What’s A Billion Dollars Between Friends?

I’ve been talking with a friend of mine who has asked me to open a discussion on the current budget work going on in the General Assembly. He believes we’re not making clear the true budget picture and magnitude of the cuts the state is facing.

I’m still facing a huge backlog of posts, so I’m going to use his numbers here. Feel free to challenge, refute, clarify, or call total BS on them if you have other data, but his points are this:

1) The budget submittedd to the General Assembly by the Governor assumes a 4% growth in revenues, yet there is currently no evidence of pending growth. The difference if revenue is actually flat for FY 2011? About $400 Million.

2) Perdue’s budget assumes that the Feds will put between $300 and $400 Million of extra stimulus/aid money that has not yet been drafted, much less passed by Congress, and

3) Perdue’s budget assumes $300 Million of expenditures will be financed by a state bond package. I think this is fairly common, but it is something we used to complain about when we were in the minority party.

The significance of the above is that some members of the General Assembly believe they need to be preparing for an actual 2011 budget that is $1 Billion short of Perdue’s estimate of $18.2 Billion.

For comparison’s sake, let’s throw in what’s going on in Louisiana, where potential Presidential Candidate Bobby Jindal has proposed a 19% cut to his state’s budget, from just under $30 Billion to just over $24 Billion. An impressive cut, but Lousiana still has a budget with $6 Billion more spending than Georgia.

Lousiana has a population estimated at 4.4 Million. Georgia’s is 9.7 Million. Yet LA spends $6 Billion more. I’m wondering if the myth of “fat” in the Georgia budget that our leaders have run on for years is headed for the scrapheap. Running against government waste is easy when you’re a member of the minority party. Running an actual government is hard. And costs money.

Let’s get moving on zero based budgeting so we can actually determine the services Georgia needs to deliver, the most efficient way to deliver them and required costs, and then determine the most fair and effective way to tax ourselves to pay for the amount of government we need.


  1. SVT says:

    I sat in on the Public Safety Appropriations Subcommittee. They are going to be making some serious cuts…the Chairman kept saying these are just tough times, we all have to cut back. My question is when are they going to draw the line? They are willing to compromise by cheapening our education system, slashing the elderly and poor from services, and cutting back on public safety…where is the compromise on generating revenue in addition to making some needed cuts???

    I support these revenue generating solutions:
    * HB 928/HR 1109 removes the sales tax exemption from lottery tickets and dedicates the new revenues to K-12 education.
    * HB 1066 adds a temporary one percent surcharge on income over $400,000.
    * HBs 1065, 1067, and 1068 would temporarily reduce the value of tax credits by 15 percent.
    * HBs 982, 983, 986, 1093, and 1137, among others, improve tax collections through electronic data management, coordinate information sharing between state and local governments, and close a tax loophole.
    * HB 39, which would raise the cigarette tax by $1 a pack, remains active from last session.

    • Dave Bearse says:

      Tax increase? Blasphemy!!!

      A story in Sunday’s AJC indicates it’ll be a struggle to eliminate any programs.

      The GOP: We’re for eliminating programs, so long as its Democrats that actually have to do it.

      • Mad Dog says:


        I love the comment. However, the GOP doesn’t want the Democrats to eliminate programs. The GOP wants to blame the Democrats for not doing it.

        It works better if you have an idea and your opponent has to carry the blame for the idea not working.

        • Dave Bearse says:

          I was trying to poking at a GOP that seems to talk alot about eliminating government programs, agencies, etc, until they’re actually in a position to do so.

          There was little such talk talk or action in Washington 2000-2006. Major new agencies (TSA, Homeland Security) and programs (Medicare D) were in fact created.

          Little such talk and no action in Georgia since ’02 either, even these past couple of years when billions have had to be cut. The Gold Dome / Guv created new agenices (Driver Services) and programs (special ed vouchers, timber company property tax breaks).

          Not saying the new Washington and Georgia agencies and programs are good or bad. Simply saying that GOP “small government” has become about as non-sensical as “local control” and “fiscal conservatism”.

  2. Clone Of B. Plyler says:

    1) No revenue growth should be assumed. Deal with the hard facts.
    2) We would do well to reject the stimulus money, even if it comes again. It skews the real numbers.
    3) Any future state bond revenue should be used for debt reduction or rainy day in 2011.

    Zero base budgeting would be excellent. However, the budget makers have to have the same set of priorities in order for it to be useful. That’s the major problem in a political arena, but I wish they would adopt it & try it.

    • Medic8310 says:

      GA ranks #50 in Revenue per capita! We don’t have a spending problem so much as we have a revenue problem. Our gov’t should be focusing on increasing revenue just as much as cutting the budget.

      • hewhoone says:

        Medic- Where do you get that #50 ranking from? I recently saw in the AJC that Ga had the 15th highest state/local tax burden among US states.

        The numbers aren’t mutually exclusive but I would like to know where your number comes from to sort it out.

