speaker Glenn Richardson’s unsuccessful crusade to do away with property taxes – namely by accusing local governments of wasting the money.

Richardson spokesman Marshall Guest says the speaker “agrees with Gov. Perdue that local spending has grown at a disproportionate rate to state government spending.” Guest also says Richardson feels that the state grant “may not be the best way to provide tax relief.”

“For more than a year, the speaker traveled the state discussing this issue and raising it before the public,” Guest says. “He looks forward to working towards a solution that will provide the property-tax relief that Georgians deserve. But he is not willing to balance the state’s budget on the backs of homeowners.”

Just as they did during last year’s General Assembly, when Richardson tried to bulldoze through his tax legislation, cities and counties are fighting back.

“The governor asserts that local governments have not been cutting back,” says Jim Higdon, executive director of the Georgia Municipal Association, which represents Georgia’s cities. Higdon says that since the tax-relief credits were enacted, municipal property taxes have actually decreased nearly 3 percent when adjusted for inflation and population growth.

According to the AJC, the amount of tax money metro cities and counties stand to lose if the grants are rescinded is substantial: $11.5 million for Cobb, $13.3 million for Gwinnett, $16.3 million for DeKalb and for the already budget-challenged city of Atlanta, a healthy $4 million.

Ironically, while Mayor Shirley Franklin has taken a PR whuppin’ over Atlanta’s budget troubles, at least her administration caught the problem halfway through the last fiscal year, when there still was time to cut spending and end the year in the black. By contrast, Sonny’s bean-counters apparently didn’t realize the past year’s state budget was in a hole until they had to pull $600 million out of reserves to cover the deficit.

Regardless of whether state or local governments would be better stewards of that money, the governor’s timing is rotten in several respects. Many counties have already prepared their fall tax bills and some have even sent them out, so for Perdue to get his hands on the $428 million at stake, taxpayers would need to be sent follow-up bills. And it’s a safe bet that county tax collectors would take pains to blame the new tariffs on the governor and Legislature.

Then there’s the election thing. Perdue isn’t running, but many GOP lawmakers must stand for re-election in November. They may publicly oppose Sonny’s plan to eliminate the tax-relief grants, but unless they do something about it, the issue will still be hanging over voters’ heads as they head to the polls.

It’s only fitting, actually, because the Legislature is just as much to blame for the current budget crisis as the governor. This past General Assembly, lawmakers fell all over each other with proposals to cut taxes – property taxes, car taxes, etc. – and increase spending. So eager were pols to bring home election-year bacon to their districts that they approved a budget bulging with pork – even as state revenue had visibly begun to dip.

The cuts Perdue now is eyeing to help balance the budget include some of the most popular funding initiatives to come out of an otherwise miserable session: reservoirs to combat the drought, the state’s land-conservation program and the already underfunded state trauma-care network.

After two consecutive sessions of party infighting, name-calling, pork-doling and an inability to address issues of real importance to average Georgians, Republican lawmakers are being forced by their own leader to confront a serious crisis of government. What they do next could amount to a do-or-die decision.