Georgia state legislators are painstakingly working to plug a $1 billion hole in the state’s budget.
The General Assembly is searching for ways to cut expenses and raise needed revenue. The governor, who sets the revenue, has made his recommendations to the House of Representatives and Senate. Unfortunately, the governor and lawmakers are not always on the same page.
Gov. Sonny Perdue has suggested the state reduce Medicaid reimbursements to physicians and hospitals by 10.25 percent, Georgia Public Broadcasting reported Friday. Originally, Perdue suggested collecting a 1.6 percent fee from hospitals, which was vigorously opposed. The governor also wants to eliminate a sales tax exemption for nonprofit hospitals, according to gpb.org.
Some state representatives and senators don’t approve of these options, which they say likely will affect low-income patients.
They tend to support a $1-per-pack cigarette tax hike sponsored by Rep. Ron Stephens, R-Garden City. The governor, reported gpb.org, does not favor the tobacco tax hike.
Stephens said cigarettes are a serious health problem and maintains Medicaid spends more than $560 million a year in Georgia, or $550 per family, to treat tobacco-related illnesses.
“We just can’t continue to subsidize tobacco-related illnesses on the backs of the taxpayers,” he said.
Stephens said most hospitals are tax exempt because they often swallow the costs of treating the poor and uninsured, such as illegal aliens.
“If someone shows up at a hospital, they have to treat them regardless if they don’t have insurance,” he said. “They are (forced) to treat people for free; that’s the whole purpose for giving them the tax-free status.”
Rep. Al Williams, D-Midway, agrees.
“I will not support any tax on our hospitals when we have a cigarette tax sitting out there to raise $400 million,” Williams said. “Our hospitals are already overburdened.”
Williams said a cigarette tax will raise revenue for the state while it deters smokers from an unhealthy habit. He said it is “foolish and shortsighted” for the governor not to consider the cigarette tax.
Stephens said he also supports adding a sales tax to food and would provide an income-tax exemption for working families equal to the amount of a food sales tax collected. He said revenue could be “captured” from illegal aliens this way, to help pay for many of the services they receive.
Sen. Buddy Carter, R-Pooler, maintains additional taxes are not the answer to balancing a budget. Carter said finding ways to reduce government spending is the best course to take.
“We’re still trying to identify cuts we can make,” he said. “There’s a lot of uncertainty with taxes. Before talking about new taxes, we have to make sure of new cuts that we can make.”
Carter said state government is a business and like other businesses that have downsized in a troubled economy, state government also should downsize. Personnel will likely have to be cut, he said.
“We’re looking at all (state) departments right now,” Carter said.
Stephens worries the steps taken to balance the budget this year will also carry over to next year. Perdue has suggested using $342 million in federal stimulus money slated for next year’s budget to help balance this year’s budget. Stephens said this tactic will only deepen the budget hole next year.
“This year, we’re looking at $1 billion in cuts,” Stephens said. “Next year, we’re looking at $2-$3 billion in cuts. Unless we’re willing to do a revenue increase somewhere, the cuts are going to come from somewhere. It’s a deep, deep hole. The reality is cuts are inevitable.”
The state representative said economic indicators show the country’s economy will eventually improve. However, he cautioned
that because most of Georgia’s revenues are based
on income tax, the state will experience “a lag”
until employment numbers increase.
“We’ve got an uphill (battle),” Stephens said.