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Senate passes balanced spending, continues working on tax reform

POSTED: April 6, 2011 4:00 a.m.

Since the recession hit in 2007, the Georgia legislature has been faced with balancing the state budget amid sharply declining revenues. We are constitutionally prohibited from spending more than we take in, which prevents us from running up a trillion dollar deficit like the federal government. Smart financial planning is crucial for any government, just as it is for every family.

 

This year, we were faced with a $1.53 billion budget shortfall in the Fiscal Year 2012 budget. This is largely due to the expiration of stimulus money. In order to fill that gap, the Senate has developed a couple of innovative solutions that will allow us to balance our budget and replenish our reserve funds.

 

First, we’ll invest resources into recovering taxes owed to the state. The budget adds approximately $23.5 million to increase compliance and recover uncollected taxes. The Department of Revenue estimates that this investment can generate $120 million in FY12 and $230 million in FY13.

 

The Senate also dedicated funds to improve operations in state departments that provide services to citizens and businesses.

 

The departments that help people obtain common services like license plates, business licenses and safety inspections are truly the face of state government, and we believe they should be more responsive to citizens’ needs. 

 

In a continued effort to invest in our state’s future, we’re also dedicating an additional $5 million in Regional Economic Business Assistance funds, which are the frontline to bringing in business opportunities and investment to our state.

 

Housed within the Department of Community Affairs, REBA is an incentive program that is used to help “close the deal” when companies are considering Georgia and another state or country for their location or expansion.  

 

The Senate and House will now work together to reach an agreement on the final budget bill before the session ends on April 14.

 

Tax reform is one of the most important pieces of legislation we’ll debate this year, and the Senate and House are working quickly to reach an agreement on a proposal before the end of session. The current bill is a revenue-neutral plan aimed at creating jobs and helping move Georgia toward a fairer and more economically attractive tax structure for private citizens and businesses alike.

 

After months of careful study, a Tax Council comprised of business and economic experts delivered a list of recommendations to the legislature on how to overhaul Georgia’s tax structure.

 

We focused on portions of the council’s recommendation that we believe we can implement immediately and that will result quickly in the creation of jobs.

 

First, the bill flattens the personal income tax rate, lowering it by 25 percent from the current 6 percent to as low as 4.5 percent. This will allow us to be more competitive with our neighbors to the north and south who have little or no income tax, such as Florida and Tennessee.

 

Next, one of the most important job-creating aspects of this bill is the elimination of the sales tax on energy. Manufacturers are among the largest users of electricity and natural gas, and by eliminating the energy tax we’ll instantly make Georgia more attractive to the industry.

 

To offset the reduction to the state income tax and elimination of the energy tax, the bill broadens consumption taxes. It establishes a Communications Service Tax, which includes an across-the-board 7 percent tax on all telecommunications including cable, satellite and all phone services.

 

This brings tax uniformity to telecom service providers. It also will include taxes on automobile repair service. It’s important to note that Georgia currently taxes parts on auto repair and at least 21 other states tax automobile labor repair, including Florida and Tennessee.

 

Again, this is a revenue-neutral proposal that is not intended to lower our tax base or raise state revenues. We are committed to achieving tax reform that will benefit all Georgians, and will continue working with our colleagues in the House to reach a final compromise. 

 

This week we also passed legislation to increase penalties for human trafficking and to strengthen protections for the victims of such crimes.

 

House Bill 200 increases the prison sentence for trafficking from one year to between 10-20 years and imposes a fine of up to $100,000. It expands the definition of “coercion” to include situations in which a person threatens financial harm or uses financial control over any person.

 

The bill also provides that the age of consent for sexual activity or lack of knowledge of the age of the person being trafficked is not a defense against a human trafficking charge.

 

The legislature has only three legislative days remaining before the end of session. We’ll adjourn this week to allow time for legislators and their families to enjoy spring break, and to also finish working on some important proposals before we complete our work at the capitol.

 

 

Sen. Steve Gooch represents the 51st Senate District, which includes Dawson, Fannin, Gilmer, Lumpkin, Pickens and Union counties and portions of Forsyth and White counties. He may be reached at (404) 656-9221 or via e-mail at steve.gooch@senate.ga.gov.

 

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