State’s tax picture murky

tfain@macon.comNovember 17, 2009 

Georgia taxpayers worried about a tax increase next year as state government grapples with falling revenues can probably rest a bit easier: There doesn’t seem to be an appetite for it among the Republican leadership in control of the Legislature.

But state employees and those who depend on state services? They might need to worry. More furloughs and cuts may be on the way, though the state’s economists are optimistic that a revenue rebound is on the horizon. That horizon may be months away, though.

There is a chance some state fees could increase as departments try to scrape in extra money to offset the cuts that have stripped about $3.7 billion from the state budget during the last year or so. Plus, any no-new-taxes promise doesn’t include a potential new sales tax to fund transportation projects, but that measure would require voter approval through a referendum.

There’s also a chance that the Legislature will sign off on a new $10 fee for vehicle tags. That measure already has passed the state Senate, and it will await action in the House of Representatives when the Legislature begins Jan. 11. The money would ostensibly help fund hospital emergency rooms and ambulance services, although there’s no guarantee so far that’s how the money would be used or that the fee will pass at all.

But when it comes to income, payroll and general sales tax rates, the Republican majority is looking to roll things back, not jack them up, state leaders said. A series of job tax credits emerged during the last legislative session, but Gov. Sonny Perdue vetoed them largely because a rollback in the state’s capital gains tax was paired with them. Those are expected to come up again in the next session.

Some Democrats say the state needs to look at new revenues, but they’re in the minority at the state Capitol. The Georgia Budget and Policy Institute, an independent think tank, has been calling for a tax increase for some time now.

The group seized on the latest state revenue figures, which made October the state’s 11th straight month with declining revenues when you compare each month to the same month of the previous year. The institute called this further evidence that “the governor and General Assembly must look to raise revenues, as a majority of states have done.”

The institute also pointed to expected future budget cuts and the expiration of the federal stimulus funding that is propping up the current state budget and will help with the 2011 budget. The stimulus money runs out in 2012. Executive Director Allen Essig has repeatedly said the state has “a revenue problem and not a spending problem.”

Several Middle Georgia legislators weighed in on whether there is a realistic threshold that state revenues could fall beneath that would lead them to support a tax increase. State Rep. David Lucas and state Sen. Robert Brown, both Macon Democrats, said the state is already past that point.

“I just don’t think we can cut any more,” Lucas said. “I think what you’ve got to look for now is raising taxes or new ways of raising revenue.”

OTHER EFFICIENCIES

But area Republicans ranged from emphatically against new taxes — with the possible exceptions of the transportation tax and fees to fund trauma care — to simply saying they’d rather look for more efficiencies.

“It’s a fair question,” said state Rep. Allen Peake, R-Macon. “At some point you do wonder, ‘What is the minimum you can go to?’ But tax increases are no way to fix a recession.”

Said state Sen. Cecil Staton: “I do not subscribe to the theory that state government has cut all it can cut. ... It will be painful, but that’s what we’re elected to do.”

Staton, R-Macon, has supported at least one new tax or fee, though: The $10 vehicle tag fee to improve the state’s hospital trauma system. That’s an issue he’s worked on for several years now.

State Rep. Larry O’Neal, a Warner Robins Republican who is chairman of the House Ways and Means Committee, said he sees more cuts and “a far more aggressive tax collection methodology.” O’Neal said he wants the Georgia Department of Revenue to hire more auditors. He also said the department is implementing new technology to better zero in on tax scofflaws.

That includes a pilot system implemented in Hall, Chatham, Lowndes and Cherokee counties to compare local business license records with state sales tax records. Already a lot of inconsistencies — businesses that pay taxes but don’t have a license or vice versa — have been found, O’Neal said.

He said he’s looking for the Department of Revenue to make some high-profile busts of retail owners who don’t turn over all the sales taxes they collect to “change the subculture” of fraud and abuse. O’Neal said he thinks there are “hundreds of millions” going uncollected either because of fraud or accidental underpayment.

The biggest change may have to do with sales tax collection methods. The Department of Revenue collects those now, then sends local governments their share a couple of months later. There’s a push to let local governments hire private companies to handle those collections or at least to routinely audit collections.

Alabama moved to such a system and drastically increased its collections, supporters of the system in Georgia have said.

That includes state Rep. DuBose Porter, D-Dubliln, who is the minority leader in the House of Representatives and a candidate for governor.

Porter has been pushing this change hard, and there appears to be bipartisan support for it, though the measure stalled during the last legislative session.

State Reps. Nikki Randall and Bubber Epps, both Macon-area Democrats, said that should be a top priority.

Lt. Gov. Casey Cagle’s office, which exercises a lot of control over the agenda in the state Senate, was emphatic on the tax issue.

His spokeswoman said that “the lieutenant governor has never supported a tax increase and continues to believe we should cut government spending before taxing families in this economy.”

To contact writer Travis Fain, call 744-4213.

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