For Immediate Release
August 11, 2008
Contact: Alan Essig, Executive Director
404-420-1324, Ext. 101
770-402-4630 (Cell)
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Georgia Budget and Policy Institute Renews Call for Special Session
Deficit Reduction Plan Should Use Balanced Approach
Click here to view the report.
ATLANTA - 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.
The Georgia Budget and Policy Institute is the state's leading independent,
nonprofit, non-partisan organization engaged in research and education on the
fiscal and economic health of the state of Georgia. The Institute provides
reliable and timely analyses of Georgia's budget and tax policies and promotes
greater state government fiscal accountability, improved services and an
enhanced quality of life for all Georgians.
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