Joining The Real World

We now know what happens when push meets squeeze.

As the economic recession deepened in the last six months of 2008, Georgia’s political leaders found themselves squeezed by dropping tax revenues at the same time they were being pushed by the state’s growing needs for basic government services. The result was a budget hole that probably exceeded $2 billion.

That situation, alas, does not appear likely to improve much this year, with economic forecasters predicting the recession will drag on through the end of 2009 and maybe beyond.

If there’s any silver lining in these dark clouds, it may be that the financial distress could finally force our political leadership to face up to reality.

Some politicians continue to advance the fiction that we can slash local and state government spending and use all that loose change to finance a major tax break, such as Speaker Glenn Richardson’s “GREAT” plan to eliminate property taxes or the abortive proposal to do away with the auto tag tax.

Simple arithmetic tells you that’s not going to happen in the immediate future. Georgia continues to be one of the fastest-growing states in the nation – at some point in the next year or two we’ll surpass 10 million in population. When the number of people living in a state increases, more schools are needed to educate their kids, more hospitals to treat their illnesses, more prisons to incarcerate their miscreants and more roads to accommodate their vehicles.

The reality is, Georgia’s budget will continue to expand because of the growing demand for government services from a steadily growing population. You cannot cut taxes in the face of these increasing needs for services and still meet your constitutional requirement to run a balanced budget.

Our governor and lawmakers find themselves with huge budget deficits because the state’s revenue base has been slowly but surely eroded by the dozens of tax breaks granted over the past decade to businesses and special interest groups.

“The weakening of the tax base has occurred over the past 10 years as Georgia has cut taxes across the board,” said a recent analysis conducted by the Georgia Budget and Policy Institute. “In addition, the movement from a manufacturing to a service economy and the rise of internet sales have further weakened the sales tax base. These tax policy decisions and a changing economy have cost the state a minimum of $1.5 billion each year.”

One obvious solution would be to plug these loopholes and possibly raise taxes in some areas. The problem there is that CEOs are addicted to corporate tax breaks and there are significant numbers of people who believe they should get all the government services they want without ever paying any taxes. It’s hard to find the political will to increase taxes when you know your constituents are going to complain.

That leaves “voluntary” forms of taxation that we know in more biblical terms as “sin taxes.” That may be the only option left for raising the necessary government revenues.

You could hike the tax on cigarettes and tobacco products, as Gov. Sonny Perdue did during his first term and as some lawmakers are talking about for this year’s legislative session. You could also raise the tax on the various forms of booze, as well as allow grocery and package stores to sell beer on Sundays (which would also give revenues a little nudge).

Finally, there’s the proposal for casino gambling, that old perennial trotted out by Atlanta legislators every year and denounced by the Christian Right and legislators who fancy themselves to be defenders of family values.

It hardly needs to be pointed out, but I’ll note it anyway: Conservative Republican states such as Mississippi already allow gambling – and so does Georgia.

When it comes to legalized gambling, our citizenry crossed that Rubicon 15 years ago when they authorized the Georgia Lottery. Games of chance have been firmly ensconced in the state since 1993. You can deny that fact all you want, but it remains the truth.

If we’re going to keep our government solvent, we might as well join the real world. Sooner or later, Georgia should take the next logical step and legalize casino gambling. Either that, or hold your nose and start raising taxes.



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