Slashing state services again will do lasting economic damage to Georgia

By Guest Columnist ALAN ESSIG, executive director of the non-profit, non-partisan Georgia Budget and Policy Institute

You’ve heard the old joke. The Georgia Legislature is back in Atlanta, so you better hang on to your wallet. But overspending by state legislators hasn’t been a problem for the better part of a decade. Lately we’ve become so tight-fisted we’re hurting ourselves.

Anyone who still finds the joke funny hasn’t been paying attention.

Lawmakers will soon consider approving a state budget that, for the sixth consecutive fiscal year, contains significant cuts to vital services. Unless the governor and state lawmakers take a fundamentally different approach, Georgia’s economic strength and appeal to employers are at risk.

Broad-based prosperity in Georgia depends on an educated workforce with 21st century skills; a regulatory and legal system that the business community can depend on; modern communications and transportation that efficiently move information, goods and people; a first-world health care system and a social safety net for those hurt by economic shocks. Over the past five years Georgia policy makers failed to invest in these basic building blocks of growth.

The dramatically decreased financial support for public education in Georgia means larger class sizes and fewer school days for students and pay cuts for many teachers.

Since 2002, K-12 inflation-adjusted funding per student decreased by 18 percent, while inflation-adjusted funding per student for the university system decreased by 54 percent. Cuts to the university system have resulted in shrunken curriculum offerings, the use of more part-time instructors and tuition increases that price too many promising students out of the college market. Such actions do little to improve education outcomes or improve Georgia’s long-term economic well being.

Budget cuts have also hurt the business-friendly climate of our state. One example: Georgia Supreme Court Chief Justice Carol Hunstein reports that backlogs in courts because of understaffing could harm the state’s ability to recruit businesses that don’t want to put up with costly delays on legal matters.

The 2014 fiscal year that begins on July 1 promises to deliver more of the same bad news. The gap between Georgia’s basic needs and its resources is about $1 billion. The governor is asking state agencies for additional budget cuts of 3 percent, excluding the K-12 funding formula.

Medicaid may be cut by 5 percent. Meanwhile, the state’s rainy day fund – the reserve against hard times – is at a dangerous low level. To significantly increase state reserves and avoid further service cuts, revenues would need to grow between 6 and 7 percent. That seems unlikely: Growth through the first five months of the current fiscal year was under 4 percent, and projections over the next 18 months aren’t much better.

Given that outlook, if Georgia continues the strategy of balancing the state budget by eliminating services year after year, the result will be a second-rate education system, a third-world healthcare system, and a fourth-rate physical infrastructure. This race to the bottom is not a race Georgia should want to win. Georgia needs to take a different path. It’s time to make significant investments if we are to have robust economic growth.

It means choosing additional revenue through comprehensive tax reform that enables the strategic investments necessary to sustain economic growth, create a surplus to grow the reserve fund and still keep our tax structure economically competitive.

We cannot cut our way to prosperity. With foresight and leadership our lawmakers can use the upcoming session of the General Assembly to lay the groundwork for Georgia to not only be a national economic leader, but to allow us to compete with the best the world has to offer. That is the race we should aspire to win.