With Priorities Funded, Georgians’ Taxes Are Being Cut

This week’s Courier Herald column:

When I write about our state’s government and governing, it is often through the prism of the state’s budget.  Like too much of life, money is how we keep score.  It shows us what we prioritize in spending, and how much we’re willing to take from our citizens in order to achieve stated goals.

Georgia’s budget, like the checkbooks of so many of our citizens, took a pretty big hit during the financial and real estate collapse that began in 2008 or so.  Because so many of Georgia’s major economic sectors were involved – banking and finance, real estate, and the airlines, among others – Georgia’s tax revenues trended down for several years as we dug out from the aftermath.

In the decade that has shown revenues increase, Georgia’s spending has been focused on key areas.  Education has received roughly half of all revenue growth each year, culminating in a fully funded QBE formula for our state’s schools in 2018.  Transportation, once at the literal bottom of spending per capita among peer states, received an additional billion dollars per year starting in 2016.  Healthcare, shoring up retirement systems, and a few other areas have also seen additional spending.

Along the way, however, budgets were modest relative to Georgia’s actual economic growth.  Most of the annual surpluses were added to the “rainy day fund”, which now holds its legal limit, Approximately $4 billion.

Those dollars came in handy during the pandemic.  Unlike the last economic crisis, teachers and state workers weren’t furloughed.  Budgets were tightened, and some plans – including scheduled tax cuts – were put on hold.  When the economic storms hit, Georgia was prepared.

Georgia was also among the first states to re-open its economy.  Governor Kemp took a lot of heat in local and national press, but comparative medical and economic data from states that chose the lockdown-in-perpetuity route shows that Georgia’s navigation of these unprecedented times yielded positive results.

Georgia’s economy is continuing to soar, with unemployment rates at the lowest ever recorded and tax revenues continuing to demonstrate double digit monthly gains.  Additional federal money on top of what Georgia has generated has put the state in a unique position.  We have a full rainy day fund with billions left to appropriate.

Some of the spending plans have been covered here in detail.  State employees will be getting their first cost of living adjustment in 14 years.  Teachers will be getting the last tranche of their promised $5,000 raises.  Additional money will go to law enforcement, to combat gang violence, for mental health programs, and to fight human trafficking.

Schools have had all of the austerity cuts that began at the beginning of the pandemic restored, along with boatloads of additional federal funds.  Given that Georgia’s schools collectively began the pandemic with higher reserves than the State, the restored state money and new federal money should have Georgia’s schools sitting on more funds than they have had in their history.

Grants have been awarded for water and sewer projects at the local level.  Programs to enhance rural broadband are receiving similar dollars.  Economic Development projects are continuing to receive funds to grow Georgia’s economy statewide. 

Priorities are being funded at levels never before seen.  And yet, there remains money left over.  It’s going to a group not talked about enough when Governments want to spend money:  Georgia’s taxpayers.

While there are strings attached to many of the federal grants for schools and infrastructure dollars that limit tax cuts, Georgia’s economy has continued to grow to a level that tax cuts are possible while still meeting requirements of accepting federal money. 

The cuts are coming in two forms. Governor Kemp’s proposed budget pending in the legislature has rebates to Georgia taxpayers of $250 for single filers and $500 for those filing jointly. That’s a rebate for the excess that the state has already taken in but hasn’t spent.

This week, Speaker Ralston and House Ways and Means Chairman Shaw Blackmon announced legislation that would lower Georgia’s tax rate from 5.75% to 5.25% while increasing the standard deduction for every taxpayer. 

A family of four making $30,000 would pay no Georgia income tax under this proposal.  A similar family making $50,000 would see their tax liability drop by 28%.

There will continue to be those who will chide these real cuts with their imaginary proposals to eliminate the income tax entirely.  They’re not burdened by having to have once furloughed teachers, for funding salaries of Georgia’s law enforcement officers, paving roads, or shoring up our thinly stretched mental health system.

Those that have those burdens have finally been able to put resources to many priorities that have long had to go without.  That includes providing relief to Georgia’s taxpayers.