By Kelly McCutchen
Those who watched this year’s legislative session as they would a hockey game – waiting for the fight – were not disappointed. Going in, the focus was a “WETT” session: water, education, taxes and transportation. But beneath the political theatre, the final score indicates a victory for good public policy. The border war with Tennessee stole water headlines, but in the undercurrent Georgia gained a statewide water management plan, significant new funding and enabling legislation to encourage the construction of new reservoirs. Businesses gained consistency when legislation passed prohibiting tougher local restrictions on outdoor watering during drought than the state’s, with an appeal mechanism for local governments to opt out of the state restrictions. And the Legislature gained oversight of the Environmental Protection Department’s state rules and regulations.
Through a new conservation use program, the Legislature placed an amendment on this year’s ballot that will provide needed tax relief for owners of forestland. Georgia’s 24 million acres of commercial forestland, more than any other state, play a critical role in recharging and filtering our water supply. Property taxes on forestland have increased to three to five times as high as neighboring states, threatening the sustainability of one of the state’s greatest environmental and economic resources.
Public schools may now opt for much-desired flexibility from rules and regulations in exchange for higher accountability for student achievement.
More Georgia children will have the choice and chance of a better education, thanks to tax-credit scholarships and more equitable funding of charter schools. Flexibility and innovation isn’t just for charter schools anymore. Public schools may now opt for much-desired flexibility from rules and regulations in exchange for higher accountability for student achievement.
In health care, insurance policies that financially reward individuals for wellness and compliance with disease management programs no longer will be illegal. This is critical to lowering the cost of health care for everyone as 75 percent of all health care costs are related to individuals with chronic disease. Small businesses will receive incentives for providing insurance and can make defined contributions to tax-free health care accounts for employees. Individual purchasers will no longer pay state income taxes on premium payments.
Funding the state’s trauma network was a bipartisan priority. A proposed $10 fee on automobiles did not pass, but then, neither did the Governor’s proposal to eliminate the state portion of the property tax. So the good news is annual revenues from the state property tax (about $85 million) are now available to supplement the $60 million in next year’s budget for trauma.
Everything is relative. While many states face large budget deficits and tax increases, Georgia boasts an excellent “AAA” debt rating (one of seven states) and a record $1.5 billion reserve fund. Unfortunately, major tax reform fizzled in an impasse, but changes made to our tax laws will enhance Georgia’s competitiveness in manufacturing and reduce premium taxes in order to lower the cost of health insurance.
Failure to reach agreement on how to provide offsetting tax cuts also doomed statewide and regionwide funding proposals for transportation. Fortunately, the Department of Transportation now has time to reorganize, then reprioritize and streamline existing projects. Meanwhile, studies show that $20 billion of needed transportation improvements in metro Atlanta can be funded by tolls and can proceed immediately. The State Transportation Board’s recent resolution directing staff to work toward a high-occupancy toll network is another milestone on the road to congestion relief.
With its goal of “public purposes including economic development,” it remains to be seen whether a statewide Transportation Infrastructure Bank to fund what Governor Sonny Perdue this week described as “for projects that don’t make that priority list,” is a wise option for local governments, the marketplace or transportation.
On a low note, Georgia remains the only state in the nation to outlaw investment in private equities and venture capital funds by its public pension funds. As Georgia Tech, Emory University and the University of Georgia produce commercial technology, we continue to fail to capitalize on these strengths and lose start-up businesses to other states due to our shortsightedness.
In what may be the most significant long-term reform, legislators passed sweeping transparency legislation to publicize – on a searchable, free Web site – state expenditures, state contracts, state audits and salary and travel expense data for every state employee.
In 1802, President Thomas Jefferson wrote, “We might hope to see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses and consequently to control them.” It took 206 years, but Georgia is finally headed in the right direction.
Kelly McCutchen is executive vice president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (April 11, 2008). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.