National Report: Georgia Has a Long Way to Go on Oversight of Tax Breaks


ATLANTA (May 11, 2011) – Georgia falls short in a number of areas when it comes to tracking and evaluating tax breaks, according to a national report released today by the Center on Budget and Policy Priorities, a Washington, D.C.-based nonpartisan, nonprofit policy research organization. Georgia published its first ever report this year to track spending through the tax code; however, policymakers should expand the report to include evaluation of the effectiveness of that spending.

Georgia spends billions of dollars a year in the form of tax credits, exemptions and deductions, known as tax expenditures, with little evaluation of whether they benefit Georgians or are effective in achieving their purpose. Those tax preferences range from narrowly-focused exemptions for certain companies to broad exemptions, such as exempting services from the sales tax base.

Georgia lawmakers enacted a transparency measure in 2010 to begin tracking the cost of tax breaks. Now policymakers must move from transparency to accountability and evaluate the effectiveness of these preferential breaks.

“On the one hand, we’ve deeply cut education, public safety and other services that Georgians depend on over the last few years. Yet on the other hand, we’re losing money to tax giveaways without any evaluation of whether they benefit Georgians in any way,” said Alan Essig, executive director, Georgia Budget and Policy Institute.

Tax expenditures do not require an ongoing review once they are part of the tax code. Unlike direct state spending, which policymakers examine and decide on each year, tax expenditures do not require annual approval from the legislature and governor.

“A well-designed tax expenditure report can help a state save money – something most states desperately need to do right now,” said Michael Leachman, co-author of the report and assistant director for state fiscal policy at the Center on Budget and Policy Priorities. “By showing policymakers and the public how a state is spending its money and what that spending is accomplishing, a tax expenditure report can identify ineffective spending through the tax code that policymakers can then eliminate.”

The Center on Budget and Policy Priorities report graded states based on the accessibility, scope, detail, and analysis of their tax expenditure reports. Georgia scored well for accessibility as the report is available online, will be published regularly, and includes up-to-date data.

Georgia falls far short of other states, however, in the area of analysis. Although lawmakers originally included such analysis and evaluation of tax breaks in the legislation requiring the tax expenditure report, those key provisions were removed from the final bill. Oregon, D.C., and Montana ranked among the best states, according to the Center’s report.

“Georgia faces very difficult choices in order to deal with the dramatic drop in revenues we’ve experienced due to the recession,” said Essig.  “At the very least, policymakers and residents should know where the state’s money is going and the outcomes of those decisions in order to prioritize and decide which sacrifices to make. In order for this to occur, legislation requiring a thorough analysis of tax breaks as part of the reporting process must be reinstated.”

Click here to download the Center’s full report.  For a related report on state’s handling of tax breaks, read GBPI’s report, Other States Take Action on Tax Breaks.


Media Contact:
Utoia Wooten
404.420.1324 ext. 109


About the Georgia Budget & Policy Institute

GBPI is the state’s leading independent, nonpartisan nonprofit engaged in research and education about the fiscal and economic health of the state of Georgia. GBPI provides reliable, timely analysis of Georgia’s budget and tax policies, and promotes greater state government fiscal accountability, improved services and an enhanced quality of life for all Georgians.

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