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Our Views: One pocket to another
Federal stimulus money will help Georgias budget problems, but only in the short term
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With President Barack Obama’s signing of the much-anticipated economic stimulus package, everyone is lining up to get their share of the goodies.

Georgia, like many states, has suffered a sharp decline in tax revenues during the recession, leaving this year’s state budget more than $2 billion in the red. The governor and state legislature have taken on the unpleasant task of cutting nearly every state agency’s budget by 8 to 10 percent to avoid a budget deficit, a violation of the state Constitution. After that comes the task of crafting a fiscal year 2010 budget with the same austerity, should revenues continue to trickle in below expectations.

But just as that hard work was proceeding at the state Capitol, the federal government rode in with its moneybags full: The $787 billion stimulus plan, offering billions to help states meet their obligations in tough times.

Georgia is expected to get nearly $16 billion for various needs, including $460 million to beef up Medicaid, $750 million for education, $220 million for unemployment benefits and $1.14 billion in construction funds for bridges, roads and transit.

A few Republican governors say they may turn down the stimulus money over objections to its size and possible federal strings attached. Fortunately, Georgia’s Sonny Perdue is not on that list. Whatever objections those governors may have, it only hurts residents of their states if they don’t accept it. We’re all paying for the plan so everyone may as well get their share of it.

Georgia taxpayers received their first stimulus benefit the same afternoon the president put his pen to the bill in Denver. Perdue quickly approved extension of the Homeowner Tax Grant, a $428 million plan to reimburse local jurisdictions for homestead exemptions. He had decided that the state could not longer afford the grant, over the objections of some lawmakers and many local officials who weren’t eager to send out new tax bills to make up the difference.

That means property taxes won’t take a direct hit, at least not this year. But it still could be axed next year and beyond if state revenues don’t improve.

Lawmakers were quick to embrace the grant’s second life, and surely will boast of saving it when re-election time draws near. But who should get the credit? The federal government is funding it, not the state. And we’re paying the freight for both, regardless.

Nevertheless, it’s good news for Hall and other county governments that feared having to send out a second tax bill to residents. Local jurisdictions are facing the same issues of declining revenues and difficult spending decisions. At least the tax grant gives them time to make the necessary adjustments in years to come.

With the federal money coming, Perdue also decided to dip deeper into the state’s rainy day surplus to help offset this year’s budget shortfall, anticipating that the stimulus will help the 2010 budget. Even with that money, plus the federal funds, cuts still must be made to this year’s budget, more like $150 million instead of $450 million.

So the state’s belt will be a notch or two looser than feared when the legislature gets around to finalizing the budget decisions. Now lawmakers can prioritize those cuts toward eliminating waste, trimming agencies and expenses that are less vital and shelving some of the revenue ideas that could have created more pain. One, for instance, was Perdue’s plan to charge hospitals and insurers a fee to pay for the Medicaid shortfall, an unpopular plan from the get-go.

Perhaps they can leave the schools be as well, since drastic cuts to education budgets would be penny wise and pound foolish. Hall and Gainesville school systems are struggling to maintain high learning standards amid budget problems that aren’t all tied to reckless spending decisions. The fluctuations in population growth and higher state and national standards are squeezing districts from both ends. They can’t get by with any less.

And some lawmakers are not willing to stop there. Republicans are promoting a plan to trim state taxes even further by phasing out the corporate income tax and the ad valorem tax, among other changes. They claim it will boost the state’s small businesses, though critics say it will merely cut state revenues that much more.

The way the parties approach a slumping economy is pretty predictable: Democrats want to spend more, Republicans look to cut taxes. Doing both, as we’ve seen in the last decade, can balloon deficits and put off more difficult long-term choices that might lead to fiscal sanity. Borrowing from the future is one of the bad habits that helped put our economy in such a mess.

And keep in mind that all of this money going back and forth from one set of government hands to another came from us to begin with, from the local, state and federal taxes we pay. If leaders at one level take from another to give us something we want, be it tax breaks or extra benefits, it’s still our money.

It’s as if the feds stuck a vacuum hose in one of our pockets to siphon cash into the other pocket. Or perhaps, more accurately, they’re sucking it from the pockets of our children and grandchildren, who still will be paying for this stimulus plan when many of us are long gone.

It’s hard to tell how much stimulating all this money will do. If it works and gets the economy moving again, it likely will be regarded as successful, in spite of its overwhelming cost.

Yet whether it succeeds or not, it doesn’t change the need for government at every level to rein in spending and explore revenue sources that don’t just transfer the burden from one group of taxpayers to another. Politicians shifting our money around isn’t the answer to our economic problems. Smarter policies at every level are needed to fund the amount of government we need while creating a more effective climate for the free markets to create real wealth and prosperity.

The recession is going to be with us for awhile longer, and its affects won’t be eased overnight by a big piece of legislation from Washington. It’s fine that our state is getting temporary help to balance its budget. The hard work remains to do it right for the long haul.

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