A state representative from Sandy Springs joined a colleague in suggesting Georgia should increase the cigarette tax to help cover a $3.5 billion budget shortfall that could cause at least 1,000 layoffs and an equal number of furloughed workers.
Rep. Josh McLaurin (D-Sandy Springs) joined Rep. Angelika Kausche (D-Johns Creek) in a virtual town hall meeting on May 28 that covered state budget cuts. The legislators were joined by Danny Kanso, a policy analyst with the Georgia Budget and Policy Institute, a non-partisan organization.
McLaurin said the state House of Representatives had already worked out a proposed budget with 4% cuts in 2020 and planned to cut the 2021 budget by 6%.
“That was already sending all of our agencies in a scramble,” he said. “For consideration too, in terms of per capita expenditures, Georgia is one of the thinnest, leanest spending states in the whole country. So, there’s this idea that there’s a lot of fat to trim. Well, not really.”
The state Senate will reconvene on June 8 to consider those proposals. A conference committee will work to create a budget both the House and Senate can support before it’s sent back to the House for a vote and then on to Gov. Brian Kemp for his approval.
“We started this year stretched thin and we are now moving into a place where we are going to make painful cuts no matter what,” McLaurin said.
Kausche said the 14% cuts will require probably 1,000 layoffs and more than 1,000 people being furloughed.
The state’s K-12 schools face $1.5 billion in austerity cuts if required to cut 14% of the state budget. Kanso said the university system and technical college system would lose $360 million through cuts and have to eliminate or keep vacant more than 2,000 positions.
She said the Fulton County School System anticipates being underwater financially for the next five years with the upcoming budget cuts. The state is already short 3,000 teachers in Georgia, with much of the need in Fulton.
Kanso said the final budget will depend on Kemp’s latest revenue estimates.
Kanso offered ways to deal with the lost revenue that weren’t limited to cuts. He suggested the state increase its tobacco tax from 37 cents per pack of cigarettes to match the national average of $1.81 per pack. That and taxing vaping products similarly would raise $600 million, he said.
Medicare in the state spends $658 million annually for smoking-related illnesses, he said. Raising the tax might have residual benefits by causing tobacco users to cut their use.
By closing other “loopholes,” the state could generate another $200 million in revenue.
He also said the state should get rid of tax credits of questionable benefit for the state, such as the film and TV tax credit. Only 12% of the production companies are from Georgia, he said, which means non-residents are getting the tax break with no benefit to the state. Eliminating the tax credits could bring another $500 million in revenue for the state according to Georgia Budget and Policy Institute estimates, Kanso said
Kanso said the state’s amended budget for this fiscal year cut $159 million, eliminating 1,255 vacant positions in some agencies to accomplish it.
A $3 billion to $4 billion budget shortfall projection led to appropriations chairs and the governor’s budget director to call for the 14% in cuts.
“The vast majority of our state funding comes from the income tax,” Kanso said.
But with record high unemployment — more than 40% of the workforce filed an initial benefits claim — the revenue isn’t coming in.
“We are not going to cut our way out of the pandemic,” Kanso said.
He said the state’s “rainy day fund” reserves were up to $2.7 billion, with about $100 million already used for coronavirus spending. That fund can cover shortfalls in the last month of the fiscal year and be used to mitigate budget cuts in the next fiscal year, which starts July 1.
McLaurin said that anybody who opposes an increase in revenue should defend why they’d rather cut basic services instead.