  3. The fact that so many state and local Republican budgets are being propped up by federal funds (including “stimulus” funds) while the local budgetwriters rail against the feds should be a scandal but isn’t because Republicans seem to get away with the hypocrisy.

    On to comparing Louisiana to Georgia, it’s tough to do a straight comparison – does their state pay for more services at the state level that are delivered at the parish level, whereas Georgia requires their counties to pay for more of the services that they deliver? They have a bigger coastline with a lot more oil on it, does their budget include taxes related to those industries (which are then spent on those industries?) or pass thru money from the feds for national security spending?

    For what it’s worth, one consistent thing Perdue and the Republicans have done is try to shovel off more spending to the local level through things like QBE cuts. The logic there is that the state should reduce the minimum standard (and payment) for local education and then let a place like Cobb (which can afford it) make up the difference locally while a place like Stewart County (which maybe can’t afford it) will just have schools that get worse.

    So it’s important to remember that in Georgia when they “hold the line” on the budget taxpayers might not be saving any money, just paying more to County X than the state. Jindal might be doing the same thing if he’s just passing the line on tax increases to the locals.

    • Lifetime367 says:

      Are you suggesting that it’s a good idea to pass the buck by enacting more unfunded or underfunded mandates for local governments? local government officials (county commissions, school boards and city councils) have enough problems without having to deal with the problems that the state legislators are now so often kicking down to them.

      • I don’t know how you could read that comment and come to that conclusion. For the record I am accusing Perdue of having done exactly this for the last 8 years and it is wrong.

  4. John Konop says:

    If the above is true I have a few issues:

    1) Tax revenue projection on overly aggressive growth projections is how get on this mess!

    2) Projecting revenue on bill not even proposed yet is once again very aggressive. Also how can you use a bill not even designed yet for on going operating expenses when you have no idea if it is one time gain, any triggers that could cost the state money…….?

    3) If you got one time gain for selling bonds how can you use it for on going operating expenses in a budget?

    It seems like this budget is being used to pass the problem onto the next Governor.

    • John,

      My understanding is that there is a real and serious debate ongoing in state government about the future of the economy: 1 – We have bottomed out and the economy will begin its slow recovery in about 12 months; or 2 – We have hit a temporary plateau and we will continue to drift lower until 2012 or possibly 2013 and then begin a recovery.

      I am of the opinion that much depends on what the federal government does. Little can be done to make things better in the short term other than reaching the conclusion to NOT move forward with the President’s plans on health care and cap and trade among other things. This formal announcement of inaction would spur small business to expand by removing the threat of increased government regulations and out-of-control fuel cost hikes.

    • But a lot of negatives could happen at the federal level. I’m convinced that any further increases in debt run the real risk of increasing the interest rates on future US bonds.

      • John Konop says:


        I am bit more optimistic about the economy. Banks will have to start lending again slowly and that will spur growth at a low rate by no later than the third or forth quarter. But not a yearly 4% growth rate and the budget should face reality.

        The biggest economic problem I fear is Medicare, and both parties refuse to deal with the issue. The truth is we pay out 3 dollars in service for 1 dollar a recipient paid in. No one argues this will BK the country in 10 years if we do not deal with it.

        The Democrats think we can afford it because of how much money we spent in Iraq and the Republicans yell death panels if we dare cut back on this unfunded entitlement. Also the Medicaid portion will overwhelm our local budget in Georgia.

        Obama was right about the abuse and waste but, he was wrong about using it to pay for his healthcare plan. And he did not tell people the truth even with waste and fraud we need major adjustments in fees, deductibles……..or this problem will overwhelm our economy. And the GOP Senior Bill of Rights was just like Medicare part D another promise with no money behind it, and a future ticking economic time bomb.

        But like many issues both sides get elected by telling us what we want to hear not the hard truth. And that is also why this budget bothers me. You cannot fix a problem unless you are adult enough to deal with the facts.

        • John,

          You may be opposed to Obama’s HCR bill but it’s the only bill out there that offers serious cost containment reforms, and a lot of these payment reforms will be done through Medicare (and the bill’s authors hope that private insurers will follow their lead, which is often the case).

          So in a sense, Obama’s bill cuts nearly a trillion dollars in wasteful medicare spending and tries to leverage that money to reform the system and save even more.

          Ken in Eastman: I guess if your idea of a small businessman is someone who runs a hospital or coal plant than that would be true. I’d have to imagine though that on balance, people that want to start a small business probably don’t pay a lot in taxes (yet, until their small business becomes successful) so wouldn’t be paying for HCR but would benefit from portability on pre-existing conditions and subsidies from the gov’t to buy insurance. I personally know a lot more people that are in a job they don’t like because it has healthcare that they would lose if they left the job than those who WANT to start a small business but are worried about paying taxes if they are successful. What a false choice.

          • John Konop says:

            Chris Huttman,

            In all due respect taking money from an upside entitlement to create another entitlement is just irresponsible. Why not first fix Medicare since nobody argues if we do not it will BK our country?

