More Bad News on Revenue Means New Direction is Needed

Posted by Alan Essig

Sluggish revenue growth continues to dog Georgia, threatening more damaging cuts to education, health care, and other vital services unless policymakers accept the reality that a different course of action is possible – and necessary.

Revenue grew by only 3.9 percent in September compared to the same month last year, continuing a troubling pattern. For the first three months of the current fiscal year, which began July 1, total revenue grew by only 4.3 percent, while the state budget is depending on 5.2 percent growth.

If this poor performance continues, the Governor may be forced to lower  revenue expectations  for the year when he presents his  amended budget to the General Assembly in January, which would likely result in even more cuts to services.  The Governor must not only plan for a revenue estimate that meets the current budget, but he must also plan for a surplus to grow the dangerously low Revenue Shortfall Reserve.

The Governor has already told state agencies (excepting the K-12 funding formula) to prepare for  an additional 3 percent  spending cut  this fiscal year unless revenues pick up, but even deeper cuts may be necessary, compounding the pain vital services have endured since the beginning of the Great Recession.

There is a better way. A balanced approach to this ongoing crisis, one that includes generating additional revenue through comprehensive tax reform, will help ensure Georgia can make the investments necessary for robust job growth and a strong economy. Continued crippling cuts to education, health care, public safety, and economic development efforts, combined with an outdated and inefficient tax system, will only squelch economic growth and make our problems worse.


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3 thoughts on “More Bad News on Revenue Means New Direction is Needed”

  1. Alan, Comprehensive tax reform cannot take place as long as tea party zealots continue the drum beat of “no new taxes”. Look at State revenue per capita in NC and VA, two states which we compete with Louboutin Pas Cher. When their legislators sign “no new tax” pledges they have just iced up a 40% per capita advantage vs. GA. “No new taxes” is too simplistic. It has differentially punishing effect on state budgets depending on WHERE THEY START COUNTING FROM.

    1. A balanced approach is the best solution. Check out our report, Advancing Georgia’s 1930s Tax System to the Modern Day, for our tax reform recommendations. The 2010 Tax Reform Council included some of our tax reform ideas in its recommendations. Our recommendations emphasize a workable combination of raising enough money to meet Georgia’s needs, updating the system to reflect today’s economy, and tying the system more closely to ability to pay.

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