Fresh Loaf

The Nelson A. Rockefeller Institute of Government recently looked at states’ revenue streams and discovered, whoa, hey, this appears to be the worst year on record.

State tax collections during the first quarter 2009 showed the sharpest decline on record, dropping 11.7 percent overall, according to an Institute report released July 17… Early figures for the second quarter reveal continued worsening of fiscal conditions for states.

According to the report (PDF), Georgia leads the pack when it comes to declines in sales-tax revenue.

Forty of 45 states with broad-based sales taxes had declines, and eleven states had double-digit declines. Iowa had the largest increase at 18.5 percent which is attributable to legislated tax increases. Georgia led the states with the largest decline at 16.3 percent followed by Nevada at 16.0 percent.

The institute predicts more budget shortfalls and financial hardships for states. Last Tuesday, Gov. Sonny Perdue told agency heads to trim their budgets once more to help fill a $900 million shortfall. Some teachers face three furlough days.

Not the best way to start the upcoming school year, but you work with what you’ve got.

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Lock up your wives and daughters, mates! Walter Jones of Morris News Service and the Dalton Daily Citizen report that the Georgia General Assembly might have to return to the Gold Dome for a special session. The reason? The budget.

From Jones:

The length and depth of the current recession has prompted round after round of cutbacks in state spending, and now legislators are talking about the need for a special session to address it.

Tax collections were down in May, putting the decline at 10 percent for the 11 months of the fiscal year to date.

Economists say the recovery in the overall economy could begin in the fall, but state revenues lag, primarily because consumers continue to hold on to their money until they personally feel an improvement, say through a pay raise, bonus or promotion. The last recession resulted in depressed state revenues for about two years after the economy officially recovered.

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Georgia saw another tough month in May, collecting 14 percent less than the same time last year, Gov. Sonny Perdue’s office says. Revenue collections from sales taxes, income taxes and other BIG GOVMINT CAPITALISM-KILLIN’ TACTICS are down 10 percent for the year. (To see a PDF of the tax collection figures, click here.)

At least we’re not alone, right? The New York Times, writing on a recent report about how states are faring during the hard-hit economy, says:

Thirty-one states said estimates about personal income taxes had been overly optimistic, and 25 said that all three major tax categories — sales taxes, personal income taxes and corporate taxes — were not keeping up with projections.

Even gloomy-Gus states that saw the recession coming and low-balled their tax estimates had little room for celebration, the report said. “The handful of states that have weathered the economic decline reasonably well are starting to report adverse revenue developments,” it said. “The news is alarming.”

A few states have seen rises in some taxes and drops in others. No one’s been whacked as hard as New York, however — its revenues are off nearly 50 percent compared to last fiscal year.

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Essig

Last week, the Georgia General Assembly passed the Jobs, Opportunity and Business Success Act, a package of bills that offered tax cuts and credits for Georgia businesses. Proponents said the legislation would help spur the economy and create jobs. Alan Essig of the Georgia Budget and Policy Institute writes below that such cuts, while well-intentioned, hurt the state in the long run.

Well-intentioned as they may be, state legislators pushing hundreds of millions of dollars of business and special interest tax cuts in the name of job creation and economic stimulus are doing far more harm than good. Notwithstanding that Georgia is already one of the lowest tax states in the nation, research and experience proves that state tax cuts for business and other special interests have a negligible overall economic impact and are not a cost-effective method to stimulate Georgia’s economy and create jobs.

In this time of economic and fiscal crisis it is incumbent upon legislators to stop grandstanding, pandering, and misleading the public. While the state budget should prioritize limited state funds for state programs that have proven to have the most value, that same value-based approach should be used in making tax policy.

The economic crisis Georgia faces is a national problem, and misguided legislation calling for hundreds of millions of dollars in state tax cuts won’t stem the tide of the national recession; not only doesn’t it help, but it hurts.

(more…)

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The AJC’s James Salzer reports:

State agencies can expect more furloughs and possibly layoffs into the upcoming fiscal year, legislative leaders said Monday.

House members will work this week to wrap up work on the spending plan for the year that starts July 1. The budget, which is expected to pass the Georgia House on Thursday, will continue major cutbacks for state agencies.

Lawmakers vowed that the budget would not contain the usual millions of dollars for local community assistance grants, commonly called “pork” at the Capitol.

“It would be irresponsible of us to put local assistance grants in when we’re asking people to make all these cuts,” said House Appropriations Chairman Ben Harbin (R-Evans). “In this kind of economic climate, it’s just not a high priority.”

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The Georgia Association of Rail Passengers has called for Gov. Sonny Perdue to restore funding for the Atlanta-Griffin commuter rail line that’s been earmarked for federal dollars and which the governor said he’d support during last year’s gas shortage. U.S. Rep. David Scott, D-Ga., has already scolded Perdue for not funding the line.

Passenger rail advocates are calling on the Georgia General Assembly to approve $15 million in funding for Atlanta-Griffin commuter rail line, despite Governor Sonny Perdue’s failure to include the money in his budget.