          • Chris,

            Talk to a small businessman sometime. A legitimate concern with this administration is government mandates on businesses, in this case the concern is mandated health coverage, so yes this applies.

            Many small business owners have a very large deductible for their personal health insurance ($5000 or $10000) so they can reduce premiums but still be covered for catastrophic illness. Obama’s plan requiring health insurance would not have allowed such high deductibles, so their personal expenses would have increased dramatically.

            Cap and trade would drive up energy costs and increase unemployment taking away markets and increasing a small business’s vulnerability to foreign competition. Before hiring additional people to expand, the responsible thing to do is to determine if there will still be a market in the near future.

            Mostly this administration has demonstrated its complete ignorance of business and the uncertainty of what they will do and its accompanying increased risk are the real problems which is why I said it needs to be a complete abandonment of bigger government.

            Your friends need to understand that there are tax advantages to owning a small business, but that would be the least of their worries. The hard parts are obtaining capital and becoming profitable so that there are tax concerns. I think you and your friends should do some research.

            As for Obama’s plan to contain wasteful spending by one government agency by replacing it with spending by another government agency, there is no reason to believe there would be any greater efficiency. Why should there be?

          • Mad Dog says:


            Chris is right on this one. Most NEW businesses do not make a profit in the first year. Maybe not even in the first four.

            And most small businesses organize as a limited liability corporation.

            Don’t you know how that works?

          • Mad Dog,

            Yes I do understand. I never said or implied I expected a business to turn a profit the first year.

            The problem is that this administration continued push of government interference in the private sector has paralyzed many small businesses. That is what I have been saying.

            An LLC means nothing if you are not making a profit and again, that has nothing to do with anything I wrote.

            try again.

          • Mad Dog says:


            I’m very sorry the world does not revolve around you. I commented about what Huttman said.

            “I personally know a lot more people that are in a job they don’t like because it has healthcare that they would lose if they left the job than those who WANT to start a small business but are worried about paying taxes if they are successful. What a false choice.”

            But to your point that our government has ‘paralyzed’ business. LMFAO!

            Businesses ran out of control in the financial sector. THAT paralyzed the risk adverse businessman.

            A good read for you would be “Derivatives and Debt: The Market as God and Marketing as Proselytizing. ” Short read but good.

            And, “The Reform of the Credit Rating Agencies:
            A Comparative Perspective.”

            I especially recommend the discussion of the Lottery and Vegas as the pre-2009 business model. But not from the point of view that the Lottery and Vegas make money.

            From the point of view that business expect ‘winnings’ from a tiny risk, i.e. gambling.

    • Mid Georgia Retiree says:

      In 2003, when Perdue took office, he found a huge shortfall in the budget left by his predecessor. He had to make huge cuts in the budget. I’m not a Perdue fan, but I will say that he at least is not sitting up there at the capital saying that everthing is rosy.

  5. fishtail says:

    There is NO MONEY in the State’s reserve fund. Sonny spent that last year. Georgia has issued $2 BILLION in General Obligation and DOT bonds during the last 2 years. The State is nearing its legal limit on bond issuance. So it appears that Sonny is trying to tread water until he can go back to Bonaire in 10 months. Whoever is the next Governor will be inheriting a disaster.

    • Lifetime367 says:

      Yep. And it gets worse. Lottery revenues have are not keeping up with lottery expenditures and this Governor wants to spend lottery revenue on things other than HOPE scholarships and Pre-K. He’s dipping into lottery reserves already. So not only will the next Governor inherit a shaky bond rating and a depleted reserve fund, the ottery will also be in trouble.

  6. Technocrat says:

    LA receives approx 1.6 Billion in severence [depletion] and petroleum/gas sales taxes.
    GA is missing their [LA’s] Soft Drink, Marijaunana, and Hard Drug Tax?

    Where is our Special Tax on Non High School Graduates under 62 [1.3 million in GA]. Pay tax, leave state or go to jail–GED classes?

    Non recourse [no damage suits] Vitamin D blood testing and supplementation on every human who receives state financial/medical services.

  7. Progressive Dem says:

    A budget consists of two parts – revenues and expenditures. The budget should be balanced by examining and adjusting both sides.

    Our tax policy is antiquated and based too heavily on a manufacturing economy and not on a service economy. Our fee structure needs a comprehensive review. The sales tax collection process is apparently missing millions in unpaid sales taxes. And we’ve given special breaks to all kinds of businesses and individuals, who are virtually exempt from state income, sales or property taxes. We need to understand which tax breaks are doing what they are intended to accomplish, and suspend ineffective tax breaks. They are special favors that cost the rest of us money. Nobody knows if the tax breaks we pass have a positive impact on the economy. Where’s the cost/benefit analysis?

