Hufstetler to examine state tax credits
♦ Georgia lawmakers feel pressure from constituents to raise spending.
Georgia lawmakers are racing to revise the current year’s budget, aiming to produce a reworked spending plan as early as this week.
And Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican, is on a hunt for money that he says should already belong in state coffers. Hufstetler’s district 52 covers a portion of western Gordon County, all of Floyd County, as well as parts of Bartow and Chattooga counties.
He told a Georgia Budget and Policy Institute forum on Friday that he will propose a two-year study of the state tax structure, including billions in tax breaks that Georgia grants to business.
Hufstetler said he wants to examine “tax credits that just don’t make sense, but have been there, because, you know, there’s a lot of political pressure to keep them.”
The former Floyd County commissioner — instrumental in getting that county back on a sound fiscal footing — has repeatedly characterized tax breaks as an investment to grow the economy that should eventually show a return.
Also, the liberal-leaning GBPI continues to push an increase in tobacco taxes, which legislative staff say could raise $700 million a year.
But either of those efforts could be blocked in the House, where Republican Speaker David Ralston of Blue Ridge continues to oppose anything that could be called a tax increase.
Alternately, Gov. Brian Kemp could reach into the state’s savings account for the additional money being sought by various agencies.
Last year, he agreed to let lawmakers spend $250 million to prop up this year’s budget. But tax collections have been strong enough that the state now doesn’t plan to spend that money, and is putting more than $550 million back into K-12 schools, reversing the majority of $950 million in K-12 cuts. Noneducation agencies aren’t as fortunate, though.
“We’re holding $2.7 billion in a rainy day fund during a global pandemic,” said GBPI budget analyst Danny Kanso. “What does that say about our state’s values?”
House Minority Leader James Beverly told GBPI that Kemp should use savings to reverse the rest of the $2.2 billion in budget cuts lawmakers imposed last year.
“The very first thing we should do is repeal all these cuts, replace them and restore the budget,” the Macon Democrat said. “We have to do that, and we have the wherewithal to do that.”
But majority Republicans aren’t likely to dip that far into state savings.
House Appropriations Committee Chairman Terry England said Thursday that he has continued to urge Kemp to plan for the worst-case scenario on tax collections.
“You always manage to the risk,” he said.
The Auburn Republican said during budget hearings Thursday that subcommittees are supposed to make recommendations by Tuesday for the 2021 budget, which runs through June 30. The aim is to get the revisions agreed to earlier than usual, in case the spread of COVID-19 forces an interruption in the legislative session, as it did last year.
But pressure is building to increase spending in the proposed $27.2 billion budget that begins July 1. Kemp ordered most noneducation agencies to present budgets that propose the same funding as this year, when funding was slashed by an average of 10%.
Kelly Farr, Kemp’s budget director, told lawmakers Thursday that proposed budget is as “flat as a crepe,” emphasizing he meant flatter than a pancake.
Agency directors followed the Republican’s directive, but it was clear from several presentations that agencies see needs they can’t meet with current funds.
More money would increase mental health services, put more state troopers on the road, and augment public health functions hard-pressed by the coronavirus pandemic.
For example, Behavioral Health and Developmental Disabilities Commissioner Judy Fitzgerald on Thursday presented lawmakers with a list of six mental health challenges for the future, including completing Georgia’s duties under a settlement where it agreed to help more people to live in the community instead of institutions.
No price tags were attached, and she didn’t explicitly ask for money. But thousands of developmentally disabled adults are on a waiting list that the state is nibbling away at. Kemp proposes adding 100 more slots this year at the cost of nearly $2 million.
“The investments we’ve made are working, but we’re going to continue to need to build and enhance what we do, really to address what continues to be increased demand all around the state,” Fitzgerald said.
Senate Appropriations Committee Chairman Blake Tillery said more spending is likely on mental health and children’s services.
“Those have always been important items to the Senate and I think we’ll try to address them,” the Vidalia Republican said.
Rep. Katie Dempsey, R-Rome, who chairs the subcommittee Fitzgerald’s budget flows through, also has said mental health is among her priorities this year.
Kemp decides how much money lawmakers can spend. He could free up more money by raising the state revenue estimate. That could happen if income tax refunds aren’t as high as many state officials fear.
“We do expect refunds to be substantially higher this year because of both individual job loss and corporate profits,” Farr told lawmakers. “As a result, we will not know where we stand for this fiscal year until the end of May.”
By then, lawmakers are likely to have passed budgets and adjourned.