A budget nobody will call perfect

When state lawmakers drove away from the Capitol early Saturday, they left many Georgians facing the possibility of higher property taxes this fall and the prospect of higher utility bills in the future.

They left students facing likely increases in tuition at universities and colleges. And they left metro Atlanta residents with the likelihood that MARTA service will be cut.

They gave Georgians with profitable investments a break on capital gains taxes.

They also may have helped create some jobs for the unemployed by giving tax breaks to businesses that hire them and by approving $1.2 billion in borrowing for construction projects.

And they gave Georgia homeowners and businesses, in a time of falling property values, the certainty that local governments won’t be able to jack up assessments to raise more money over the next few years.

In a state that is seeing record foreclosures and unemployment, lawmakers left town Saturday morning giving average Georgians, at best, a mixed bag of legislation. At worst, what they did will wind up costing Georgians more money when they can least afford it.

Sen. George Hooks (D-Americus), the dean of the Senate and a legislative historian, said the priorities seemed to be off throughout the 2009 session.

“The little man behind the plow, as we say in South Georgia, got very little this session,” Hooks said. “They are certainly no better off.”

Neill Herring, a veteran environmental lobbyist who writes a daily legislative diary, summed it up this way: “It could have been worse, but I’m not exactly sure what they could have done to make it worse.”

When asked early Saturday what the General Assembly did to help Georgians during the 2009 session, Lt. Gov. Casey Cagle said, “With all the challenges we faced, the biggest thing is we didn’t raise taxes on anybody.

“That was our number one goal, to cut the waste out, cut the fat, downsize state government. We were able to do that and we haven’t impacted negatively people’s taxes.”

That is an accomplishment, since many states faced with plummeting revenue because of the recession have raised taxes this year.

Instead, Georgia lawmakers carved $4 billion in spending out of two budgets, cutting many state agencies more than 10 percent to keep from raising state taxes.

But county and school officials, and Democrats, who are a minority in the General Assembly, say it’s not entirely accurate to say the General Assembly didn’t raise taxes.

For the first time in about a decade, the General Assembly didn’t fund the homeowners’ tax relief grant, which saves Georgians about $200 to $300 a year on their property taxes. County officials say that will be passed on to homeowners this fall in their property tax bills.

School districts and colleges took hundreds of millions of dollars in budget cuts. To make up for the lost revenue, some school districts will probably raise property taxes, and colleges are expected to raise tuition.

Republican leaders say it’s wrongheaded to blame lawmakers for those increases. After all, the state is in the middle of a fiscal crisis, and lawmakers had to make tough choices about what to fund, and what not to fund.

“Local government has the same ability as the state and federal government: They can reduce spending or raise taxes,” said House Majority Leader Jerry Keen (R-St. Simons Island). “They have the ability to do both. And we’re not limiting their ability to do either.”

Lawmakers made sure that any tax increases will be out in the open by putting a temporary moratorium on property assessments. Local officials won’t be able to raise property values to collect more money.

Taxes weren’t the only pocketbook issue.

Early in the session, lawmakers passed SB 31, which will assure higher utility bills.

The bill allows Georgia Power to charge customers an estimated $1.6 billion in financing charges and an additional $400 million in related taxes between 2011, when construction of two nuclear reactors begins, and 2017, when the reactors are done.

Supporters say the early payments will ultimately save consumers money on the cost of building the reactors.

A bill consumer groups said would help address the state’s foreclosure crisis, Senate Bill 57, passed the Senate but never made it to the House floor for a vote.

Georgia Watch, an Atlanta consumer group, said the bill would have, among other things, banned major financial incentives for mortgage brokers to guide borrowers into expensive and unsuitable loans.

Allison Wall, executive director of the group, said she was “extremely disappointed” the House didn’t take up the bill.

“This state has the sixth highest foreclosure rate in the nation,” she said. “It’s simply unacceptable to have the volume of foreclosures we’re having here and have no action from the House at all in the middle of this crisis.”

The Legislature also failed to take action on a measure that MARTA officials said was desperately needed to avert service cuts.

The bill, which would have lifted or eased state restrictions on how MARTA spends its money, would have given the transit agency access to capital reserves to operate the system. MARTA General Manager Beverly Scott said service cuts are now inevitable.

Republican leaders say they made several moves that could spur the economy and help Georgians.

The $1.2 billion bond package will provide badly needed work to some construction companies. Work is expected to begin several months from now.

Lawmakers approved a GOP jobs plan that gives tax breaks to businesses that hire the unemployed and keep them in jobs.

On the final day of the session, they tacked onto that bill a major tax break on long-term capital gains. Over two years, the state tax rate on long-term capital gains will be cut in half.

Capital gains are paid on money made from the sale of stocks, bonds and other investments. For most Georgians, profits from the sale of their primary residence are already sheltered from capital gains taxes.

The Georgia Budget and Policy Institute, a group that advocates for social services, said virtually all of the capital gains tax break will go to the wealthiest Georgians.

Sen. Nan Orrock (D-Atlanta) called it “the same old tired trickle-down theory. It helps the rich and the super-rich.”

But Senate Majority Leader Chip Rogers (R-Woodstock) said that’s not the case. He said many Georgians hold stocks and other investments and could benefit from the tax break. He argued that a tax cut would give people more of their money to invest, thus helping the economy.

“We are an investor-class society, which is good,” he said. “We want people to own capital, we want capital to be freely traded.

“Cutting the capital gains tax is one of the best things we can do to help our economy.”

Kelly McCutchen, executive vice president of the Georgia Public Policy Foundation, said he would have preferred to see a more broad-based cut in income tax rates for all Georgians.

But he said the capital gains tax cut isn’t necessarily a bad idea.

“Anything we can do to create an atmosphere that favors investment … on the margins it’s going to help,” he said.