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CSU students get sobering account of state's finances

By Joel Hall

jhall@news-daily.com

Alan Essig, executive director of the Georgia Budget and Policy Institute, told

Clayton State University's political science students and faculty on Tuesday

that, "Looking at the state budget, it's extremely bleak.

"As a percentage of our budget, we have the eighth-worst deficit in the country," said the man who is the head of the state's leading public policy research institute. "California is number one, where the deficit is about 45 percent of the budget ... and it's about 20 percent of our budget. It's a lot, and it's impacting us harder than other states."

He said an open, honest conversation about taxation and the role of government will be needed to overcome the state's deficit. According to Essig, between fiscal year 2009 and fiscal year 2010, state revenue decreased 10.5 percent, the highest decrease on record. He credited the state for plugging a $4 billion gap in the fiscal 2010 budget through a series of spending cuts and federal stimulus dollars.

However, he warned that the state would face further budget cuts, if it did not generate addition tax revenues. "We spend 86 percent of our budget on education, health care, criminal justice, and social services," he said. "Everything else the state government does is about 4 percent of the budget, so when you're facing multi-billion dollar deficits, you can eliminate entire state agencies, entire state bureaucracies, fire thousands of employees, and still not balance the budget. To avoid further budgets cuts, we have got to replace those funds.

"You don't have to depend on budget cuts," he said. "You can increase taxes ... it is something that just about every other state facing a deficit has done, especially our Southern, conservative neighbors."

Essig said that in the past fiscal year, the states of Florida, Mississippi, Arkansas, Kentucky, and North Carolina have all raised taxes to meet budget deficits. He said that North Carolina, which faced a $4 billion deficit, much like the state of Georgia, passed a budget with $1 billion more in tax increases.

"Georgia is kind of the anomaly, where we have made a political decision, an ideological decision, that under no circumstances ,whatsoever, will we increase taxes in this state," he said. "If that is the way we continue to go forward, the only option -- because we can't print money -- is to continually cut what state government does."

He said he believes the Georgia General Assembly should call a special session, in which it would hold hearings to discuss the impact of further state budget cuts. As ways to increase state tax revenues, he suggested passing legislation to increase the state's cigarette tax by $1 a pack, institute a temporary 1 percent surcharge on family income over $400,000, and scale back special interest tax breaks.

He also suggested the approval of Senate Bill 206, which -- if approved -- would require a tax expenditure report to accompany the fiscal 2012 budget and every annual budget thereafter.

"It would require the governor to list out every tax break in the code, sales tax, income tax, property tax, when it was implemented, an estimate of what it is costing us, an explanation of what the public policy purpose of it is," he said. "And then, lay it out there and be able to say, is tax break 'A' more important than health insurance for kids, or is tax break 'B' more important than funding the university system?"

"If [SB 206] gets through this session, in 2012, we'll have our first tax expenditure report, and our first real look at what tax breaks [are in the budget], who's getting what, and [be able to] make some intelligent decisions on what's worth doing, and what's not [worth doing]."

Essig said SB 206 has "passed the Senate unanimously," and is current under review by the House Appropriations Committee.

Clayton State Political Science Professor Joseph Corrado hosted Essig's presentation on Tuesday. He said he believes the talk gave students "a sense of the tough things that are ahead" and "a better idea of what to expect from their politicians.

"You have to focus on the numbers," Corrado said. "If you look at the lack of revenues in the state, some very tough decisions have to be made, and it's important to honestly talk about what you are going to do. People need to sit down like adults and deal with these problems. Things aren't going to magically get better in the next couple of years."