The budget is always the Gold Dome’s biggest priority, as it is the only thing our constitution requires that we accomplish. However, this year’s budget will be especially difficult, as it is the first time in over a decade that we will have to take major cuts.
As you have probably heard, revenue is not as high as we expected it to be. The reasons are complicated and not well understood, but a few issues stand out. First, we expected a larger windfall from the federal tax cuts two years ago. Based on that calculation, last year we approved the largest tax cut in Georgia’s history: a deduction in your personal income tax from 6% down to 5.75% this year, and then to an expected further cut to 5.5% next year. Although that half a billion dollar income tax cut is obviously hurting revenue, the biggest problem we’re facing next year is our super-low unemployment.
Record low unemployment is awesome. But we have come to the point where we simply don’t have any workers for the new jobs we are producing. In November alone, Georgia businesses created 70,000 jobs … but there are only 10,000 workers in Georgia who are actually qualified to do those jobs.
A senator asked this question, “How do we increase our revenue?” The economist answered, “Education is the smartest thing you can do to increase growth. Education pays for itself.”
Yet even with record low unemployment, there are over 160,000 Georgians who are actively looking for work. Unfortunately, they don’t meet the educational requirements to get the high-tech jobs that are being produced.
To be fair, Georgia has put a huge effort in retraining and technical jobs these past few years. The Georgia HOPE grant is completely free for 20-plus technical fields, and almost 100 percent of their graduates are hired on the spot. Still, we obviously have more work to do.
Another reason for our slower-than-expected growth is that Georgia is one of the top exporters in the nation. Again, that is normally great. Unfortunately, most countries in the world are now facing mild recessions. America’s current robust economy is one of the few exceptions.
The biggest economies in the world are the U.S, China, Japan, Germany, Britain, and then France. Unfortunately, all of those countries except the U.S. and France are currently in a mild downturn. Our nation’s biggest trade partners are China, Canada, Mexico, Japan, Germany and South Korea. Of those countries, only Canada and South Korea are growing. Our biggest exports are to Canada, Mexico, China, Japan, Britain and Germany, in that order. Again, only Canada is growing.
On the bright side, collection of sales taxes is growing at about 2 percent. Wages are growing at about 4 percent. Corporate taxes are all growing nicely. But overall, we are growing slower than we had planned.
We did pass an important bill last week that would capture third party online sales tax. This is not a tax increase, but a way to collect taxes that we should have been getting (but were not), mostly from businesses who work with Amazon. We hope to add about $150 million a year in revenue from this law.
Gov. Kemp wisely cut spending by 4 percent last year. As a result, Georgia government grew the least of all the states last year. He also wants to cut another 6 percent next year. These cuts will not include education, Medicare/Medicaid, and transportation; which accounts for about 80 percent of the budget.
Unfortunately, that last 20 percent that will be cut includes vital areas like agriculture and many public and mental health services. The other big debate will be about the $2,000 teacher pay raise and the last half of the income tax cut that we had planned on. It will be impossible to fund all these priorities.
I hope you will continue to pray for me as I attempt to serve the peoples of Morgan and Newton counties. You may contact me at email@example.com.