Analyzing Georgia’s financial structure — asking the questions:
1. Where does Georgia rank in revenues and spending compared to other states?
2. How has spending changed reflecting population growth?
3. How have spending priorities shifted in the state budget over the past decade?
Georgia receives less federal funds and ranks 46th in U.S.
Compared to some other states, the “other revenue” derived from fees and other sources including tuition is less in Georgia.
Georgia is a “low tax state” — collects less than any other state in state and local taxes per capita — $6,602 per person.
From collections of total revenue – taxes, fees, tuition, (45th) etc., Georgia spends only $3,702 per person, second in the country.
Georgia is more reliant on taxes, although lower, than some other states when all sources of revenue are considered per capita.
Georgia spends less and brings in less revenue than almost any other state but is more reliant on tax revenues because of lower fees and other revenues such as tuition.
As a percent of budget, spending has shifted over the past decade away from public safety and health and human services toward education, k-12 and higher education.
Georgia’s tax structure does not appear to reflect the economy and does not seem to grow with the expanding economy.
The most accurate and inclusive way to study state revenues and budgets is on a “per capita” or per person basis. States vary in sizes so percentages can be misleading, but when the totals are divided by the population, everyone is on an equal basis. Per capita numbers also more accurately portray a growing state that has both positives and negatives.
A quick and non-academic study of revenues, spending and how Georgia stacks up is particularly timely right now. If it is true, and it appears it is in Georgia’s case, that the state is on the very low end of tax collections and spending, then continued budget cuts are more difficult because there is presumably less fat there. In the 2012 budget, when the stimulus funds have gone away, that hole that those funds have filled, about $1 billion, will have to be addressed unless there is some unprecedented growth in collections between now and then.
Periodically, the Census Bureau publishes data based on population. Virginia published a very interesting analysis of this data in 2008. This column is based on much of that analysis. In 2005, Georgia ranked dead last, or lowest, in per capita state and local taxes, $6,602 per person. Reduced to state taxes only, Georgia is still the lowest at $3,954 per person in taxes per person.
An important fact gleaned from this study is the make-up of “revenue.” Revenue is not just taxes but that combination of tax revenue, federal funds and grants and fees, fines and other fees like tuition. That mix and the differences between states becomes apparent when you examine these components separately. When you combine those for total revenue, Georgia still ranks next to the lowest in expenditures per capita at $3,702 per person.
Components of revenue
Federal grants and funds
Georgia ranks 46th in the nation in federal grants per capita at $1,223 per person. It could be that as the state has grown, federal grants have not kept pace, but indirectly Georgia has become more reliant on taxes. This is an issue that bears further examination. Of the lower tax states, none but Utah received less in federal grants than did Georgia.
Fees, fines, tuition, etc.
Georgia is ranked 45th or fifth lowest in average annual tuition and fees at four-year institutions. Tuition is considered to be one of the largest of the categories of fees. This “other revenue” component of state revenues in Georgia also needs further investigation. If state services and fees have not been reviewed in light of changing times and rising costs, then the net effect is more reliance on taxes because fees have not kept pace with costs of delivery of services.
As stated earlier, Georgia ranks at the low end of tax collections, 38th nationally, in combined state and local tax collections at $3,010 per capita. Combined with the dead last ranking in total revenue expenditures, it is apparent that Georgia depends more on taxes than at least 12 states, to account for the difference in the ranking.
First week “big picture” conclusion
Georgia brings in less revenue and spends less than almost any other state, but is more reliant on tax revenues to fund its operations than other states. Others apparently make better use of federal funds and fees/tuition.
To be continued.....
Reference: “Virginia Compared to the Other States,” staff of the Joint Legislative Audit and Review Committee, January 2008
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