Monday, John Oxendine made two statements that will cost the State hundreds of millions of dollars – but we are a balanced budget state. This means that we can NOT spend more than we bring in – and tax revenues are falling sharply.
First, he said that he does not support the decision to cut the additional stipend that National Board Certified teachers get, saying that “I acknowledge and understand that in order to avoid raising taxes Georgia must address serious and substantial budget cuts, but teacher pay is off limits.”
OK, Ox. I assume you already know that education is right at 57% of Governor Purdue’s FY 2010 Recommended Budget and that other critical areas have already been cut to the point that some areas that even *I* say government needs to be in are taking some massive hits that are curtailing essential services. (Page 23 of the 436 page pdf file)
So Ox, Whatcha Gonna Cut?
Then, Ox said that the Supreme Court of the State of Georgia was wrong in deciding that the electronic voting machines were perfectly Constitutional. Ignoring the fact that this is the Secretary of State’s job and that said office is a SEPARATE Constitutional office that in NO WAY reports to the Governor, changing the voting system is a very expensive and time consuming process. In fact, according to one website I found that lists Maryland’s costs – who uses the same Diebold machines we do in GA but is NOT under the Voting Rights Act – costs of the voting machines over FY 2006 – 2008 ran at LEAST $97 million. That is more than the FY 2010 budgets of 30 State Departments – or roughly the budgets of the Department of Defense (GA National Guard) and Department of Drivers Services COMBINED!
So Ox, Whatcha Gonna Cut?
The Ox also proposes massive new interstates across the state. One would be a I-75 Western Bypass that goes roughly from Dalton to Rome to Macon. Another would be a Fall Line Expressway that goes roughly from Columbus to Macon to Augusta, but south of I-20. Another would be the much-discussed Northern Arc from I-85 all the way to I-75, and the I-75 end would more than likely put out somewhere near my parents’ home in Cartersville. Finally, he wants a “Parallel Connector” that would pave over many historic East Atlanta neighborhoods. Now, according to one site, actual costs of the entire Interstate system in 2008 dollars was $500 Billion for roughly 40,000 miles of road – for a rough cost in 2008 dollars of $12 million per mile. Rough approximations of these routes using Google Earth’s path ruler show that the Western Bypass would be roughly 175 miles, the Fall Line Expressway would be roughly 190 miles, the Northern Arc would be roughly 85 miles, and the Parallel Connector would be roughly 15 miles, for a total mileage of 465 miles. Using the 12 million per mile number, this comes in at a little over $5.5 BILLION dollars for the Ox’s transportation plans alone. That alone is more than a quarter of the entire State’s budget this year! Now, to be fair, Wikipedia and some other sources say that the Feds pay for 90% of the costs of Interstate highways – but that STILL leaves the State of Georgia responsible for roughly $550 million, making this the 10th largest item in the State’s budget.
But wait! This is an ADDITIONAL cost at a time when we are already having to CUT the budget!
So Ox, Whatcha Gonna Cut?
Finally, let’s look at one of the Ox’s pet issues – the “Fair” Tax. According to Page 17 of the budget document I linked to above, the sales tax is currently ~28% of Georgia Revenue. Corporate and Individual Income taxes represent another 47% – nearly double the revenue generated by the sales tax. Assuming that the “Fair” Tax will also account for the Motor Fuels Tax and “Fees and Sales”, we find that we truly do have to double the sales tax to account for these other taxes not existing. Also, don’t forget – the “Fair” Tax does NOT eliminate your local property taxes, it adds to them. Now, the problem here is not only do we have to have a reliable funding mechanism – and sales taxes are hardly reliable – but we also know that the higher the sales tax, the less goods are purchased. This means that if you raise the sales tax very much and it is your primary funding source, you actually begin to LOSE money. And bureaucrats know this – it is the very reason various politicians want to raise the tobacco or alcohol tax or the gas tax: to convince you to NOT buy those products! So the “Fair” Tax will actually wind up LOWERING state revenues even more – in ADDITION to being completely unreliable!
So Ox, Whatcha Gonna Cut?
Or do you just want to come clean and admit that you’ve got to raise taxes to pull off these campaign promises?
Ox and the rest of the candidates face a budget problem that never gets discussed. That is getting into the guts and interworking of the agencies and departments budgets. I remember when the state budget first topped $1 billion now we can’t get by on $22 billion without “draconian” cuts. We have programs and positions galore that have long since ceased to be needed but they remain tucked in the budget. In the few minutes each “manager” has to defend his or her appropriations request very little detail is possible so we end up cutting some NEW spending and freezing vacant positions and wait for tax revenues to go up to resume business as usual. Government bureaucracy is self perpetuating so unless someone takes on the laborious task of analyzing the minutia of each budget item it will continue to grow and candidates will talk about make-believe budget control.
First I would like to point out that Florida, Texas & Tennessee are among the states who do not have state income taxes. Their largest source of revenue is the sales tax.
Here is a link to a study that found – “Research revealed that consumption varied less, and was therefore more stable over time
than with the current income tax base. This finding was confirmed using three different
statistical measures.”
http://www.azfairtax.org/resources/govt.pdf
Also Karen Handel has stated that she in favor of eliminating the income tax in favor of a sales tax and John Monds has stated that Georgia needs serious tax reform.
Ops, Wrong again, Jeff, on the FairTax. Fair Tax is a Federal Tax Issue first. With each state collecting the FairTax, each state will be able to hold 1/4% of the FairTax which means 4% of 23%. That in itself creates revenue for each state. Doing away with the “income tax”, replacing it with a sales tax like Florida, Texas, and Tennessee. Anyone who buys in these states pays the taxes all the same. This creates a stable environment for state revenue. Why do you think more candidates are starting to understand these FairTax studies and support the FairTax?
