Tax breaks: The state should quit playing favorites
by Alan Essig and Sarah Beth Gehl
The budget situation in Georgia keeps getting worse. January revenue numbers showed a year-to-year decline of more than 14 percent, one of the largest declines in the history of Georgia.
As the economy continues to deteriorate, the projected $2.2 billion budget shortfall could turn into a shortfall of close to $3 billion.
Couple that with the uncertainty around federal aid and state agencies could be facing budget cuts of between 15 and 20 percent. Vital government services needed by the most vulnerable Georgia families will be scaled back just as the need is greatest. The health, welfare, and safety of Georgia's children, elderly, and disabled will be put at risk.
How is the Georgia General Assembly dealing with this crisis? It scrambles to find funds for a property-tax cut and it continues to pass legislation out of the Ways and Means Committee to extend tax cuts to favored corporations and special interests. In this time of crisis, with our most vulnerable Georgians at risk, it's time that the General Assembly stop giving out tax breaks as if they were candy, and begin to take a cold, hard look at the existing special interest tax breaks. What Georgia needs is zero-based taxation.
Over the past several years, the General Assembly has implemented many positive budget reforms by taking a zero-based approach: Each agency's entire budget is reviewed, not just any requested increase in spending for the following year. The appropriations committees have taken a closer look at budget outcomes and performance. The General Assembly is more apt to make sound budget decisions when performance and transparency are key factors.
A similar philosophy is needed by the House Ways and Means and Senate Finance committees. We need to dig deep into the tax breaks and loopholes that have been placed in law over the past 30 years. Over the past four years alone, more than $250 million in tax breaks have been passed into law. A zero-based taxation approach would force into the sunlight all of the tax breaks put into law by the powerful special interests roaming the halls of the Capitol. All tax breaks should be analyzed to determine the outcome - do they increase or decrease state revenue? And they should be ranked in priority with budget choices. In short, tax policy and budget policy should be on an equal playing field.
In light of the current fiscal crisis and the human impact of budget cuts, there should be a moratorium on all bills giving special interest tax breaks. A zero-based approach to existing tax breaks should be established. It's time that the General Assembly, during this time of fiscal crisis, hold tax policy to the same standards as budget policy.
Alan Essig is director and Sarah Beth Gehl is deputy director of the non-profit Georgia Budget and Policy Institute.
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