    Nobody wants to pay more in taxes, but we can afford to pay more. In 1990 state revenues accounted for approximately 6.5% of personal income. Today revenues are 4.5% of personal income. Georgia needs to look at our entire tax structure. We need to increase the sin taxes on tobacco and alcohol. The gasoline fuel tax is essentially a user fee, but it doesn’t provide sufficient revenues to maintain our infrastructure, so we need to either adjust or find another funding source for transportation. We need to move towards taxing services (dry cleaning, DVD rentals, nail salons, carpet cleaning, yard services, dog grooming, etc.). We need to adjust the income tax rates to reflect the differences in income spread – we essentially have a flat income tax, and that is not by design.

    The budget problem is not the result of inefficiency and fraud. Georgia is highly ranked in the southeast and nationally as one of the most efficient governments. We’re not going to find the solution to the deficit just in “cutting the fat”. Georgia has to take a more balanced approach and look at the revenue side of the equation.

    • John Konop says:

      Progressive Dem,

      The problem with your theory is wages are falling because we are a service based economy which consumes more than we produce. And between the underemployed and currently employed ,tax increases will be tough to swallow. I do agree we have a revenue problem based on what people want. That is why a user fees makes more sense to make up the difference in tough times.

    • IndyInjun says:

      It might help with revenue collection if the honest taxpayers who pay use tax on untaxed purchases could actually have a form to file.

      The correct form was Form ST-3USE. The form and its instructions are nowhere to be found despite instructions that it is to be used for self assessing and paying use tax.

      Strangely, this form went missing about the time that this commenter made an issue over use tax payments in May or June of last year.

      I figure that auditing for use taxes would increase revenues $400 million to $500 million a year.

      This is not a new tax, either, but an existing tax that DOR has not had the staffing to pursue.

      Now it doesn’t even have the form.

      There are good folks at Revenue, a lot of them. All they need is more staff and the political support to do the unpopular.

    • hewhoone says:

      Progressive- I have never before heard that Georgia is highly ranked as “one of the most efficient governments”. Please cite your source.

  8. Lee Howell says:

    Assuming a growth in revenues at this point makes the same mistake as was made with the previous budget…and when you are 2 weeks into the fiscal year and “suddenly” discover you’re $1 billion in the hole, you’ve screwed up pretty badly.

    Too bad none of us, particularly those of us who are state employees, seem to be holding the General Assembly responsible for last year’s mistakes or this year’s pending mistakes.

    • brian.holcombe says:

      it is the Governor’s responsibility – it’s time we started calling Sonny by his real name – George – and holding his legacy accountable for messing up this state!

  9. Lifetime367 says:

    Yep. We have a revenue problem. And user fees are the ticket. We should raise the cigarette tax like everybody else is doing. It creates a disincentive for unhealthy behavior and it raises much needed revenue.

  10. Progressive Dem says:

    I’m sure you know that although the service economy includes low paying jobs, it also includes the professional business services that metro Atl provides to the region: IT, legal, consulting, etc. While billings are down, these are high paying jobs. When we invest, we diversify to spread our risk. Government revenues should be diverse as well. User fees don’t work for everything.

    • John Konop says:


      Since we have followed the service based economic theory and stop producing the biggest winner is China not us. Please help me understand why you think we can consume more than we produce and tax our way out of this problem?

      The truth is, as I warned years ago we were living on debt, not production, and that consumption from debt was driving our economy. Without the debt you have to produce if you want to see real wages go back up on a Macro. And trust me, the crazy leverage days are over.

      At the end of the day both sides are promising things they cannot deliver. And you will feel it big time sometime later this year ie 4 day school weeks, more kids in a classroom…….

      I have news for the GOP tax cuts will not fix this problem. Targeted tax cuts like hiring people, capital gains could help but lower fees, sales and income tax would kill us. That is why people most associate the cost of the government service with a price, and than you will find how much they want it and control cost.

      Medicare is a classic example, most people have no idea they get 3 dollars in service for 1 dollar they paid in. We cannot afford to run most government services this way anymore ie post office, licensees, inspections, libraries, hall of fame buildings…….

      • Progressive Dem says:


        “help me understand why you think we can consume more than we produce and tax our way out of this problem?” Those are your words/conclusion; not mine. The US economy absolutely needs to produce goods as well as services. Our state revenue collections should reflect the shift in our economy towards services, and begin to collect taxes from this sector. The poiint of my original post is that to solve the budget shortages in Georgia, we need to examine revenues as well as expenditures. Cutting our way into a balanced budget is a myoptic view.

        • Mozart says:

          Perhaps they should start taxing political campaign contributions. Say, 15% of every dollar contributed to any political campaign goes to the General Revenue fund. After all, we gotta pay for these guys’ names being on the ballots and running elections for them. They should have to pay something into the system for their privileges of running for office, right? That’s “fair”, right?

          • ByteMe says:

            But but but Money is Speech! So you shouldn’t be able to tax it! You should only tax making money and things you buy with money and … oh, wait…..

            The rules are so confusing.

