While we all know that numbers can be deceiving, as far as Georgia’s state budget is concerned, there is good news and bad news.
The good news is that last week Georgia’s revenue figures for the month of October were reported and showed that tax collections were down by only 0.1 percent. This means that since the beginning of the fiscal year in July, the states revenues are now down by only 2.0 percent.
Couple this with the cuts that have already been implemented in the state’s expenditures and we are only off budget by about 1 percent. Not bad considering the economic downturn we are all aware of.
The bad news is that many say these numbers are deceiving since the Department of Revenue has made procedural changes this year that have increased processing efficiency and rendered the month-to-month comparisons less useful.
Still others say our economy hasn’t hit bottom yet and the worst is yet to come.
In fact, some state leaders are now predicting revenue shortfalls of $2 billion to $2.4 billion instead of the original $1.6 billion estimate.
One thing everyone agrees on is that whatever the final shortfall ends up being, major cuts in the state’s spending are going to have to be made in order to balance our budget as the constitution requires. And many of those cuts will impact local governments’ budgets.
Still up in the air is the $428 million Homeowners Tax Relief Grant (HTRG) that Gov. Sonny Perdue has proposed to cut.
The grant, which is money sent by the state to counties to pass along to homeowners in the form of credits on their property taxes, is intended to hold down escalating property taxes.
But the program hasn’t worked as intended, claims Gov. Perdue, as the growth of local governments has been overwhelming and the grant has been ineffective in lowering property taxes.
However, not all state leaders are in agreement with the governor on this issue. Lt. Gov. Casey Cagle and Speaker Glenn Richardson have both said they would be opposed to eliminating the HTRG, at least during this fiscal year.
In fact, many who oppose cutting the HTRG point out that if you factor in population growth and inflation, local government growth has remained flat since the HTRG was implemented.
The fate of the HTRG could also be determined by another tax measure that is being proposed for the 2009 legislative session.
Included in the Republican controlled House legislative agenda for next session is a constitutional amendment to cap commercial and residential property tax increases to 3 percent or the rate of inflation, whichever is less. In fact, a vote on this item has been promised within the first 20 business days of the session.
While many counties in the state already have this cap in place on residential properties, it can only be placed on commercial properties through a statewide amendment.
Because it’s a constitutional amendment, passage of this bill will require a two-thirds majority of both chambers of the legislature, which is sometimes difficult. However, denying citizens the right to vote on limiting property taxes will be difficult for even the most partisan politician.
And while the HTRG may make it through this fiscal year, because it is a yearly appropriation, its’ chances for being included in the 2010 fiscal budget are less promising.
Individually, elimination of the HTRG or the implementation of property tax caps could have a significant impact on the budgets of local governments. Together, the impact could be substantial.