Georgia Budget and Policy Institute Renews Call for Special Session

The Georgia Budget and Policy Institute has released a new report examining the growing state budget crisis and calling for a special session to address the state's budget woes.

On July 29th, GBPI released its first look at the FY 2009 budget, "Uncertain Times Call for Sensible Measures: FY 2009 Budget and Revenue Outlook" (report available at www.gbpi.org).

Today's report, "Deficit Reduction Step Two: Bringing Other Voices Into the Planning Process," provides a more detailed look at what six, eight and ten percent cuts will look like for state agencies and calls for a balanced approach to deficit reduction - an approach that prioritizes cuts and includes revenue enhancements.

GBPI believes that a special session is essential to a balanced approach as it would allow for public testimony by subject matter experts as to where and how to make cuts that prioritize state spending. A special session would be the only way to address potential revenue enhancements, such as eliminating newly passed tax credits or increasing the cigarette tax.

For the first month of FY 2009 (July 2008), revenues declined by 6.6 percent ($86.4 million), as compared to July 2007. Thus, revenues would need to grow by $1.57 billion over the next 11 months to meet the FY 2009 revenue estimate.

"A balanced approach to deficit reduction that prioritizes state spending cuts along with reasonable revenue enhancements and wise use of the Revenue Shortfall Reserve will put Georgia in a good position to weather the current economy," said Alan Essig, Executive Director of the Georgia Budget and Policy Institute. "To assure the long-term fiscal health of the state, the Governor should appoint a blue ribbon commission to look at ways to comprehensively reform Georgia's tax system." The report outlines the following balanced approach to deficit reduction:

Implement and prioritize targeted budget cuts after gathering public input. Medicaid, PeachCare, Department of Human Resources, Board of Education and public safety programs should be the highest priority for funding. A decision to either eliminate or reduce the Homeowners Tax Relief Grant needs to be made in a timely fashion to give counties, cities and school districts sufficient time to notify property owners;

Redirect funding from low priority programs to high priority programs. For example, some of the tobacco settlement funds that are currently appropriated for economic development programs in the OneGeorgia Authority could be redirected towards Medicaid, PeachCare and Public Health programs.

Pass legislation that would increase revenues in order to avoid significant budget cuts to vital government services. Such legislation could include increasing the cigarette tax by $1 a pack, eliminating some of the special interest tax breaks passed during the 2007 and 2008 sessions of the General Assembly, implementing an income tax surcharge on those earning more than $400,000, and reinstating the estate tax; and

Plan on using between 50 to 75 percent of the funds available in the Revenue Shortfall Reserve in order to avoid significant budget cuts to vital government services.

A copy of the report is available on GBPI's website, www.gbpi.org.
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