Georgia Governor Touts Spending Restraint, No New Taxes

Published March 1, 2004

Before a joint session of the Georgia legislature on January 13, Gov. Sonny Perdue (R) outlined his vision for the state of Georgia during the annual State of the State address in Atlanta.

“Across all lines of race, religion, and economic status, Georgians believe that our children are the most precious resource we have,” said Perdue. “They are also united in wanting good jobs, a growing economy, and lasting prosperity.”

The governor and General Assembly struggled a year ago to use budget cuts and reserves to close a $620 million gap in the fiscal year 2003 budget. Perdue has been working ever since to rein in spending and lower expectations for 2004. He told departments to cut spending 2.5 percent in 2003 and 5 percent in 2004.

No New Taxes

According to the governor’s Web site, Perdue “directed every state department to identify its core mission, associate a cost with every program, identify core customers, and rank programs in priority order.” The result is a “responsible and balanced budget in 2004 based on priorities.” The budget contains “no tax increases of any kind.”

“The news in Georgia late last year was that the current [2004] fiscal year’s state budget may have to be cut by another $440 million to $1 billion in order to balance it as required by the state constitution,” said Bob Irvin, former state House Minority Leader and U.S. Senate candidate, now a management consultant living in Atlanta.. “For Governor Sonny Perdue, this is nothing new. He has probably spent more of his first year on trying to solve the state budget crisis than on everything else put together. That is a double shame–first, because it’s not his fault; and second, because it didn’t have to happen at all.”

“I will not allow anyone to make your struggle harder by reaching deeper into your pocket with a tax increase,” said Perdue in his annual message to the citizens of Georgia. “If you have to live within your means, state government will too. We will not raise taxes to balance this budget.”

According to Irvin, “Back in the roaring ’90s, when the seeds of this crisis were sown, total state spending exploded. It more than doubled from Zell Miller’s first budget (fiscal year 1992, $7.55 billion) to Roy Barnes’ last (fiscal year 2003, originally passed as $16.5 billion), and it ended up running way past revenue collections.”

Watch Spending

The Georgia Public Policy Foundation has tracked state spending for every year since 1979 and measures it against such benchmarks as inflation and population growth. The numbers show “state government was Georgia’s biggest growth industry in the 1990s, outrunning both population growth and inflation.” Over that decade, spending increased 88 percent, while population was up 26 percent and the consumer price index 33 percent.

According to Kelly McCutchen, the foundation’s executive vice president, “Government tends to get bigger year after year and spends more of taxpayers’ money. It’s a bigger group, a bigger bill, but some people still get more than others.”

“Anyone who’s dined out with a group of colleagues and made the mistake of agreeing beforehand to split the check evenly has experienced the sticker shock of a higher-than-expected bill,” explained McCutchen. “It starts when someone who normally wouldn’t order dessert if he were paying his entire check decides to splurge, rationalizing that the additional cost, split several ways, really isn’t that high. The problem, unfortunately, is that most people in the group tend to think the same way. Pity the poor responsible fellow who still had to pay his share of the large bill but didn’t get any dessert.”

Perdue also used his State of the State address to call for $1 billion in new debt to fill a potential budget gap, but he cautioned against opening the state financial spigots. “You don’t drive full-speed toward a cliff hoping that someone will build a bridge before you get there,” Perdue said. “I will not put Georgia in the business of recklessly spending money we don’t have and may not get.”

The governor’s budget anticipates a 4.7 percent rate of revenue growth. An optimistic revenue projection last year was tempered by more than $300 million in spending cuts when tax collections were slow to rebound.

“Spending is fun,” notes Irvin. “Dealing with budget cuts isn’t, and if we would do a little less of the former, we’d have to do a lot less of the latter, and the people would be a whole lot better off for it.”

John Skorburg is managing editor of Budget & Tax News. His email address is [email protected].