  11. Jawgadude says:

    Keep an eye on Israel! Intelligence reports in recent days point to something major happening between March 15 and May 15. An Israeli strike on Iran will shut down the Persian Gulf, and the U.S. economy will crash as gas hits $10 to $12 per gallon. This may be the catalyst that crashes the current world money system and ushers in a new currency standard.

    • Jawgadude,

      I don’t know about when but Israel must protect itself in order to survive. To allow a nutjob like Mahmoud Ahmadinejad and his cronies access to nuclear weapons would be a huge mistake that would probably result in the destruction of Israel.

      A shooting war between Israel and Iran would drive up the price of oil drastically. I don’t know if it would reach $10 – $12 per gallon, but it would likely exceed the $4 per gallon we had here recently.

      Drill here, drill now may not be enough of a difference but it beats the heck out of doing nothing.

      • Mozart says:

        I’m not doing “nothing.” I’m erecting a windmill. Then, when there’s no wind, I’ll hire the neighborhood kids to take turns climbing onto the blades and then having them spin to generate electricity.

        Ken, my plan is foolproof.

      • benevolus says:

        How does “drill here, drill now” change anything? It’s not like the US government owns the oil. That oil will be owned by Shell, BP, Citgo, et.al, and they will sell it to the highest bidder regardless of where they pumped it from.

        • benevolus,

          How does “drill here, drill now” change anything?

          It makes us less dependent on imported oil is a good enough answer, but . . .

          It provides JOBS at a time we desperately need them.

          It will reduce costs when there is a fight between Israel and Iran and that part of the world becomes even more unstable.

          In the case of off-shore drilling in the Gulf of Mexico, we are securing our own resources that other countries are attempting to exploit.

          Good enough?

          • benevolus says:

            How does it make us less dependent on foreign oil? If Aramco owns the lease and does the drilling, they don’t have to sell it to us or sell it here at all. If Chinese brokers bid higher for it, the oil tankers will go there and we’re just as dependent as we were before the drilling frenzy.

            How does it reduce costs? Any new drilling would add something like 1/10 of 1% to overall capacity, and it wouldn’t even hit the market for a few years anyway.

            Securing our own resources? How does that work? How do we keep other countries from exploiting our resources?

          • Directional drilling from current platforms could put new oil in the pipelines in as few as 18 months.

            I am aware and glad the US government does not own the oil.

            Less dependent on foreign oil means we have domestic production, so we are less vulnerable to the oil cartel. It also increases domestic supplies in case of a middle eastern war.

            Yes, companies own the oil and they don’t have to sell it to us, but they will. Where in the world did you come up with a 1/10 of 1% of capacity? Between off-shore drilling, Alaska and directional drilling off the California coast where oil platforms already exist we would make a significant difference.

            Let’s also not forget that it would increase natural gas production, as well.

            So you believe it’s not worth our while to drill for oil? Sorry, but your better idea is to do what?

          • John Konop says:

            Energy prices have a major effect on our economy. It seems like we are very close on battery technology for cars and trucks. Also a big gain would be home use of energy, and wind, nuclear, natural gas and solar seem fairly close as well.

            I think we would yield way more long and short term from the above. From what I read it takes a lot of energy to get to the oil. The above from what I read are way more efficient long and short term,

          • benevolus says:

            “domestic production”, does not equal “less vulnerable to the oil cartel”. There is no connection.

            “It also increases domestic supplies”. Not really.

            “they don’t have to sell it to us…but they will.” Sure, if we pay more than the Chinese.

            My better idea is to use less gas!

          • benevolus,

            Last time I looked, the US was not a part of OPEC.

            Use less gas, how? The most obvious answer is to do as you suggest, allow gas prices to climb to $6 or $7 a gallon while we wait on the inevitable showdown between Israel and Iran because our current administration seems to be pretty much anti-Israel.

            Sorry, but I just don’t see that as a viable answer.

          • Ken – another way to use less gas is for people to start migrating to alternative fuels such as biodiesel. I personally run biodiesel in both of my trucks as well as my tractor. In winter, I have to run a B-20 mix due to colder weather, but in spring through fall I run a full B-100 biodiesel. It’s better for the environment (doesn’t contribute as much to that gray smog you can see hovering in Atlanta during summer) and doesn’t require any imported petroleum.

            Another thing people usually neglect to think about is the amount of petroleum that goes into other things we use every day. Think shampoo, wax candles made from paraffin wax, asphalt in driveways and roads, plastic packaging, makeup, pesticides, detergent, etc. That’s a helluva lot of petroleum. Just cutting down buying things that use plastic packaging not made from bioplastics can help reduce our oil dependency. If people really want to get serious about reducing the amount of oil we import, they’ll start to seriously consider changing their everyday habits and products.

          • David,

            Good points. Bio-diesel works well and people do not think about all of petroleum used in plastics and vinyl.

            I would also like to see us begin manufacturing some autos that use natural gas instead of oil to reduce our dependency on petroleum.

