State Government Revenues Fall 16 Percent

/PRNewswire/ -- State governments took in nearly $1.7 trillion in total revenues in fiscal year 2008, a 15.8 percent decrease from 2007, according to new data on state government finances released by the U.S. Census Bureau. The largest share of those revenues came from taxes ($780.7 billion), which made up 46.5 percent. The decline was primarily because of a decrease in insurance trust revenue, which fell by $377.7 billion (72.7 percent).

Insurance trust systems are comprised of public employee retirement systems, the unemployment compensation system, state government workers' compensation programs and other state social insurance trusts.

Total state government expenditures increased 6.2 percent from fiscal year 2007,
totaling slightly more than $1.7 trillion in 2008. Education ($546.8 billion), public welfare
($412.1 billion) and highways ($107.2 billion) represented the top three outlays, accounting for nearly two-thirds of all state government total expenditures.

The findings come from the 2008 Annual Survey of State Government Finances, which includes data on revenues, expenditures, debt, and cash and security holdings for each state, as well as a national level summary. The major source of these finance statistics is the governments' own accounting systems, either directly from a government's own records or through intermediate reporting systems.

Eleven states spent more than 25 percent of total expenditures on public welfare, with Tennessee (32.8 percent), Maine (30.5 percent) and Rhode Island (29.8 percent) spending the highest percentage of their total expenditures.

Public welfare spending is used to support people based on need and includes such items as old-age assistance, temporary assistance for needy families, and commodities and services provided under welfare programs, including medical care or burial services.

Hawaii (11.5 percent), Alabama (10.1 percent) and South Carolina (9.9 percent) led in spending on public health and hospitals as a percentage of total expenditures.

In addition to state taxes, state lotteries were another way many state governments (including Washington, D.C.) raised revenue in 2008. Total state lottery ticket sales reached $77.3 billion in 2008, an increase of 1.8 percent from 2007. Lottery prize payouts represented $56.7 billion in expenditures, a 1.4 percent increase over the previous year. And lottery proceeds represented $18.2 billion in state government revenue, an increase of 2.9 percent. New York ($2.7 billion), Florida ($1.4 billion) and California ($1.2 billion) led the nation in lottery proceeds.

The data used in the tabulations came from state government records. As such, they are not subject to sampling error. Although quality assurance methods were applied to all phases of data collection and processing, the data are subject to nonsampling error, including errors of response and miscoding. For information, visit the Census Bureau's Web site at: http://www.census.gov/govs/www/index.html.

For information on Georgia expenditures, visit http://www.census.gov/govs/state/0811gast.html

-----
www.georgiafrontpage.com
Georgia Front Page
www.fayettefrontpage.com
Fayette Front Page

State Fiscal Crisis: Georgia Has a Revenue Problem

The Georgia Budget and Policy Institute (GBPI) released a report today highlighting the fact that state spending is not a driving factor in the projected $2.5 billion budget deficit facing the state in the current fiscal year and possible $1 billion deficit in FY 2010. The report, State Fiscal Crisis: Georgia Has a Revenue Problem, found that the current budget shortfall is due to the combination of a historically weak economy and a declining tax base.

Even before the current economic recession, state revenue collections as a percentage of personal income have declined dramatically. In other words, as Georgians' incomes increased, the state taxes collected from Georgians did not keep pace. The weakening of the tax base has occurred over the past 10 years as Georgia has cut taxes across the board. In addition, the movement from a manufacturing to a service economy and the rise of Internet sales have further weakened the sales tax base. These tax policy decisions and a changing economy have cost the state a minimum of $1.5 billion each year.

Even during the economic recovery between FY 2003 and FY 2008 this inadequate revenue base resulted in $2.4 billion in funding formula austerity cuts and sustained budget reductions for the Board of Education and Board of Regents. In addition, due to funding limitations in Medicaid and PeachCare, the number of uninsured children in Georgia increased, and Georgia was unable to make adequate investments in such areas as a state trauma network, a community mental health system, or services for those with mental and physical disabilities. In fact, Georgia ranks 49th in state spending per capita.

"The inadequate revenue base has resulted in lagging funding for the physical and human infrastructure of the state even during times of economic growth," noted GBPI Executive Director Alan Essig. "In the midst of the current economic recession, revenues are not sufficient to pay for our basic public services, causing deep cuts that will likely worsen in the coming year."

