Wednesday, February 3, 2010

Soapbox: Budget cuts alone won't solve Georgia's financial woes

Posted By on Wed, Feb 3, 2010 at 6:09 PM

click to enlarge Alan Essig
  • Alan Essig

Gold Dome leaders have vowed to cut programs — and not raise taxes — as the Legislature attempts to balance the state's deep-in-the-red budget. Alan Essig, executive director of the Georgia Budget and Policy Institute, says that approach hurts Georgia in the long term. Rather than gutting, Essig says, lawmakers should get creative to enhance revenues. And that doesn't have to mean broad-based tax hikes.

Revenues should be part of a balanced, responsible approach to closing the gap between the growing needs of Georgia’s people and the resources the state has to meet those needs.

Why? Because relying on spending cuts alone hurt struggling families too much today, damage the state’s economy, slow recovery from the recession, and poorly position the state for when prosperity returns.

Georgia’s economy is in crisis. As we face the worst recession in our lifetimes, unemployment continues at record levels. Hundreds of thousands of Georgians have lost their jobs during the past 18 months. Georgians’ applications for unemployment insurance, food stamps, Medicaid, and various social service programs have increased dramatically.

Tens of thousands of jobless men and women have enrolled in our technical schools and universities in order to improve their skills. We cannot ensure that these vital services, which have already faced significant cuts, are available without taking a balanced approach.

To be clear, this does not mean avoiding budget cuts. We are way past this being an either-or proposition. With a problem this serious, no single response is enough. That means getting beyond the political rhetoric that offers the false hope of sparing education, healthcare, and public safety from cuts if only we “right-size” state government. Of course we should prioritize government services and deliver them more efficiently. But, in the face of multi-billion dollar deficits — caused by record-breaking drops in every state’s revenues, not by overspending — savings through increased efficiencies are unfortunately a drop in the bucket compared to the depth of the problem.

Increasing state revenues will avoid cuts that will severely damage our ability to help those most in need. It will also allow us to continue to invest in the education, transportation, and healthcare infrastructure that is vitally important for Georgia’s current and future economic success.

This need not mean broad-based tax increases, they should be targeted. For instance, Georgia should make a focused effort to collect taxes already owed to the state; close special interest and corporate tax exemptions and loopholes; increase fees (many of which have not changed in more than 20 years); increase the cigarette tax to be on par with the majority of states; increase the income tax on those Georgians with the most income; and modernize the sales tax to include the services that reflect today’s economy.

More than thirty states, including most southern states, already chose a balanced approach to deficit reduction through increasing revenues during the past year. North Carolina, our neighbor and chief economic competitor, increased revenues by more than $1 billion in addition to cutting many programs and services. Georgia cannot compete if we unilaterally de-fund state government while our neighbors and competitors continue to invest in their future economic growth.

What do we want the legacy of this recession to be for Georgia? Will it be that we abandoned Georgia families in their most desperate time, choosing inflexible ideology over practical solutions? That we failed to invest in education, transportation, and healthcare, sealing Georgia’s fate as a second-rate economy that offers only limited opportunity to those who want to start a business or raise a family?

Or will our legacy be the prosperity that comes from making decisions that assure the basic economic, health, and safety needs of Georgia families, and making wise investments that allow Georgia to once again lead the region? A balanced approach will take us down that road.

(Courtesy GBPI)

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