Gov. Nathan Deal talked about moving forward with a focus on progress in his State of the State address last week. But his 2014 fiscal year budget still suffers from a lack of revenue from a briskly growing economy to fully fund the state’s growth in population and need for services.
The governor’s budget is $40.8 billion, with $19.8 billion in state funds, a 3 percent increase compared with last year’s budget. The state is still dealing with slow economic growth and the increasing need for services from a growing population. Where to find more revenue is a matter members will likely debate as the Georgia General Assembly gears up for the start of the budget process in the coming week.
Appropriations committees from the House and Senate will meet to discuss the governor’s amended fiscal 2013 and fiscal 2014 budget plans, said Marshall Guest, press secretary for House Speaker David Ralston, R-Blue Ridge.
“This is an important time in the budget process because it gives members the first opportunity to delve into the specifics of each agency’s budget and hear directly from agency heads and key administration officials about the proposals before them,” Guest said.
The governor sets the revenue estimates and the state legislature works with those numbers during the budget process, said Alan Essig, executive director of the Georgia Budget and Policy Institute, an independent organization that provides research and advances public policy recommendations.
“This year, let’s concentrate on the things which we can all agree,” Deal said in his address. “The foundations that improve the lives of our citizens and undergrid the bright horizons of tomorrow.”
Those foundations he included in his speech were public safety, education, health care and economic development.
The governor’s budget for 2014 anticipates state revenues to grow at a moderate rate of 4.8 percent, said Teresa MacCartney, director of the Office of Planning and Budget. The year-to-date revenue rate is 4.9 percent, but the fiscal year 2013 estimate was 5.2 percent and was revised to 3.9 percent later, a reduction of $218 million.
“The (state’s) revenue isn’t enough to fully fund the budget,” Essig said. “The worry is if we’re only growing at 4 percent to 5 percent, the governor may have to go back and cut to make a surplus.”
The state collects most of its revenue through personal income taxes, corporate income taxes and sales taxes. In last week’s speech, Deal said the government has reduced Georgians’ tax burden, and he quoted a Tax Foundation article that said the state collects 25 percent less in taxes than it did 10 years ago.
Georgia was hit hard in its banking and housing industries during the recession, state Sen. Carl Rogers, R-Gainesville, said. It’s getting better, but it’s going to take some time, he said.
“Nobody wants to pay more taxes,” he said, referring to North Georgians’ decisive rejection of a transportation sales tax last year.
The governor’s 2014 budget report shows enrollment growth in some public services, such as K-12 education, higher education and health care. Most state agencies had to cut their 2013 amended budgets by 3 percent.
Medicaid and PeachCare health insurance for the poor, disabled and elderly, funding was cut by 3 percent and is expected to be cut by another 2 percent in 2014, but the state also expects to add about 100,000 more people to its rolls. Deal has thrown his weight behind legislation that would authorize the board of the Georgia Department of Community Health to assess a provider fee to hospitals that would make up a nearly $700 million shortfall in Medicaid funding.
The legislation was approved last week by the Senate and now goes to the House.
Essig gives Deal a lot of credit for that move, and also praised the governor for restoring 10 days of pre-kindergarten classes.
“That was a very positive thing to do,” Essig said.
The state needs some extra money coming in, but opinions on how to increase revenue differ depending on who is asked. Essig said there are three ways: growing the economy at a rate of 8 percent to 10 percent; adding tax increases and fees; and cutting spending.
State Rep. Lee Hawkins, R-Gainesville, said the extra money will come from attracting companies to the state by the business-friendly, low-tax environment. Raising taxes on individuals means they’ll buy less, and that will affect business growth and jobs, he said.
“We provide the atmosphere and the tools for businesses to excel and then we get out of the way,” Hawkins said. “The state isn’t going to raise taxes.”
Essig disagreed, saying that businesses care more about improving transportation, education and health care than taxes.
“It’s a status-quo budget,” he said.