            Or, here’s one: Wal-Mart could begin to equip its parking lots with electrical outlets. People could swipe a credit card and charge their electric vehicles for pennies while they shop. It would provide a known charging locations throughout the country, increase Wal-mart’s business and possibly be a huge factor in getting Americans to re-consider electric cars.

            Just a thought.

          • benevolus says:

            I’ve thought about a similar thing for MARTA, Ken. Drive your electric car to the train station and leave it plugged in for the day. They could even have electric “rental” cars that you could pick up and drop off at any MARTA train station or park and ride lot.

  12. IndyInjun says:

    This may be the catalyst that crashes the current world money system and ushers in a new currency standard.

    I agree with the former.

    Establishing a world currency and world government is certainly the dream of globalists, but it ain’t gonna happen. Just look what is happening with the Euro.

    • Ambernappe says:

      However, this is exactly the plan under consideration by the UN, and endorsed by the President – google “The Millenium Plan” , a 3000 page document submitted by Professor Jeffrey Sachs of Columbia University – in short, Global Government which will obliterate the US as we know it unless the Progressives are stopped.

  13. Technocrat says:

    A year ago I pointed out that Georgia only has a miniscule [$100k] bounty for the first producing oil well discovered in STATE. Since the possibility is VERY VERY high in the NW corner for Nat Gas why not cover both and raise it to 5 Million to get industry attention.
    More than 97% of Georgia’s electricity FUEL and home heat is currently imported to the State: COAL, Nat Gas, and Uranium.
    While”Alabama Reaches Natural Gas Production and Revenue Milestones” http://www.gsa.state.al.us/documents/misc_ogb/milestones.pdf

  14. Goldwater Conservative says:

    Has anybody here stopped to think that, historically, GA has had a low budget?

    We do, and have had, a very low budget for quite some time. Taxes were cut too much and we are having problems raising revenue, but GA has a low budget. There is not too much that can be cut without denying basic law enforcement, education and justice to many parts of the population.

    • Goldwater Conservative says:

      We need to find more revenue. Plain and simple.

      A new tax bracket of 7% should be created that applies only to the top 3% of income earners in the state. Sunday sales of alcohol and the complete decriminalization of marijuana should be legislated as well. The state might also think of a small V.A.T.

      Any two of these will raise revenue significantly.

      Also, I would like to see a retroactive tax increase of around 1000% that covers profits made from out of state land purchases in 2004.

      • John Konop says:

        Goldwater Conservative,

        In all due respect, do you not think the problem is people get government services without understanding and or caring about the cost? Medicare is the biggest problem we face and nobody wants to deal with issue and we cannot afford the subsidy. Unless we put an appropriate price against the cost of a service you will not change the behavior. That is why user fees in general make more sense.

        • Progressive Dem says:


          People want government to perform certain functions they can’t provide on their own. The reason they want government to provide them is because they can’t buy or accomplish them on their own. National defense, police protection, courts, public health, old age pensions, transportation, safety nets to eliminate hunger, homelessness, unemployment and now health care.

          User fees are not the only solution, but they offer a unique opportunity for transportation. It is now possible to track how many miles a vehicle travels and have each car owner billed for their highways miles driven. Can you stand this kind of user fee precision?

          • John Konop says:


            You are making my point! For example, people want Medicare but anyone will tell you paying out 3 dollars on 1 dollar paid in will BK our country. I am not saying everything needs a user fee, but we cannot afford the current entitlements. And you cannot tax your way out of the problem.

          • John Konop says:


            Do not kid yourself. this problem is not just in Atlanta. We are facing this with the VA, SS, Medicare, county, state, city….. As I said we do not have the money for what people want.

            Reed warns rising pensions threaten city’s future

            AJC… Without sweeping changes, Reed said the city will be able to do little aside from policing, fighting fires and picking up trash. It also has hurt the city’s bond rating, which could force Atlanta to pay higher interest rates to borrow money to fund various projects.
            “[Pensions are] putting the long-term health of our city in jeopardy,” the mayor said in a recent speech to the Buckhead Coalition.

            The city is projected to spend about $136 million on pensions in the 12-month period that ends June 30. That’s nearly as much money as budgeted to the Police Department, about $154 million….


          • Mad Dog says:


            User fees have never been a solution. Just a transfer of government responsibility.

            We have developed taxation into an art form. Now nobody knows what they pay in taxes or where the spending power comes from.

            (dang that was an awkward sentence)

            The people who pay sales taxes do not always have representation where they shop.


        • Goldwater Conservative says:

          I have never polled a list of Medicare recipients to ascertain their level of knowledge about the costs of their services…so I will not make an qualified remarks about whether it is a problem or not. I will say, however, that such a phenomenon as this, which I do believe is rampant (to make sure we are on the same page, I am refering to people not understanding or caring about the cost of government services), is not exclusive to “welfare” type programs. In 2001 and 2003, President G. W. Bush proposed (indirectly) and signed into law $2.5trillion worth of tax cuts and credits. Americans of all classes rejoiced (whether they should have or not) regardless of their medicare or foodstamp status, etc. That $2.5trillion dollars in tax “relief” was entirely funded by incurring addition debt, thereby adding to the deficit.

