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Monday, August 23, 2010 - 10:10am

State Facing "Structural Deficit"

A study shows that Georgia could have long-term budget troubles, called a “structural deficit”.

That term is used in a recent Georgia State University study on the health of the state’s budget. The authors of the report say Georgia’s current income through taxes and fees is not enough to support state services like schools and health care for the poor into the future. Therefore their term of “structural deficit”.

There have already been teacher layoffs, agency furloughs and other cuts to cope with deficits. And next July, about $1.5 billion in federal stimulus money goes away.

Kelly McCutchen with the business-focused ‘Georgia Public Policy Foundation’ says innovative ideas are needed to deal with a “new normal” in budgeting.

He says in Texas, $500-million is being saved through changes in its prison system:

“Shifting some prisoners out of prisons…non-violent prisoners out of prisons and into probation. Looking at investing on the front end in mental health services so that inmates don’t go into prison in the first place.”

One of the authors of the study, Ga State’s David Sjoquist, says state leaders need to change long-term revenue policy:

“Change its tax system either to generate additional revenues, raise tax rates, expand the base...those types of things. Or increase fees, which it actually did this past (Legislative) session.”

Sjoquist is also a member of the newly-created tax reform commission. It includes a group of business leaders, economists, and Governor Sonny Perdue.