The following editorial was first published in the Atlanta Journal Constitution on February 2, 2010 and then in several other media sources throughout the state.

Georgia Should Raise its Taxes to Close the Budget Shortfall and Modernize the State

Revenues should be part of a balanced, responsible approach to closing the gap between the growing needs of Georgia’s people and the resources the state has to meet those needs.

Why? Because relying on spending cuts alone hurt struggling families too much today, damage the state’s economy, slow recovery from the recession, and poorly position the state for when prosperity returns.

Georgia’s economy is in crisis. As we face the worst recession in our lifetimes, unemployment continues at record levels. Hundreds of thousands of Georgians have lost their jobs during the past 18 months. Georgians’ applications for unemployment insurance, food stamps, Medicaid, and various social service programs have increased dramatically.

Tens of thousands of jobless men and women have enrolled in our technical schools and universities in order to improve their skills. We cannot ensure that these vital services, which have already faced significant cuts, are available without taking a balanced approach. 

To be clear, this does not mean avoiding budget cuts. We are way past this being an either-or proposition. With a problem this serious, no single response is enough. That means getting beyond the political rhetoric that offers the false hope of sparing education, healthcare, and public safety from cuts if only we “right-size” state government. Of course we should prioritize government services and deliver them more efficiently. But, in the face of multi-billion dollar deficits — caused by record-breaking drops in every state’s revenues, not by overspending — savings through increased efficiencies are unfortunately a drop in the bucket compared to the depth of the problem.

Increasing state revenues will avoid cuts that will severely damage our ability to help those most in need. It will also allow us to continue to invest in the education, transportation, and healthcare infrastructure that is vitally important for Georgia’s current and future economic success.

This need not mean broad-based tax increases, they should be targeted. For instance, Georgia should make a focused effort to collect taxes already owed to the state; close special interest and corporate tax exemptions and loopholes; increase fees (many of which have not changed in over 20 years); increase the cigarette tax to be on par with the majority of states; increase the income tax on those Georgians with the most income; and modernize the sales tax to include the services that reflect today’s economy.

More than thirty states, including most southern states, already chose a balanced approach to deficit reduction through increasing revenues during the past year. North Carolina, our neighbor and chief economic competitor, increased revenues by more than $1 billion in addition to cutting many programs and services. Georgia cannot compete if we unilaterally de-fund state government while our neighbors and competitors continue to invest in their future economic growth.

What do we want the legacy of this recession to be for Georgia? Will it be that we abandoned Georgia families in their most desperate time, choosing inflexible ideology over practical solutions? That we failed to invest in education, transportation, and healthcare, sealing Georgia’s fate as a second-rate economy that offers only limited opportunity to those who want to start a business or raise a family?

Or will our legacy be the prosperity that comes from making decisions that assure the basic economic, health, and safety needs of Georgia families, and making wise investments that allow Georgia to once again lead the region? A balanced approach will take us down that road.

By Alan Essig, Executive Director, Georgia Budget & Policy Institute. The Georgia Budget & Policy Institute is a nonpartisan, nonprofit think tank that rigorously analyzes budget and tax policies, to inspire informed debate and responsible decision-making.

 Published in the Atlanta Journal-Constitution, Savannah Morning News, and other media outlets Dec. 21, 2009

National Health Reform: Expanded Medicaid Is a Bargain for Georgia

Leading congressional health insurance reform proposals include expanding Medicaid, which could not only bring coverage to nearly one million low-income, uninsured Georgians, but would provide at least 90 percent of the funding to do so.

Despite the obvious and significant benefits to the state's economy and its citizens, Gov. Perdue, Lt. Gov. Cagle, and others opposed to reform are arguing that Georgia cannot afford its share of the proposed Medicaid expansion in either the House or Senate proposal.

They claim that expanding Medicaid will cost Georgia more than $2 billion over six or seven years, but they rarely mention the billions in new federal funds that would flow to Georgia's economy during this time.

But their calculations are misleading. The cost on a yearly basis of expanding Medicaid for hundreds of thousands of uninsured citizens with little access to coverage is not only affordable, but is a bargain for Georgia.