Although revenue collections for the first five months of the fiscal year have shown only a 1.3 percent decline, due to the further weakening of the economy expected throughout calendar year 2009, the Georgia State University Economic Forecasting Center projects a 6 percent revenue decline in the current fiscal year and a 1 percent revenue decline in FY 2010. With Georgia potentially facing a $2.5 billion budget shortfall in the current fiscal year and an additional $1 billion shortfall next fiscal year, new revenues should be part of a balanced deficit reduction package to address this fiscal crisis.

Revenue raising options include:

* Increase cigarette taxes by $1 a pack to raise $450 million.
* Impose a temporary 1 percent surcharge on family income over $400,000 to raise an estimated $225 million. (Would impact less than 1 percent of taxpayers.)
* Reinstate the state estate tax to raise between $100 million and $150 million. (Would impact less than 1 percent of all estates.)
* Lower the cap on various tax credits and exemptions passed during the past two legislative sessions. For example, lower the $50 million cap on the tax credit for student scholarship organization donations to $2 million during the recession.
* Implement an income ceiling on the child care tax credit to save $20 million.
* Create a ceiling on vendor compensation for sales tax collection.

In the long term, Georgia needs to undertake fundamental tax reform and modernization that addresses the question: How do we fairly and equitably raise the funds necessary to provide the quality public services and infrastructure that Georgians demand? Such tax reform and modernization should include:

* Create a tax break budget to increase transparency and accountability for tax breaks. Like 39 other states, Georgia needs a tax break budget to detail the costs and benefits of tax breaks. A tax break budget would provide data that legislators and the public need to weigh Georgia's spending options.
* Eliminate unnecessary and ineffective tax breaks based on data gathered from a tax break budget.
* Expand the sales tax to cover some household services. The change from a manufacturing to a service economy and the rise of Internet sales have weakened the sales tax base. Broadening the sales tax to cover some services would help strengthen this declining revenue base.
* Modernize the income tax structure to the 21st century. The income tax has been relatively unchanged since the 1930's. The income tax should be modernized through increasing the standard deductions, broadening the tax brackets, establishing a new top income tax rate, and implementing a state Earned Income Tax Credit.

"Revenue increases as part of a balanced deficit reduction package would be more beneficial to the economy than budget cuts alone. In the long term, fundamental tax reform and modernization would allow Georgia to make the investments in the human and physical infrastructure of the state that is necessary for Georgia to prosper," said Essig.

-----
www.georgiafrontpage.com
Georgia Front Page
www.fayettefrontpage.com
Fayette Front Page

City’s July 2008 Tax Payment 14% Lower than July 2007

The City of Atlanta just received the July 2008 sales tax payment in the amount of $8,334,041.43.The sales tax payment for July 2007 was $9,682,507.41. This is a decrease of 14% from last year. Because this is such a large decrease, it will cause us to monitor our sales tax revenues closely and be even more conservative with our financial planning.

GMAC Insurance Reduces Rates in Georgia

PRNewswire/ -- GMAC Insurance today announced it is reducing its auto insurance rates in Georgia, effective immediately. Many drivers in the Peach State can expect to save an average of around seven percent when purchasing GMAC Insurance coverage from one of more than 400 Georgia-based independent agencies.

With fuel prices surging, these rate decreases will help customers manage their transportation costs. What's more, Georgia customers can potentially achieve even greater savings through discounts for paying a policy in full at the time of purchase rather than through monthly installments, in addition to GMAC Insurance's exclusive GM Retiree and GM Dealership employee discounts.

"We are committed to providing new and existing customers with outstanding service at affordable prices," said Scott Murphy, vice president of product and pricing, GMAC Insurance. "In addition to the new lower prices, we'll continue to offer the same benefits, such as our outstanding SmartServices, including SmartValet, SmartInspect and the SmartParts Promise, and our 24/7 claim reporting service and emergency expense allowance."

The GMAC Insurance rate reduction is a statewide average that will affect individual customers differently. Overall premium changes for individual motorists will vary depending on factors such as the coverages they carry, the discounts for which they qualify, where they live, the kind of vehicle insured, who drives it and how much it is driven.