“It’s extremely unfortunate that the Governor went back on his promise to fund the Atlanta-Griffin line,” said Steve Vogel, president of the Georgia Association of Railroad Passengers (GARP).  “It also was a big mistake.”

The federal government has $87 million set aside for the rail project, but it’s been stalled for years by state government inaction.  The Georgia Department of Transportation has asked for $15 million to get the project moving again.

Rest of the release is after the jump.
(more…)

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SPARE $2 BILLION? Perdue delivers bad budget news to lawmakers

It’s a shame Gov. Sonny Perdue’s penchant for prayer doesn’t work as well for deficits as it did for drought. If that were the case, Georgia would literally be swimming in greenbacks.

With revenues plummeting in an economic landscape akin to Mad Max, the state is currently facing a $2 billion shortfall, the deepest hole anyone at the Gold Dome says they’ve ever seen. In response last week, Perdue delivered a cost-cutting whack, slashing nearly all state agencies and programs — many of which state Democrats say help the most vulnerable of Georgians in this most precarious of times.

The Department of Labor, the state agency that’s been the first stop for pink-slipped residents? Nearly 13 percent cut. The Public Defender Standards Council, the arm of government that provides indigent defense attorneys in an attempt to ensure justice for both defendant and victims? Almost 11 percent cut. The departments of Education, Community Health and Human Resources? Cut, cut, and cut. State employees’ salaries? Frozen — and vacant positions eliminated.

Add to that the $350 million slashed from K-12 educational funding, and you’re left with a budget that has little wiggle room. From lobbyists to lawmakers, behind-the-scenes staffers to Gold Dome shoeshine men, everyone we queried agrees: The 2009 legislative session will be about money, and what little of it the state has.

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BUDGET BUDDIES Richardson and Perdue at this morning's legislative breakfast.

Tuesday morning, Gov. Sonny Perdue, Lieutenant Governor Casey Cagle and state House Speaker Glenn Richardson, speaking before a banquet room filled with business heavies, lobbyists and fellow lawmakers, outlined their legislative agendas for the session at the Georgia Chamber of Commerce’s annual “Eggs and Issues” breakfast at the Georgia World Congress Center.

There, over plates of eggs, sausage, and some hashbrown-stuffed tomato concoction, the elected officials said that, even with the state nearly $2 billion in the red, progress would take place.

After the jump, what Perdue, Cagle and Richardson said, in fancy bulletpoint style, about the upcoming legislative session.

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Students and faculty at Georgia State University’s Andrew Young School may have the luxury of being mere footsteps from all the downtown salad bars and panhandlers one could hope for, but they have the misfortune of being located in one of the Georgia Building Authority’s properties.

The state agency, forced to scale back expenses in light of Georgia’s $1.6 billion shortfall, recently started setting thermostats in the school’s building to Hades highs. Come winter they’ll be set to Siberian lows. (ba-da-zing!)

From an e-mail addressed to what seems like 98,324 people, according to the recipient list, sent out by an employee who’s got a good sense of humor about something totally out of their control :

Good warmer afternoon all,

I have had many complains/questions/concerns today regarding the warm offices/work areas and the only answer I had for each caller was, “We are going green”.

I know I, as many of you, have become accustom to having much cooler office temperatures. However, as of yesterday, September 2, 2008, the luxury of cooler office temperature may now be referred to as ‘the good old days’….

Copied below is GBA’s reminder of the new regulations and recommend practices….

And now, the rest is up to you!

If you have any questions/concerns regarding this matter, please
contact me.

Ah, yes. When the state goes broke, we gotta ‘go green.’ Perhaps if the governor and his bean counters weren’t so optimistic in their revenue projections, we wouldn’t be in this mess to begin with, eh? And just what temperature is the governor’s mansion these days, boss? How about retrofitting those windows down there with some insulated models? Fret not, students and faculty of GSU, for we feel your pain. Or at least I do. I sleep in my car, with the engine running, Japanese-engineered air conditioning blowing on my face. Gas bills are a pain but I wake up to the sunrise!

After the jump, the e-mail from the authority to its sweltering tenants.

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Gov. Sonny Perdue’s plan for fixing a hemorrhaging state budget would cost Georgia homeowners upward of an extra 200 bucks a year — but it could end up costing Republicans even more.

With revenue collections now clogging the toilet, Perdue announced earlier this month that projections were indicating a $1.6 billion (yes, that’s a “B”) shortfall in the $20 billion current-year state budget. Part of his proposed remedy – eliminating the state Homeowner Tax Relief Grant – can be viewed as an affront to hardworking Georgia families struggling to make financial ends meet.

Or, if you’re a Democratic strategist, you can dance a jig and thank your nondenominational deity for yet another in a string of priceless political gimmes from a state Republican Party that seems determined to shoot itself in the foot with an AK-47.

But let’s back up a moment for a remedial course on Georgia taxes. The tax-relief grant in question was an initiative passed 10 years ago by then-Gov. Roy Barnes, under which the state reimburses cities, counties and school systems for a large chunk of local property-tax bills. The program has much the same effect as a homestead exemption, saving the typical taxpayer between $200 and $300 a year.

Read the rest if this article here.

(Photo by Joeff Davis)

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