PDF: GBPI study
When stimulus funds run out in June 2012, Georgia could plunge over a financial cliff that leaves state leaders with four grim options for funding education, a recent study states.
Lawmakers can beg for more federal stimulus money, hike taxes, shift the funding burdens to the local level or continue cutting education, according to an analysis by the Georgia Budget and Policy Institute.
"It's important for people to know that this isn't temporary," said the institute's deputy director, Sarah Beth Gehl, author of the analysis.
"We're going to have a revenue problem for several years to come," Ms. Gehl said. "We're facing very limited options."
There are proposals in Congress to provide more stimulus funds - the first option - but that is a temporary fix, she said.
"State revenues are really dependent on sales taxes and income taxes," she said. "Until those two pick up ... Georgia's revenues are going to continue to lag."
But state Rep. Jay Neal, R-LaFayette, said he is concerned that raising taxes in a sagging economy "could be far more damaging than making the cuts."
"Realistically, no, we can't keep cutting, but we can't go out and increase taxes to get all the revenues to prevent cuts either," Rep. Neal said.
The Legislature walks a "fine line" when deciding between raising taxes and making cuts, he said.
Between fiscal year 2009 and the one for 2011, Georgia lawmakers have cut education 13 to 15 percent, the study shows.
Ms. Gehl said the solution lies in combining revenue-generating ideas with cuts.
Solutions include expanding the sales tax base to include service industries, boosting cigarette tax rates or repealing state income tax deductions, she said.
BY THE NUMBERSGeorgia Department of Education Fund Shift$8.2 billion: Original FY 2009 state funds$7.8 billion: Original FY 2010 state and federal stimulus funds$7.1 billion: FY 2011 state and federal stimulus funds$676 million: FY 2010 to FY 2011 change9 percent: Percentage change FY 2010 to FY 201113 percent: Percentage change FY 2009 to FY 2011Source: Georgia Budget and Policy Institute
Lawmakers also could shift the funding burden to local governments for public education and to college students who could pay higher tuition rates, she said.
The last option is continued cuts to education, she said, which means larger class sizes, teacher layoffs, pay cuts and waiting lists for programs.
The solution for Georgia education "really needs to be more focused on revenues from this point forward," she said.
Ms. Gehl and Rep. Neal both hope a new panel formed last week to study the problem will produce real solutions.
Georgia Gov. Sonny Perdue last week signed a bill to enact a 2010 Tax Reform Council to make proposals for the 2011 Legislative session. Rep. Neal hopes the Tax Reform Council will produce new options for Georgia education's financial situation.
Rep. Barbara Massey Reece, D-Menlo, said she voted against formation of the council but hopes it produces some valid ideas anyway.
She said she opposed the council because its recommendations will bypass standing House committees and its ideas could go straight to the House floor.
"I think it should be carefully studied when you're going to recommend any new tax structures that will have widespread impact," she said. "Nevertheless, I am glad to see that there will be a commission working on that."
Taxpayers can't take on more of a burden until the economy turns around, she said, and lawmakers must make some challenging decisions when they develop the budget for the 2011-12 fiscal year.
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