          That is a simple example. Fact is, a select few actually know what benefits (public goods) they receive from government and how much they cost. Many people that post comments here and are supposed to be politically in tune with what is going on are only in tune with events. Have you, Mr. Konop, sat down to determine your personal cost-benefit differential for federal regulation and enforcement of leather tanning treatments? How about the total cost to you for road signs and traffic lights…the energy infrastructure? Defence? Public Museums and parks?

          User fees do not make sense for many “welfare” and other entitlement programs because they are designed to be economic safety nets and/or OASDI.

          Sure, Medicare needs reformed. User fees is only putting off reform…it is a bandaid that will solve the problem on paper for a decade or two at best. Fact is, the baby-boomer generation is in for quite the poor reputation as far as American history will be concerned. They fought no great wars, they cut taxes too much, they increased spending too much and they caused another economic depression…in addition to maintaining a Cold-War infrastructure after the conflict ended. Medicare, along with Social Security, will probably be given a phasing-out time table in the next decade and replaced with something else…maybe nothing. Perhaps the Fed can just buy Florida and everyone without the means to retire on their own can go there to live out their days.

        • John Konop says:


          Andrew Biggs is a former Social Security analyst and Assistant Director of the Cato Institute’s Project on Social Security Choice. BTW David Walker former head of the GAO. uses similar math and points out the same problem for years

          Have Seniors Really Paid for Their Medicare Benefits?

          … Let’s start with a typical person who was born in 1944, began work at age 21 in 1965, and in 2009 retired at age 65 and enrolled in Medicare. Over the course of his life he paid the Medicare tax out of his wages (see here for historical tax rates). According to the 2009 Medicare Trustees Report, the average Medicare benefit per person in 2008 was $11,012. From this, we subtract the average Medicare premium of $1,288 to produce an average net benefit of $9,724. I’ll assume that this person collects the average Medicare benefit from age 65 through age 83 (his life expectancy as of age 65).

          But unlike Social Security benefits, which increase only to keep up with inflation, Medicare benefits grow in real terms. The Medicare Trustees project that health costs will grow around 1 percentage point faster than the growth of per capita GDP, which in turn they project will grow around 1.3 percent faster than inflation over the next 15 years. So I assume that real Medicare benefits will increase by 2.3 percent each year.

          To make taxes and benefits comparable, I convert each to present value terms, assuming a real interest rate of 3 percent. This means that taxes paid in the past have 3 percent interest added each year, to account for the fact that these taxes could otherwise have been invested. Likewise, future benefits have 3 percent annual interest deducted, to account for the fact that retirees must wait to receive them.
          So what do we get? This typical person paid around $64,971 in Medicare payroll taxes over his lifetime. Likewise, after netting out Medicare premiums, he’ll receive around $173,886 in lifetime Medicare benefits. The net? He can expect to receive around $108,915 more in benefits than he paid in taxes over his lifetime….


  15. DTK says:

    @ Icarus

    I didn’t read the comments, so I’m not sure if someone else mentioned this, but the Louisiana budget number you mention is for TOTAL spending by the state, which means both state and federal money.

    For FY 2009, Louisiana had a state budget of $14.7 billion and a federal budget of $14.9 billion. In total, the state spent $29.6 billion in FY 2009.

    By comparison, Georgia had a state budget of $21.1 billion and a federal budget of about $19 billion. In total, the state spent $40.8 billion in FY 2009.

    In Georgia, when the Legislature kicks around budget numbers they only talk about the state’s share, and that’s what the media reports as the “budget.” I’ve noticed that in other states, when the Legislature talks about the budget, they use the total amount of spending (state + federal) as the “budget” number.

    It appears Lousiana goes with the latter description of the budget. So, Louisiana doesn’t actually spend more money than Georgia does, although it appears they do spend more per capita.

    • Dave Bearse says:

      Higher LA state per capita spending is well beyond simple appearance. Louisiana has less than half as many people as Georgia does. Georgia’s state spending would be $30B or more if the two states had similar state fund per capita budgets.

  16. IndyInjun says:

    Why doesn’t Georgia collect the $100’s of millions in use taxes it is owed? It really isn’t that hard.

    Hire more auditors. Make people pay what they owe before passing new taxes or raising taxes.

    In years past, states like Florida and Virginia had more auditors in this state than Georgia did.

    Sometimes I think the legislature hates the very necessary function of collecting taxes.

    • Mozart says:

      Use taxes? You mean like pay taxes on stuff they buy off the Internets that they don’t pay sales taxes on now?

