Pro & Con: Should the Legislature raise revenues to balance the budget?

By Alan Essig

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 will hurt struggling families, damage the state’s economy and poorly position the state 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 already have 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, health care 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 multibillion-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 also will allow us to continue to invest in the education, transportation and health care infrastructure that is vitally important for Georgia’s current and future economic success.

This need not mean broad-based tax increases. 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 30 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 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 health care, 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.

Alan Essig is the executive director of the Georgia Budget & Policy Institute.

NO: Increasing taxes in a recession will kill Georgia’s job growth.

By Chip Pearson

Raising taxes on people who are already hurting doesn’t make sense in a struggling economic climate.

Georgia is in a far better position than most states in the country because we have held down spending, kept our taxes low and reduced government inefficiencies.

We are poised for a strong economic recovery as one of the lowest-taxed states in the nation and with the lowest debt per capita.

Our low corporate income tax rate also makes Georgia very attractive to companies, bringing much-needed jobs.

Despite Congress passing the biggest spending bill in our country’s history, the “stimulus” package has not yielded the intended results.

Jobs continued to crumble, making it clear that frivolous government spending is part of the problem, not the solution.

Never before has government spent so much with an outcome so devastating. Why would Georgia ever follow this prescription for disaster?

Conservative leadership in Georgia has taken a different path.

We have kept tight control of taxing and spending, and have also increased investments in those limited areas where state government has a fiscal responsibility — particularly education.

Fiscal 2004 was the first budget created by Gov. Sonny Perdue. It contained $8.59 billion for education spending.

The fiscal 2010 budget contains $11.47 billion for education spending. A 34 percent increase in education spending!

Moreover, the percentage of Georgia’s budget spent on education has increased from about 51 percent to 59 percent under GOP control.

Due to the rapid escalation of property values over the past seven to eight years, total revenues to education have doubled or more in some Georgia counties.

Georgia taxpayers should also be comforted by the Citizens Against Government Waste 2009 report on “pork” spending. It ranks Georgia as the best state for fewest pork dollars.

Our fiscal constraint also has been noticed by the bond rating agencies in New York.

Georgia is one of only seven states to earn a Triple-A bond rating. In fact, Georgia has the lowest bonded state debt per capita in the nation.

Conservative policy has placed Georgia at the top of the list for solid financial footing even during difficult economic times.

As Republicans, we believe that tax relief is when government allows the taxpayer to keep more of what he or she earns in the first place.

Our conservative leadership is committed to allowing taxpayers to keep more of their hard-earned money.

I was proud to carry a measure in the Senate last year that provided a $1,800 income tax credit to home buyers.

This tax credit is the very definition of a true stimulus, as it encourages consumer spending that results in activity within the market.

Simply put, conservative leadership at the Georgia Capitol has balanced our budget, held down spending, lowered taxes and kept Georgians out of bonded state debt.

Yet that’s still not enough.

We must continue to find efficiencies and ferret out waste at all levels.

That’s what we’re after, not just cuts.

We will continue to evaluate the role of government in our daily lives and decide how best government can get out of the way to let Georgians grow and prosper.

Increasing taxes, eliminating job-creating tax credits and spending more taxpayer dollars are dangerously naïve approaches in today’s economy.

Sen. Chip Pearson (R-Dawsonville) serves as chairman of the Senate Economic Development Committee.

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