Georgia’s revenues are up 4.5 percent over the first 11 months of the 2014 fiscal year. Still, revenues are stubbornly sticking to levels below the historical average for a non-recession year. In the 13 non-recession years between 1993 and 2007 Georgia’s revenue growth averaged 8.2 percent. Georgia takes in $675 million more in revenues with 8.2 percent growth instead of 4.5 percent.
This historically weak revenue growth is due to a state economy still trying to shake off the damage of the recent recession coupled with a 20-year erosion of Georgia’s tax base through indiscriminate tax cuts. Revenue growth of 4 percent or 5 percent won’t meet the basic needs of a growing state. It won’t restore several billion dollars in cuts incorporated in the state budget since 2009. It won’t make significant progress to rebuild the state reserve fund to pre-recession levels.
Georgia ranks among the lowest tax states in the nation, which you may have heard will pave the path to economic growth. Yet we are getting an economy that continues to struggle.
Georgia’s outcomes in education and health care are rank among the worst in the country, which is undoubtedly connected to the fact our investments in those areas also lag the nation. Georgia policymakers need to reform and modernize the state tax structure in order to assure state revenues are adequate to make the necessary investments in education, health care and infrastructure to compete and prosper in the 21st century economy.
The economic blow Georgia suffered during the recession seems to have ushered in a sense of low expectations. It’s been so long since Georgia experienced healthy revenue growth that many people seem willing to embrace steady increases of less than 5 percent as a cause for celebration.
Not only is it not cause for celebration, it’s not enough to get Georgia moving in the right direction again.
