Sunday, January 10, 2010

Deficit to dominate debate

During the coming 40 work days, the General Assembly will be dominated by a debate over what government services to eliminate or cut back as lawmakers grapple with a budget deficit caused by lagging tax collections.
 
When the General Assembly convenes Monday morning for the second year of its two-year term, it can consider more than 1,000 bills from last year's session and new ones added this year, but cutting the budget is certain to be the most challenging.

Georgia is one of 48 states staggering from the twin blows of lagging tax collections and rising demand for government services, both effects from the recession.

Revenues in Georgia for the fiscal year that began July 1 are lagging 14 percent behind last year's. That's a drop of more than $1 billion. Georgia's Republican leaders have pledged not to raise taxes so that leaves them only one other choice: cut deeper. Georgia's constitution bans state officials from running a budget deficit.

The budget has already shrunk as money flowing into state coffers from sales, income and corporate taxes has dropped as the economy has soured. Flush with cash, the state budget stood at $21.2 billion in 2008. It's shriveled to $18.6 billion and is expected to drop at least another $1 billion.

Gov. Sonny Perdue reported Friday that revenues in December dropped 5.8 percent from the same month the year before, the 13th straight month that tax collections have declined.

Only legislative proposals that don't cost the state money will be considered, not new services or expansions of existing ones.

The emphasis is expected to be on eliminating government activities.

Mr. Perdue said his recommendations Wednesday will spark that discussion.

"It will give us an opportunity during this time to look at, from my recommendations and from the appropriators' analysis, what are the fundamental aspects of government that we need to ensure are perfected and what are those things that we may have been doing that we no longer feel like we can afford to do," he said.

One tool is what conservatives call the "yellow pages test."

"If you find the service offered by a business in the yellow pages, then government probably shouldn't be doing it," said Jonathan Williams, the director of tax and fiscal policy with the American Legislative Exchange Council, a conservative think tank.

Besides wholesale elimination of some agencies, other conservative states are considering privatization of some state assets and passage of tax breaks for job creation, Mr. Williams said.

Surveys usually show the public opposes cuts to health care and education, but those two areas -- with the addition of prisons -- make up 86 percent of what legislators control of state spending.

Posted via email from Jim Nichols

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