Georgia's legislators have gotten themselves into another fine mess with the state budget. The question is how do they get themselves out of it?
The House and Senate have approved a revised budget for the current year that cuts $1.2 billion because of a shortfall in state revenues, but the ongoing recession may force them to cut another $200 million before June 30.
The budget for the next fiscal year probably will have to be reduced by another $1 billion or more unless the recession suddenly ends.
The situation came to a head last week when the legislative leadership decided to call a timeout and lawmakers agreed to adjourn the session until March 8. Over the next two weeks, the House and Senate appropriations committees will meet jointly to try to figure out what else they can cut from the budgets.
We mentioned in a previous column that the state could solve some of its budget problems by simply collecting past-due sales taxes that businesses have not been sending to the revenue department.
Here is another suggestion: for the past few years, legislators have passed and Perdue has signed dozens of special interest tax breaks requested by lobbyists. Basically, anyone who had the money to hire a team of lobbyists could get a tax exemption.
The assorted tax breaks, legislators assured us, would create thousands of new jobs for Georgians. But they didn't. Even with all of these exemptions, the state's unemployment rate has been higher than the national jobless rate for 25 of the last 26 months, according to Labor Department figures.
This conglomeration of tax breaks now drains an estimated $1.5 billion or so from the state treasury each year. This isn't a huge problem as long as the economy keeps growing, but one thing we know is that recessions will occur from time to time. When the current recession came along, Georgia suddenly found itself in a deep revenue hole that is getting deeper all the time.
State Sen. George Hooks (D-Americus) has been a legislator for 30 years and chaired the Senate Appropriations Committee for nearly a decade. He probably knows as much as anyone under the Gold Dome about the state's budget and finances.
Hooks argues it is time to start rolling back some of those tax breaks that lawmakers have so generously given to our corporate citizens.
"They need to call us back into special session so we can look at every one of these tax exemptions," Hooks said. "They ought to lock up every lobbyist and keep them out of the capitol while we're doing it."
Some of Hooks' GOP colleagues are starting to agree. "We've cut our budget, we've used up our reserves, we've used up stimulus funds; we must find new sources of revenue for this state," said Sen. Greg Goggans (R-Douglas), who sponsored legislation to review and suspend some of the tax breaks.
Back in 2006, the State Auditor's office issued a report recommending that the revenue department, which reports to Perdue, collect and analyze data to see if all those tax breaks passed by the Legislature had actually benefited the state.
The revenue department chose to ignore that advice. When auditors took another look at the agency a few months ago, they discovered that "no steps have been taken to begin collecting data for evaluating the costs and benefits derived by the state from corporate tax credits."
"We don't even know if those tax breaks are doing what they're supposed to do," Hooks protested. "They've eaten away at our tax base until there's nothing left."
We are now seeing the results of that eroded tax base: teachers and state employees are being furloughed. Local school systems face dire prospects because the state has cut their funding. There is hardly any money to build highways. Financially distressed hospitals could be forced to close their doors.
We all hope that the state's political leadership can somehow find a way out of this budget mess. Before they can do that, however, they have to admit some hard facts. They can't afford to keep handing out tax breaks just because lobbyists ask for them and they have to start suspending some of the tax breaks they've already granted.
Georgia just can't afford it anymore.
Tom Crawford is the editor of Capitol Impact's Georgia Report, an Internet news service at www.gareport.com that covers government and politics in Georgia. He can be reached at tcrawford@capitolimpact.net.