      • Yep, I think that’s what he means, though I’m not real sure how one would propose collecting those taxes. What, do you go around to everyone’s house one by one and ask what they’ve bought over the Internet in the past year, two years, whatever that they haven’t paid use taxes on? Do they ask to see receipts for everything someone has in their house and assume if they don’t have a receipt, that they must have bought it over the Internet and that they must now pay use taxes on it? Off hand, I don’t really see a good way of collecting those.

        • IndyInjun says:

          I don’t really see a good way of collecting those.

          Face it. There is no ‘good way’ to collect taxes from a taxpayer’s prospective. However, auditing and collecting unpaid sales/use tax is really quite simple. The taxpayer is sent a simple letter requesting his credit card purchase summary for the last year. The out-of-state vendors who collected no tax can be quickly identified, assessments made based upon estimated tax liabilities for the last 3 years, penalties added and interest collected. It is child’s play.

          The record-keeping requirement, ability to audit, and even power to estimate tax liabilities have all been affirmed by the courts.

          It just depends on a legislature down $4 billion in revenues having the willingness to hire the auditors.

          Furthermore, sales/use tax compliance is very low in Georgia because audit capabilities were allowed to atrophy. This is not a staff ability problem but a staff sufficiency one.

          Cross-referencing business licenses with sales/use tax returns was a long-needed effort and one that reportedly yielded results.

          One thing that is darned sure, Georgians should not be asked to pay new taxes when existing ones are being forgiven.

          Somebody needs to ask the Department why the simple form used for household consumers to pay use tax is no longer available on their website. The regular return, Form ST-3, is more complex and their FAQ’s page still references form ST-3 USE. The unavailability of the short form cannot be encouraging for those taxpayers seeking to do their compliance duty.

          • So you’re wanting to put the average citizen through even more hassle to pay taxes than they already are? People already have to file federal and state taxes, and now you want them to file state use taxes once a year? And on top of that to pay use tax for stuff a year at a time?

            So how are you going to determine the difference between an out of state purchase when someone is actually traveling to that other state vs. something they purchased over the Internet? For instance, what if I buy a case of wine while visiting Napa and I pay sales tax there… how will the state auditor know whether I purchased it there or whether I called to order a case and had it shipped to me?

            Sure, when I visit a restaurant my American Express card breaks the tip out separately online, but it doesn’t show whether sales tax was paid. My Mastercard and Visa don’t itemize period… other than the total charge for whatever merchant it was.

            I just don’t see this as being something that is easily do-able unless we require Internet merchants based in Georgia to collect sales tax on everything – even if they’re shipping it out of state.

          • IndyInjun says:

            Filing use tax returns is required by law. I do it. Why can’t everyone else?

            This state is down $4 billion in revenue. Collecting revenue never has been easy and never will be.

            Then there is the matter of equitable taxation of Georgia merchants versus those out of state. Selling tax free is an unfair advantage.

            The revenues are there. The law is there. Teachers will probably have to take 20% pay cuts before this is over. Why go increase existing taxes or come up with new ones when you have one that isn’t being collected?

            It would not take too many audits to get citizens to start doing their duty and filing use tax returns.

            As for any out of state purchases on a credit card statement there is generally sufficient information presentable on audit to clear those up.

            The Georgia Department of Revenue needs to hire more auditors and do everything possible to collect existing sales/use tax revenues.

            Compliance among business is even suspect.

          • So what you’re saying is forget about trying to cut waste out of government… we just need to step up our tax collection efforts – ya’ gotta spend money (hiring more auditors, continue to expand government) to make money, right?

          • IndyInjun says:

            So what you’re saying is forget about trying to cut waste out of government

            Dunno where you got that from.

            I think they need to cut the budget 20%, which probably ranks me #1 among those who see the need to cut more.

            I also think they need to make revenue collection more efficient and equitable.

            In short, I think you have to do both cutting and revenue enhancement, with greater emphasis on cutting.

      • IndyInjun says:

        Internet sales are probably the biggest source. Any tangible personal property that goes untaxed but is consumed within the business is taxable. There are lots of businesses that buy materials under an exemption certificate that is converted to a taxable use.

    • IndyInjun says:

      Dealing with deficits is hard when ‘growth’ states, like Georgia, are used to getting increasing revenue streams irrespective of how inefficient, careless, or even hostile that their legislatures got to the unpleasant duty of collecting taxes.

      This commenter is old enough to remember that HOPE scholarships were once restricted to A studends and that he protested to Ben Harbin when those requirements were relaxed, predicting that general revenues would shortly be needed to fund the largesse.

      Lack of discipline was prompted by the good years. Hopefully, lean years will prompt renewed discipline and efficiency.

  17. polisavvy says:

    In doing some research on this, I stumbled across an article which I think makes a good bit of sense. I thought you guys would like to read it. It’s found at: http://tinyurl.com/yccgcsk . It might not be the solution to the problems we are all facing with budget/economic concerns; however, it does give some fairly good suggestions on how the states can help themselves.

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