You are right – the property tax will NOT be affected because of FairTax. Again Fairtax aims to abolish the 16th amendment and replace it with a National Retail Sales Tax. This is a National Taxation Issue. It has nothing to do with property tax, which is a county issue and deals with county commissioners – it is a local taxation issue. With the FairTax the state will not have to pay FICA, which will INCREASE state budget revenues. FairTax would help reduce the property taxes because it would create MORE revenue for the state.
You are wrong on “So the “Fair” Tax will actually wind up LOWERING state revenues even more – in ADDITION to being completely unreliable!” Why? We have to stop “punishing productivity” on all levels, this RAISE revenue, Therefore if we don’t, that’s in
ADDITION to being completely unreliable! What I just said has been researched extensively and under our current income tax system. If you can reduce the cost of “new goods and services” that creates lower prices,s puts more money into the worker pockets (abolish the income tax, which abolishes the IRS) and therefore creates more people “buying” or stimulating the local economy by buying more and paying more retail sales taxes. Extensive research has proven this again and again. Again look at Florida and Texas who have some of the biggest economies in the world, even in these times, where everyone is struggling, they are in “better” shape than say California, and many other states . You create where “EVERYONE” pays their “fair” share of the sales tax, no matter if you are a resident or not. Again this shows how “stable” their FairTax type economy is.
When you talk about FairTax. Jeff, please stop doing like so many others in only telling half truths. Get your facts right about FairTax and don’t use FairTax for your benefit to ATTACK a candidate like John Oxendine for your personal political gains, for your article.
As a representative of FairTax I would like to remind you that the FairTax has had over $23 million in research by renowned and respected economists. I would request you consult that research – which is readily available at FairTax.org – before making untrue statements about FairTax – or at least be clear that it is YOUR OPINION – although respected nonpartisian economists who have researched the effects and come to a different conclusion.
Anyone who thinks sales tax alone creates a “stable revenue stream” needs to look at Florida over the past year. If you have friends or family down there, ask them how they like their recent property tax bill.
To do without income tax, Florida relies on sales and property tax. Which means their revenue stream relies heavily on tourism and housing. Let’s see what people stopped doing during the last recession – traveling and building.
I’m for tax reform (although not the fair tax) but let’s not pretend income tax free states are beacons to steer towards.
Again look at the proposed studies of FairTax, compare it to a income tax with a VAT tax as the Government is trying to impose on us now. Watch how high our taxation go then.
Compare FairTax with Flat Tax as Flat Tax is nothing more than Income Taxation. Flat Tax put us back into the same results we have today.
Look at Florida, yes I know I lived there until I married my wife 2 years ago, I still have property there, I know what going on there.
You have a governor who like to spend, like our president, with a state that MUST have a balance budget. It don’t take a scientist to figure you have to tax somewhere. So tax the property owners and I felt it after double last year again this year another 15% and light company charging 30% more because of Cap and Trade. Where does it end? FairTax helps the constituents control government spending. That is why we support FairTax that has spend $23 million on studies and research. In this case it start at the Federal level and spread down to effect all us constituent, and we have no control on how they tax us! It start on how we are taxed to gain control what we spend on taxation. Check it out FairTax.org
I agree with Doug 110%.
I think we need to look at ways to PERMANENTLY DECREASE SPENDING instead of looking at new ways to generate revenue. The problem is not our revenue, its our expenditures! Our RINO Governor did a poor job of balancing the budget this year. Needless to say, next year without the Stimulus money we are going to be in deep yogurt all over again.
I completely concur there. In fact, I wrote up my own thoughts on tax reform over the summer…
Government today exists to grow itself first and perform whatever function it was created for second. Both parties are guilty and as I said in an earlier post it isn’t necessarily new spending just the creep of old. It’s like compound interest. Adjustments for inflation, maintenance of facilities, vehicles, salary increases, etc. all for something that maybe isn’t needed. I’m not suggesting each new administration clean house and start over. There are a lot of good folks working in government doing serious jobs. But approaching the budget process by saying: it cost $X last year so this year we can expect $X plus X% is wrong.
[...] we already know that Ox is for higher taxes, as he wants to fund extraneous programs that the State really doesn’t have the money to fund right now. I’m sure that my more “eco-friendly” friends and associates would argue that he [...]
[...] given the current budget situation – which is a very critical piece of information. As I told John Oxendine a few weeks ago, “Whatcha Gonna Cut?” to get this done, Rep [...]
[...] Largely, I agree with Jason’s feelings on the matter – the tax increase is absolutely ludicrous, particularly in the current climate. I oppose ALL “sin taxes”, no matter the reason. I also call for the General Assembly to pass – and Governor Perdue to sign – either of the Zero Based Budgeting bills currently in the General Assembly. The Senate has already passed David Shafer’s SB 1, which I prefer, and the House has already passed Tom Graves’ HB 44, both of which largely do the same thing. That said, I do differ from Jason a bit. You see, both State Rep Ed Rynders and Speaker of the House Glenn Richardson said Monday night that Georgia lawmakers face one of two choices: cut spending or raise taxes. They both emphatically said that tax increases would NOT be on the table so far as they are concerned. Deal clearly sees them as being on the table, and evidently prefers to either not cut spending or maybe even increase it. Deal’s position is one that I find utterly vile, but even I can acknowledge that at least he is making a good faith effort to find ways to fund the various things he is promising to do as Governor, unlike John Oxendine. [...]