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Perdue lambastes tax cut plans, says Georgia can’t afford them

POSTED: March 30, 2008 5:01 a.m.

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There’s a major difference of opinion under the Gold Dome of Georgia’s state Capitol.

The House has made one tax cut proposal, the Senate another and the governor now says the state can’t afford either one of them.

Gov. Sonny Perdue on Wednesday blasted a new Senate tax plan to cut income taxes in Georgia, accusing lawmakers in his own party of playing politics with the state’s fiscal health even as the economy flounders.

Perdue acknowledged that even if the state slashes $310 million from the budget as he recommended earlier this month, it will still have to dip into reserves to stay afloat.

"They’re trying to figure out how to get elected," the governor said of Republican state lawmakers. "And I’m sitting here trying to figure out how we balance this budget."

On Tuesday, Lt. Gov. Casey Cagle and Senate Republicans debuted their plan to lower the state income tax by 10 percent over five years. When fully implemented in 2013, it would mean the loss of $1.2 billion a year in revenues.

The Senate has rejected a competing plan championed by House Republicans that would eliminate the car tag tax at an annual cost of $660 million. That plan passed the House last week

"Sadly, all these tax plans are more about politics than policy," Perdue told reporters following a graduation ceremony for state patrol officers at the state Capitol.

Meanwhile, in an afternoon teleconference with reporters from daily newspapers around the state, Cagle wouldn’t forecast the fate of either of the proposals.

"It remains to be seen," Cagle said.

A Mercer University economist, Roger Tutterow, said the Senate plan is just the latest offering in a line of tax concepts.

"It is the latest contribution that what will likely be a multi-year debate about how we as a state raise tax revenue," Tutterow said. "Certainly, the timing of the tax cut may not be ideal — with revenues declining. But, it gets one more idea on the table — and that elevates the debate."

Perdue likened the internal Republican rivalry to a dangerous game of one-upsmanship.

"It’s a little bit like playing spades. You know if I play the three of spades you’ve got to play something higher," he said.

The governor said from a policy standpoint he preferred the Senate plan because it would help more Georgians. But he allowed that ripping such a huge hole in state revenues could make draconian cuts necessary.

"When you cut taxes long-term what are you going to do to pay for education, transportation, health care?" Perdue asked.

Cagle conceded that it would be difficult to proceed with work on the state budget, the only task required of the legislature, without knowing of the potential revenue loss from the income tax cut.

"We’re awaiting the House to take action on the 2009 budget," Cagle said. "It appears we have reached agreement on the ‘08 budget. We’re waiting to see what kind of cuts the house is willing to do on the ‘09 budget and if they’re willing to endorse this plan."

The immediate reaction from House leaders on Tuesday was a flat-out rejection of the Senate proposal. A reporter on the conference call quoted House Rules Committee Chairman Earl Ehrhart, R-Powder Springs, as saying Cagle was offering the proposal to bolster a potential bid for governor in 2010.

Cagle responded with laughter to that notion.

"Now is not the time for political rhetoric. Now is the time for serious debate and discussion," he said.

Perdue on Wednesday also chided lawmakers for considering a constitutional amendment that would allow voters to hike the sales tax by one cent to pay for transportation even as the legislature weighs a large tax cut.

"This is the silliest thing," Perdue said.

Earlier this month, Perdue said Georgia needed millions of dollars in budget cuts because of the flagging economy. Months of sluggish tax collections mean the state may not bring in enough money to meet its budget for the current fiscal year.

The state has a $1.5 billion reserve fund. Perdue said the state will probably have to use some of that reserve for the fiscal year that ends June 30 even as it moves to tighten its belt.

Perdue made no mention on Wednesday of his own proposal to cut taxes on retirement income on upper-income senior citizens. That plan has stalled in the House.

The Associated Press contributed to this report.



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