The Georgia government's own estimate of the House proposal forecasts $93 million in additional state costs the first year (2013). This equates to an increase of less than five percent of Georgia's existing Medicaid budget and less than 1 percent of the overall state budget.

In addition, these state costs would be accompanied by hundreds of millions in new federal funds flowing into Georgia each and every year, contributing to the state's healthcare sector and local economies.

Over time, these costs would increase as the state's economy and population grows. As more people enroll, and as medical costs increase with inflation, the Georgia government estimates that costs could reach $500 million a year by 2019. However, this number must be put into perspective as well. Relative to the overall state budget a decade from now, these costs will remain a small percentage and surely will be

manageable.

Although Georgians across the income spectrum have seen their access to

employer-sponsored coverage decline in recent years, low-income families

have been most affected.

A mere one-quarter of Georgians in families with incomes below twice the poverty level ($36,600 for a family of three) have employer coverage, compared to 76.6 percent for families with income above this threshold.

As a result, low-income individuals and families in Georgia are far more likely to be uninsured (35.9 percent) than their higher income counterparts (10.9 percent). In total, nearly 1.7 million non-elderly Georgians (nearly one in five) lacked health insurance in 2007-2008.

Those opposed to expanding health insurance coverage should also consider the likely effects on Georgia's uninsured children and adults if they remain uninsured. Uninsured people have less access to timely medical care, worse health outcomes, and are more likely to die prematurely than their insured counterparts.

There is plenty of time for Georgia's leaders to ensure the state has adequate funds to pay what the federal government does not so that we reduce our high number of uninsured citizens. Both proposals give states several years to comply with the new Medicaid eligibility standards, and both provide full federal funding for the first two to three years of implementation.

Our elected leaders should be tackling Georgians' growing needs, not posturing against national reform. Georgia's uninsured rate is tenth in the nation, approximately one in seven people lived in poverty in 2008, and our job loss rate is fifth in the nation. Vulnerable groups are hit hardest during recessions, and low-income workers are losing

employer-sponsored health insurance faster than others.

Rather than using misleading multi-year figures to argue that the state cannot afford to expand Medicaid coverage to its struggling citizens, Georgia's leaders should realize that we cannot afford to lose out on this incredible opportunity to insure its neediest citizens and bring hundreds of millions of dollars into the state’s economy annually.

Sweeney is the senior healthcare analyst for the nonpartisan, independent think tank, the Georgia Budget & Policy Institute. Sweeney is the senior healthcare analyst for the nonpartisan, independent think tank, the Georgia Budget & Policy Institute. Sweeney analyzes healthcare policies and their impact on the state budget. Read his analysis of the proposed expansion at www.GBPI.org

Published in the Atlanta Journal Constitution Nov. 23, 2009 

No Turkey and Gravy for All

Georgia deteriorates from average to 4^th worst in hunger ranking

As families gather for Thanksgiving this week, we should consider that in just a decade Georgia has deteriorated from average (ranking 22^nd) to 4^th highest for food insecurity in the nation.

One in seven Georgia households experienced food insecurity during 2006-2008, according to a report released last week by the USDA. The share of Georgia households lacking resources for adequate meals rose from 10.9 percent during 1996-1998 to 14.2 percent during 2006-2008.

These sobering numbers highlight the importance of focusing solutions on combating hunger and poverty in our communities.

How do we do this? Communities across the state are providing support to hungry families through local food banks and pantries to address just this issue. In metro Atlanta, for example, the Atlanta Community Food Bank has distributed 24 percent more pounds of food through October of this year compared to the same period last year to meet the growing need.

Beyond local responses and resources, another important tool is public policy. By thoughtful budgeting and policymaking, the state government and local advocates have a powerful opportunity to reduce the number of Georgians experiencing food insecurity.

For example, expanding participation rates within the federally funded nutrition programs, especially among the unemployed, should be a top priority. Food stamps, school lunches and breakfasts, and summer programs will reach more than one million Georgians this year, providing critical resources for nutritious meals. Additional benefits are available through the federal stimulus package passed by Congress and signed by President Obama in February, increasing food stamp benefits by 13.6 percent and sending more than $650 million to Georgia tables over the next five years.

