published Saturday, April 9th, 2011

Georgia GOP offers tax plan for jobs

ATLANTA —Republican lawmakers say the latest version of a tax proposal they hope to pass next week cuts the budget hole left by the plan by more than $90 million.

House and Senate leadership on Friday announced an agreement on the proposal, which they touted as one that will create jobs and save Georgia taxpayers. The proposal now raises the tax rate from 4.5 percent to 4.6 percent — a move that is estimated to shrink next year’s revenue estimate shortfall from $220 million to $128 million.

Georgia’s current tax rate is 6 percent.

“We are delivering the one thing Georgians are wanting us to do now,” said Speaker David Ralston, who called the tax proposal among the session’s most important priorities.

House Majority Leader Larry O’Neal said the number was tweaked “out of an abundance of caution.”

“We had finally confirmed it was going to be close to $220 million hit or so to the budget, which we weren’t comfortable we could absorb in growth,” O’Neal said.

Gov. Nathan Deal signaled his support for the measure, which he tied to a March boost in revenue announced Friday.

“Georgia continues to experience strong revenue growth, a leading indicator of a rebounding economy,” said Deal. “This positive trend will aid our ability in the final days of the legislative session to enact tax reforms that will increase our state’s competitiveness and build a strong job-creating environment here at home.”

Ralston said he is optimistic that the bill will pass during the 40-day legislative session that is scheduled to end Thursday. The measure will have to pass out of committee on Monday and be approved in the House and quickly transferred to the Senate, where it must be read three times before a vote on the final day of the General Assembly.

Senate President Pro Tempore Tommie Williams, who favors eliminating the state income tax, praised the spirit of cooperation among the two chambers and the governor’s office. He said this year’s proposal is a significant first step towards that goal.

“The tax council doesn’t dissolve itself after this year,” he said.

The tone on Friday was markedly different from that of a week ago, when Senate infighting threatened to derail a tax plan — much to the consternation of Ralston, who publicly chided the Senate leadership. The Legislature adjourned this week for spring break, though many decision makers lingered at the Capitol to hammer out issues like the tax proposal.

“Philosophically, we were all for this,” Williams said.

Ralston shrugged off last week’s tensions with a chuckle. He said he was hopeful that the bill would have bipartisan support, though he has not spoken with all members of the Democratic caucus on the issue. Still, he signaled that the legislation is attractive for both sides.

“I sure wouldn’t want to vote against a tax cut, against a pro-jobs bill, and go back to my area and defend that vote,” Ralston said. “I think what we have now ... is going to be pretty hard to vote against that sort of measure.”

House Minority Leader Stacey Abrams said she had not spoken to Ralston about the newest version of the bill and continued to criticize the plan as rushed and bad for Georgia. Abrams, who first raised concerns last week about the plan’s effect on the middle class, dismissed the likelihood of bipartisan support for the measure.

“They might be able to peel off a few Democrats, but any Democrat who goes home in 2011 having voted for a bill without knowing what they voted for ... is making a very, very dangerous gamble and they’re relying on the other side to tell them the odds,” Abrams said.

While Republicans are relying on the economy to rebound and the state to attract employers to fill the hole left by the tax plan, Abrams panned the proposal as wishful thinking.

“This is prognostication,” she said. “They’re guessing that the money will come back. They’re guessing that people will show up. I’m looking at what the real numbers say ... and I don’t know how in anybody’s estimation that equals improving our tax situation. I believe in fiscal responsibility, not fiscal magic.”

Georgia Budget and Policy Institute Executive Director Alan Essig called the proposal a copout that will equal further cuts down the road.

“I still think it’s irresponsible,” Essig said. “Right now, there’s a $180 million hole in Medicaid (in the fiscal year 2012 budget). If they keep the hole in there, that means they’re expecting growth to pay for that, too. At what point are we going to start putting money back?”

Georgia House Bill 388: http://www.legis.ga.gov

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