Georgia’s state senators could inflict more than twice the pain contemplated by their House counterparts if they move forward with plans to fix roads and bridges with a raid on the general fund to the tune of $442 million. The version House members sent to them proposes a “mere” $168 million whack from the general fund, which Georgia uses to pay for education, health care, services for children and the aged, and public safety.
Funding transportation should be a state priority, but it is far from Georgia’s only priority. Georgia needs a quality education system, a first world health care infrastructure and an adequate safety net to fuel an economic environment that creates jobs. That’s in addition to the need for a modern transportation infrastructure. Starving the state’s support for education, health care and other needed services to pay for transportation fixes is a bad idea.
The Senate version of HB 170 proposes to:
- Eliminate the sales tax on motor fuel resulting in moving $168 million in motor fuel funds currently spent throughout the state budget to the Georgia Department of Transportation (DOT) for transportation purposes.
- Move $137 million in motor fuel funds currently spent on debt service (principal and interest on bonds already sold) to the DOT to be used for transportation purposes.
- Move $92 million in motor fuel funds currently spent on debt service for bonds previously issued by the State Road and Tollway Authority to the DOT for transportation purposes.
- Give a tax credit to trucking companies for the cost of local sales taxes on diesel fuel at a budget cost of about $45 million.
Supporters of the Senate version of HB 170 claim the state can make up this large revenue loss through year to year revenue growth. Reality check: There is no free lunch. Such a large revenue loss threatens significant pain for people who count on such vital state services as education, health care and public safety.
Why is it naïve to assume revenue growth will cover a $442 million budget shortfall? You only have to look at how the 2016 state budget spends $921 million in anticipated revenue growth. More than $450 million of the revenue growth is consumed by obligations the state has no choice but to allocate money for. That includes new students who enroll in K-12 and higher education, retirement system contributions for state employees and teachers, Board of Regents Health plan contributions, enrollment growth in the Medicaid and PeachCare program and a Department of Justice settlement agreement concerning mental health and developmental disabilities programs. Of the remaining $470 million, $280 million is to reduce the ongoing K-12 education austerity cut and $52 million pays for a modest 1 percent salary increase for state employees.
The governor’s 2016 budget proposal includes $921 million in new revenue, but it also still includes a $465 million austerity cut to the K-12 funding formula and hundreds of millions of dollars in cuts incorporated in agency budgets since the Great Recession. Those cuts continue to deliver in large caseloads for state workers, backlogs and ever increasing waiting lists for services. The budget is so tight the governor could not find $60 million to prevent a cut in the Medicaid payment rate to primary care doctors. A cut of $442 million would have most likely eliminated the additional education funding, the state employee salary increase, and caused over $100 million of additional cuts.
The Senate version of HB 170 is fiscally irresponsible and causes as many problems as it solves. It is incumbent upon state senators to explain specifically what cuts are coming to balance the budget. Individual legislators and the public are owed this information to make an educated decision to support the Senate version of HB 170 or object to it.
Do the benefits of additional funding for transportation outweigh the cost of additional cuts to education and other government services? The public lacks the information to answer that question.
The Senate version of HB 170 is not fatally flawed, but it is incomplete. Identifying more state revenues to offset the $442 million shift from the general fund could vastly improve the bill. The Georgia Budget and Policy Institute offers a menu of economically responsible revenue options, including increasing the tobacco tax. Lawmakers can select one or more of these to cover the shortfall. That makes more sense than stepping backward toward the painful days of the recession.