However, many more families remain eligible for federal nutrition assistance but are not enrolled. Participation levels in federal food aid programs in Georgia range from only 11 percent to 68 percent, and hit children — the very people who need adequate nutrition in order to develop their brains and bodies, and the ones least able to advocate for themselves —worst of all.

The state needs skilled staff to reach and qualify residents who can benefit from the millions of untapped dollars in federal nutrition assistance available to Georgians. Although the federal stimulus package includes funds for state food stamp eligibility workers, lawmakers have chosen to furlough already-stretched eligibility workers to address the daunting loss of state revenues.

Moreover, the Georgia Department of Human Services plans to layoff 733 federal benefit eligibility workers in the coming year if the governor requires an additional 3 percent cut in services, as he states in his contingency plan. When stimulus funds begin expiring next year, programs serving the elderly such as the Meals on Wheels will also be in danger.

At a time when more families are struggling with hunger and food pantries are stressed to the limit, we must all ensure public efforts are not diminished. Donations to food pantries are an essential ingredient, but they must be combined with thoughtful public policy and budgeting. Georgia has made great strides in reducing hunger in the past — we must do so again.

Sarah Beth Gehl is deputy director of the Georgia Budget and Policy Institute, an independent, nonpartisan organization engaged in research and education about Georgia’s fiscal health. To find county-by-county estimates of food insecurity, download the Institute’s report Reaching Georgia’s Tables, released in March.

Published in the Atlanta Business Chronicle, November 20, 2009

Georgia’s Steep Job Loss Demands New Thinking to Aid Georgia’s Recovery

Georgia, along with the rest of the nation, has now experienced more than 20 months of recession. Although economists are announcing the official end of the Great Recession, Georgia has a long road to full recovery.

How should the state best position itself to come out of this recession poised for success?

Georgia has lost 7.6 percent of jobs since December 2007, when the recession began, ranking fifth highest in job loss among states. More than 480,000 workers (10.1 percent) are unemployed, while 16 percent of workers were underemployed in recent quarters.

The state has lost more than double the amount of jobs during the current recession compared to the 2001 recession (316,000 jobs lost versus 150,000).

What is perhaps the most startling factor in Georgia’s development is that our state has fewer jobs today than at the start of the decade, yet 19 percent more people aged 16 and over. Georgia’s job-population mismatch for the decade is more prominent than that of most states: Georgia ranks fifth highest in percentage population growth and eighth highest in percentage job loss since 2001.

The path to recovery will take years, not months. After the 2001 recession, Georgia did not return to pre-recession job levels until 2005. Long-term challenges remain with us, including rising poverty, stagnating median income, and declining employer-sponsored health coverage.

The Georgia Budget and Policy Institute’s recent report, The State of Working Georgia 2009, analyzes the severity of the recession and offers recommendations that will indeed poise Georgia for prosperity.

There are, of course, no fix-all solutions to the short- and long-term economic challenges confronting Georgia. The state has limited tools at its disposal in the face of a global economic downturn; however, making investments in human and physical capital are some of the most powerful and proactive tools the state has, if we choose to find the resources. State leaders’ spheres of influence – quality of life issues such as education, transportation, infrastructure, health coverage, and public safety – can assist families through the economic downturn and provide the environment for Georgia businesses to thrive as the nation begins to recover.

Lawmakers have been in the business of cutting prices for these public essentials, reducing the state’s ability to maintain and modernize infrastructure and to educate the one million adults who lack a high school diploma. Now the state is cutting the quality of structures we all depend on. At some point, the cost might be low enough, but the quality will be so poor as to drive customers away.

The balancing act state leaders subscribe to — continually narrowing the tax base and attempting to fund quality-of-life essentials adequately — is beyond the tipping point. We cannot do both, either today or for years to come. We are not at the point of “throwing money at a problem,” but instead we are now cutting money from the solution.

Policymakers must decide which strategy is more important to the well-being of our communities, including our business community. Will success stem from having better technical colleges, universities, transportation, and water supply infrastructure, or will it come from driving Georgia to being the lowest tax state in the nation?

