During the six years that I have served in the Georgia state legislature, this past session may have been the most productive yet.
Many major issues that have been debated and discussed over the past few years — trauma funding, property tax reform, texting prohibition, transportation funding, reform of gun carrying laws, seat belts in trucks — were finally passed.
While we agree that all of these issues are important and will impact the future of our state, many will say that the most important bill passed this year was HB 1045, the Special Council on Tax Reform and Fairness for Georgians Act.
Signed into law last week by Gov. Sonny Perdue, HB 1045 creates a council that will conduct a study of the state’s current revenue structure and will make a report of its findings and recommend legislation by January 10, 2011.
The members of the council will be Gov. Perdue, Dr. David Sjoquist of Georgia State University, Dr. Jeffrey Humphreys of the University of Georgia, Dr. Roger Tutterow of Mercer University, Dr. Christine Ries of Georgia Tech, the 2010 chairperson of the Georgia Chamber of Commerce, the 2010 Georgia chairperson of the National Federation of Independent Business and two members each appointed by the lieutenant governor and speaker of the House.
The council’s report and recommendations will be made to the Special Joint Committee on Georgia Revenue Structure (SJC) that will consist of leaders in the House and Senate who will be responsible for writing a bill to be presented to the General Assembly.
The legislation will be introduced in the House — as is required by our state constitution for all revenue bills — and will receive an up-or-down vote without any amendments. The legislation will be required to be read by each chamber three times on three separate days.
Why is this so important?
One of the wisest and sensible things our forefathers ever did for our state was to add a constitutional amendment requiring us to have a balanced budget.
Unlike our federal government that prints money without regard to who will be responsible for paying it back or when it is paid back, our state government is held responsible. Revenues must match expenditures. If it’s not coming in, it can’t go out.
It has been many years since there has been a systematic review of Georgia’s revenue structure. Currently our state derives revenue from three major sources — corporate tax, income tax and sales tax. Many consider this to be somewhat antiquated and feel a fairer system of taxation may be available.
A few years ago, then Speaker Glenn Richardson received a great deal of attention when he proposed his GREAT (Georgia’s Repeal of Every Ad Valorem Tax) plan.
Originally slated to end all property taxes and replace them with consumption taxes bolstered by eliminating the many exemptions granted over the years, the plan was doomed from the start and even when it was scaled back significantly, failed to go anywhere.
Unlike the GREAT plan that was far reaching and would have changed city and county tax processes, HB 1405 will only deal with how the revenue structure exists at the state level.
Because of the tough economic times that we find ourselves in, some changes in our state budget process are already taking place.
Although only a small portion of our revenue source, this year we began phasing out the state portion of taxing property (.25 mill) as well as the tax on senior retirement income.
And in an attempt to make us a “pay as you play” state, we also overhauled our fee schedule by making certain that our fees cover the cost of the service provided, saving billions in taxpayer money.
Also being studied are the many corporate tax breaks that have been offered over the years to attract businesses and jobs to our state. Although these may never be totally eliminated and serve a useful purpose in many cases, it is a good exercise and will result in cost savings for our state in the future.
Only time will tell whether HB 1405 produces its desired results, but one thing is certain — tax reform and fairness is on the minds of the Georgia General Assembly.