Georgia Faces 'Very Steep Cliff' Without More Federal Help, Policy Expert Says
The Georgia Budget & Policy Institute says a pandemic-induced recession is starting to show how frayed our economy is, and that without renewed funding from the federal government the state faces a historic budget shortfall.
Revenues are crucial right now, GBPI Policy Analyst Danny Kanso said.
"One of the primary boosts that we've received in terms of revenue collections is from the enhanced unemployment benefit payments," Kanso said.
Unemployment benefits have been the primary driver of the positive revenue numbers in the first two months of the fiscal year.
"We are facing a very steep cliff if Congress does not reauthorize those unemployment benefits," he said.
But the opportunities still exist to bring in more money through policy changes such as increasing the tobacco tax, a measure which failed to pass in the last legislative session. Lawmakers, however, did approve a vaping tax.
"Even if we were to put back the $2.2 billion in our budget, we know we're not even at the level of pre-recession numbers," GBPI President and CEO Taifa Butler told reporters Tuesday. "So we are not sort of growing the budget in the way that we should based on the population and based on inflation."
Among top concerns for the nonpartisan think tank are cuts to public education, behavioral health services and health care, particularly for families in vulnerable communities.
"Black, Brown, low-income families have not recovered fully from the Great Recession," Butler said.
Data show these same vulnerable populations are most at risk in the pandemic as well.
An attempt to return to "normal" post pandemic isn't enough, Butler said.
"I think we need to re-imagine," she said. "We need to think differently about what tomorrow can bring for Georgia and what are the things that we can do to make Georgia thrive and make Georgia families thrive even more so."
Georgia remains on of the lowest-taxed states in the nation, and the 37 cent tobacco tax ranks at the bottom.
Raising that tax per pack of cigarettes to match the national average would help cover the increased costs of health care from the effects of tobacco use, Kanso said.
In Medicaid costs alone, Georgia owes about $650 million a year for health care costs that are a direct consequence of smoking.
"We can get to an adequate level where right now we're only raising about $230 million a year from those 450 million packs of cigarettes that are sold," he said. "We could bump that number up significantly to at least cover the direct costs associated with smoking and to help fill part of that hole in our budget."
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Kanso said Georgia's unusual tax deduction "where you can deduct your state taxes from the state taxes that you owe" makes no sense, and the state offers more than $9 billion in tax credits, loopholes and exemptions.
"While some of those are positive, we know that many of them are flawed," he said.
Georgia needs federal aid to bridge the short term, but it won't be permanent solution.
"When the federal aid does expire, there is likely to be a hole in our state's budget that if we're not prepared to offset with new state revenues, we'll be right back to square one," Kanso said. "And we'll be in a posture like we were in the Great Recession, where these cuts have the potential to linger for years, if not decades, and very adversely affect Georgians, our communities and our state as a whole."