We have aggressively relied on the latter, and it surely did not protect us from this recession — in fact, Georgia has suffered some of the worst outcomes of the recession in the country. Georgia should strive for balance, remaining a low tax state while increasing revenues so that we can invest in economic prosperity. 

Sarah Beth Gehl is deputy director of the Georgia Budget & Policy Institute, an independent, nonpartisan organization engaged in research and education about Georgia’s fiscal health. She is also the author of The State of Working Georgia 2009.

Georgia — Rethink Use of Available State Funds to Reduce Child Poverty

Poverty in Georgia is on the rise, with more children living in poverty than adults or seniors.  In fact, even before the recession, one in five of Georgia’s children were living in poverty. Families in poverty don’t have the resources to meet their basic needs of food, clothing, and shelter. Can you imagine this for your family?

Georgia cannot afford, financially or morally, to ignore child poverty. “Every year a child stays in poverty reduces his or her future productivity over the course of his or her working life by $12,000,” said Senator Christopher Dodd, referencing research by the Center for American Progress as he introduced a  bill to modernize poverty measurement. 

Children who live in poverty are more likely to have poor educational outcomes, poor health, and engage in criminal activity. The impact touches all Georgians. Persistent poverty prevents Georgia from becoming a prosperous state with educated productive workers and stable families.

It is time for Georgia to stop this decline and be a can-do state. It’s time for lawmakers and policymakers to fund successful initiatives that move families from poverty to self-sufficiency. This is a direct purpose of Temporary Assistance for Needy Families, formerly known as welfare and Aid to Families with Dependent Children (AFDC), funded with federal money and a smaller state match.

Right now Georgia has untapped opportunities to stem rising poverty.  It should act now while funds are available. Under the American Recovery and Reinvestment Act (ARRA), Georgia can draw down $165. 4 million more in TANF federal funds to help with the increased need for cash assistance, expansion of short-term emergency assistance, and/or expansion of subsidized employment the recession is bringing on.

Georgia does not have to start new, unproven programs. Successful TANF initiatives from other states lead the way. Here is a sampling of strategies Georgia is poised to implement:

§         Career Pathways – Building on Georgia’s Work Ready Program, post-secondary system, and career centers, Georgia is poised to pilot a Career Pathways Initiative for low-income families. This initiative integrates academic, workforce development, and remedial instruction to provide a clear connection between academic credentials and available jobs in local industries while providing student support.

§         Car Ownership – The legislature should allocate funds to renew and reconstitute a robust statewide car ownership program for TANF applicants, recipients, and those that have left TANF but whose wages keep their families impoverished. For nearly a decade, Georgia operated Wheels to Work, a program that assisted TANF recipients in select counties to purchase low-cost vehicles with no down payment, zero interest, and low monthly payments. In 2001, this program went statewide using TANF funds but, despite its impressive outcomes, was not renewed.  Policymakers could apply for and use ARRA funds to revive this initiative.

§         Building Assets – Georgia should provide low-income families with opportunities to save money and accumulate assets to protect against unforeseen hardships, as follows:

§         Raise the resource limit for TANF eligibility as most states have done.  Georgia has no resource test for food stamp eligibility but it has set the resource limit for TANF eligibility at $1,000.

§         Join 24 other states and Washington D.C. and enact a state Earned Income Tax Credit that piggybacks on the successful federal tax credit.

§         Provide funding for the TANF Individual Development Account (a matched-savings program used for pursuing post-secondary education, starting a business, and buying a home) that currently exists in policy only.

If your neighbors were struggling to swim in stormy waters, would you throw them a life preserver so they could make it safely to shore? With TANF funds and the stimulus, Georgia lawmakers have that opportunity to pull Georgia’s families from the depths of poverty to the stability of self-sufficiency.

The Georgia Budget & Policy Institute has researched and analyzed successful initiatives and invites you to read about them and share them with others. The report, Strategies Georgia Can Use to Reduce Rising Poverty, A Review of Successful TANF-Funded State Initiatives That Increase Family Self-Sufficiency, is available to download freely.

Clare S. Richie researches, monitors, and analyzes budget and public policies with a focus on poverty and social services. Contact Clare at CRichie@GBPI.org or 404-697-6669.