LETTER: New budget more of the same: higher taxes, fees, debt

We appropriation committee members from the House and Senate began the legislative process for amending the budget after hearing the Governor and many of his Department heads and pointedly asking questions.

Gov. Perdue presented his budget recommendations, which propose reducing the current year’s budget by $1.2 billion, from $18.6 billion to $17.4 billion, to reflect severe declines in state revenue collections. With many state agencies and services already cut to the bone, these new reductions average eight-percent among state agencies, including another $299 million slashed from public school funding and three additional furlough days for educators and other state employees.

During the budget hearings, I questioned state School Superintendent Kathy Cox on the fact some 35 local school systems are near the financial breaking point, and those school boards are having to decide whether to make payroll or keep up bond payments on school buildings. Superintendent Cox confirmed with a quick “yes” and said more education cuts will have a devastating effect on many more school systems that are “teetering on the edge.” She warned that some systems are already in the red, leaving local school boards with no choice but to expand class sizes up to 40 students or increase local property taxes, or both.

This proposal brings the total school cuts for this year to $710 million and the eight-year total under this administration to $2.3 billion, shifting the burden to the local level where property owners are forced to make up the difference.

In addition to higher property taxes, the governor is also reintroducing his plan for a 1.6 percent tax on hospitals and other health care providers to partially make up for an estimated $506 million deficit in the Medicaid program. Lawmakers rejected the governor’s so-called “sick tax” last year out of concern the extra costs would be passed on to patients’ health care bills and/or force some already-struggling rural hospitals to close their doors.

Under the plan, hospitals would be taxed 1.6 percent on their net revenues, whether they receive Medicaid reimbursement or not. The facilities handling the largest volumes of Medicaid patients would come out ahead financially, but the vast majority of hospitals would lose money, according to an analysis by the state’s Office of Planning and Budget. In House District 29, it is estimated that the Ty Cobb Healthcare System hospitals in Franklin and Hart counties would lose a net $268,041.

The governor is also proposing higher premiums for participants in the State Health Benefit Plan for the remainder of this fiscal year, followed by an extra 10 percent premium increase beginning July 1. This is in addition to new fees for lab tests and screenings, evaluations of well water and a 50 percent hike in the fees for people needing birth or death certificates.

The governor’s budget plan also has the effect of “robbing Peter to pay Paul” by diverting some $34 million in lottery revenue that is supposed to fund HOPE Scholarships and pre-kindergarten for other programs that are currently covered by state general revenues.

The changes to the FY 2010 budget are based on the governor’s forecast that state revenues, which have been on a steep decline for more than a year, will be essentially flat over the next six months. Another dip in the economy, he said, will necessitate even further cuts in state spending.

For the FY 2011 budget, the governor is forecasting a 4.2 percent increase in state revenues and proposing $901 million in additional state debt to pay for construction and other capital outlay projects. I am among the legislators and economic observers who are concerned that growth rate is unrealistically optimistic, with the state not expected to reach 2007 revenue levels again until 2014. If we instead planned on flat growth, it might prevent so many cuts and the need for deep budget adjustments next year.

Unfortunately, the budget practices of the last eight years that have been a major factor in creating the current fiscal crisis in state government are continued in this administration’s final budget proposals. I am hopeful the new leadership in the House of Representatives will make good on the promise of more debate and consideration during the budget process to address some of the systemic problems plaguing our state, rather than rubber-stamping a proposal for higher taxes, higher fees and higher debt. I did see a bright change at last week’s hearings, as many Legislators across party lines were asking the hard questions that I’ve been railing about for years, shifting and unfunded mandates that are running property taxes through the roof of affordability.

Also last week, House Speaker David Ralston appointed me to serve on a new Special Committee on Small Business Development and Job Creation. I look forward to contributing to the effort of focusing on issues – budgetary and otherwise – that will help our small businesses, which are the lifeblood of Georgia’s statewide economy.

Rep. Alan Powell (D-Hartwell) represents the 29th District (Franklin, Hart and Madison counties) in the Georgia House of Representatives. Contact him at 507 Coverdell Office Building, Atlanta, GA 30334; by phone at 404-656-0202 or by e-mail at alanpowell23@hotmail.com. For more information, visit www.alanpowell.net.