Balancing the state’s books

Asking for more smart reductions may be the best the governor can do, given anti-tax sentiment and distrust of government. Comprehensive tax reform will speed us along the road to recovery.

By the AJC Editorial Board

For the sake of our future, Georgia should follow savvy advice contained in a letter explaining the latest call for $553 million in state budget cuts.

The one-pager sent in late July to state agency heads and fiscal officers contains this wise phrase: “To make the most efficient use of limited resources, budget requests should be targeted and strategic.” Governor’s Office of Planning Budget Director Debbie Dlugolenski Alford wrote on to urge officials to not take the easy way out and to “avoid broad, across-the-board reductions.”

That approach is a smart tactic. Yet, one tactic doesn’t usually make for a comprehensive strategy. It’s problematic, even dangerous, to think otherwise.

Yet that’s exactly the scenario before Gov. Nathan Deal as his staff is left with only a budget-cutting axe to swing at ever-fewer targets. Years of whacks have dropped annual state spending by billions.

In the current environment, asking for more, hopefully smart, reductions may be about the best that Deal can do, given significant anti-tax sentiment, general distrust of government and Georgia legislators’ refusal to bring into being a truly comprehensive package of tax reform that better balances income and outflows. Add in a stubbornly slow economic recovery that’s hindering the return of state revenue to pre-recession levels and, taken together, it’s a nearly impossible balancing act.

Grappling for half a billion dollars more to cut in coming weeks may please the sizable camp that’s ever-clamoring for less government. Yet, building a successful, innovative state rarely comes from following the popular path.

Deal seems to realize that. His office’s budget-cutting remarks are tempered with assertions that Georgia must yet find a way to strategically invest in a few things that will help us continue to climb away from the Great Recession. That’s a sorely-needed sentiment, given that the failure of the T-SPLOST in 9 of 12 regions will make it even harder to pay for even some of the overdue transportation improvements across the state.

The budget guidelines thankfully exempt basic K-12 schools funding from mandated cuts. Of course, schools have already endured more than $4 billion in “austerity cuts” since 2008. Other programs, namely higher education, Medicaid and PeachCare, were targeted for significant cuts.

And yes, government budgets need close scrutiny now and always. Cuts should be made where they increase efficiency, or do the least harm. It also makes sense to zero-base budgets, as Georgia is beginning to do. Good government should be smart and lean. It must also be necessary and sufficient to complete the basic tasks that lie before it. That’s becoming increasingly difficult to do in Georgia. That must change.

Two successive governors and the state legislature have mastered the art of cutting. Now they should become equally proficient at devising a balanced revenue stream to pay for state basics and targeted strategic investments, such as transportation work, that begs for completion.

A good place to start on that learning curve will be to take another hard, close look at the comprehensive tax reform plan that lawmakers commissioned in 2010, then cherry-picked a few nuggets from earlier this year. Georgia needs a stable, broad revenue platform paired with targeted cuts if we are to do remain a desirable state in which to live and work.

Legislators should pass legislation next year that shores up the income side of Georgia’s fiscal ledger. Re-reading the special council’s report on “Tax Reform and Fairness for Georgians” before next January would be a good first step toward this necessary end.

Andre Jackson,
 for the Editorial Board

More cuts are only option for governor

Another View: From the Savannah Morning News

Georgia is one of many states that are reflecting the weakness in the nation’s economy.

But unlike the federal government, which borrows more money to pay its bills when things get tight, Georgia’s state government must balance its budget. Since raising revenue through tax hikes is a political nonstarter, that leaves only one option: Cutting spending.

Gov. Nathan Deal is already preparing for the worst. He has told state department heads to hop aboard the pain train because it’s getting ready to leave the station again. The destination: $553 million in spending reductions.

Actually, this shouldn’t be a huge surprise. While some segments of the economy seem to be rebounding, unemployment remains high. The governor’s Office of Planning and Budget, which watches these things, sees continued weakness in Georgia. It also takes a cautious approach to fiscal management — a wise strategy.

This marks the fifth straight year that this office has told state department heads to come up with additional reductions. This year’s requested cuts are larger than last year’s. Hence, what’s coming down the tracks in Atlanta isn’t going to be pretty.

Fortunately, most school funding is exempt. Now isn’t the time to cut back on K-12 education. Many systems, including Savannah-Chatham County public schools, are making progress in improving outcomes. The investments, in other words, are paying off.

Instead, about half of the cuts will come from two areas: public health and higher education. The governor wants to see $170 million in reduced spending in the Department of Community Health, which handles Medicaid and PeachCare. Another $108 million would come from the University System of Georgia. Neither agency has responded, but it’s been reported that layoffs are being considered.

Trimming more than a half-billion dollars will be painful. After years of cutting, the obvious fat is gone. Still, the governor doesn’t have much choice. Until the economy picks up and state revenues improve, the budget knife is Mr. Deal’s main tool.

Georgia’s economic recovery has been slower than other states, mainly because the housing bubble that burst here was larger. At the same time, school and college enrollments are up. So is the number of Georgians signing up for health care programs. Such trends put more pressure on state spending.

At the same time, voters don’t seem to be in the mood to cough up more money. Last month, a majority of voters in Savannah and in many other areas of the state thumped T-SPLOST, opting not to hike the sales tax to 8 percent to pay for transportation improvements.

So Mr. Deal must be cautious. The state can’t spend what it doesn’t have.

Until the economy recovers, making do with less isn’t the exception. It’s the rule.

For the sake of our future, Georgia should follow savvy advice contained in a letter explaining the latest call for $553 million in state budget cuts.

2 comments Add your comment

Bernie

August 20th, 2012
9:46 pm

correction …:)

$430 MILLION is the planned expense!

Bernie

August 20th, 2012
9:45 pm

Yet Our Illustrious Governor is prepared to Spend $340 Million Dollars on a untested and unproved STATE WIDE CHARTER SCHOOL PLAN that will BENEFIT less than A HALF A QUARTER of the Student Population in the entire STATE of Georgia.

A NEW STATE WIDE, BIG GOVERNMENT – WELFARE EDUCATION PLAN for the LUCKY GENE POOL CLUB Members Only!