Objectively, Georgia Is A Fiscally Conservative State

This week’s Courier Herald column:

Every year, usually during the first week the Georgia General Assembly convenes, the Governor delivers a state of the state address.  It, much like the President’s State of the Union speech, is often a mix of how things are, with a heavier emphasis on the agenda the executive branch would like the legislative branch to help enact.

We’re a half a year away from next year’s State of the State.  We have primaries in our rear view mirror, and a November election that will decide who will be delivering that address in Georgia’s House chamber.

The rhetoric in the Governor’s primary, mostly on the Republican side as the nomination on the Democratic side was not contested, focused on the idea that Georgia needs to eliminate the state income tax.  Strangely, most of the candidates pushing this idea seemed to believe – or wanted you to believe – that Georgia could eliminate more than half of the revenue going into the state’s coffers without raising taxes elsewhere or substantially cutting funding for education, public safety, healthcare, or other services funded by the state.

Inherent in these kinds of ideas is the premise that state government is just filled with people in office buildings in Atlanta doing nothing but accepting your tax dollars to watch a clock until it is time for them to leave for the day.  It would perhaps be more helpful to first understand where the money collected from the state actually goes.

Almost forty cents of every dollar collected by the state goes into grade school education, the vast majority of these funds sent directly to local boards of education.  Another fifteen cents go to the University System of Georgia which is spent at college campuses around the state.

Healthcare expenses now take twenty cents of every dollar.  That’s one out of every five cents collected going to doctors, hospitals, and nursing homes in Georgia.

Construction and maintenance of roads and bridges get about seven cents of every dollar.  Our public safety, law enforcement, and department of corrections take less than nine cents of every dollar paid in state taxes.

“General Government” – the catch all for other harder to classify services but can be considered the “overhead” of state operations, gets about four cents of every dollar.  That’s about the same amount we pay for debt service, which represents the principal and interest on bonds the state uses to finance large capital projects.

So those are a bunch of numbers, and the reply for those who still want to eliminate half of state spending will still reply “So what.  Other states don’t have income taxes.  Make cuts.”

This is where objective comparisons help.  The Brookings Institution has a Tax Policy Center that lumps state expenditures in with local expenditures to determine how much states spend per person.  Combining local expenditures with state outlays helps to smooth out differences between states where local governments have differing levels of responsibility and taxing authority to provide generally the same services.

According to their 2019 data – both the last year compiled and the last year before the pandemic skewed numbers for revenue intake and spending outflow – Georgia had the second lowest general expenditures per capita among all fifty states.  Only Arizona was lower.

Georgia’s state and local governments combined spent $7,280 per person in 2019, against the US average of $10,161 and a southeast state’s average of $8,394.  Other nearby states without income taxes include Texas, Florida, and Tennessee.  They spent $8,650, $8,027, and $7,543, respectively. 

Revenue for state and local government comes from many baskets.  How each state constructs that basket to deliver services comes not only from resources available in each state – such as oil extraction fees in Texas and tourist driven taxes and tolls in Florida. 

The final scorecard, however, is how much is taken from citizens and businesses, and what services are delivered in return.  We’re beyond the rhetoric of the primaries, and moving into a general election that will be a referendum on the state of the state.  On this measure, objectively, Georgia’s record on fiscal conservatism is quite strong.