Slight of hand magic at the ‘Greatest Show on Earth’

By Rep. Alan Powell

The Ringling Brothers Circus left Atlanta about two months ago. But don’t worry, folks, the “Greatest Show on Earth” – also known as the Georgia General Assembly – still has a few performance days left.

Your ringmasters (the Governor, Lieutenant Governor and House Speaker) added a slight-of-hand trick to their repertoire on Wednesday, April 14, and worked enough magic to convince a majority of legislators to pass a state tax increase valued at upwards of $275 million. First, some background:

Back on April Fool’s Day, the Senate had narrowly approved legislation that would impose a $169 million tax increase on Georgia’s hospitals and their patients. Three of the Senate’s most fiscally conservative members voted against the tax hike on principle and as a result were stripped of their leadership positions and committee chairmanships. But a Senate amendment that would have repealed the state tax on health insurance companies was immediately rejected by the House Speaker, so it was back to the drawing board.

The rhetoric from the legislative leadership in favor of the hospital tax increase has reached unbelievable heights. Some Senator’s were even quoted last week as saying the hospital community had “proposed” the bed tax. Oh, really? Here is what Georgia Alliance of Community Hospitals President Monty Veazey wrote in the latest issue of James magazine:

“To compensate for revenue that would be lost as a result of the proposed tax, hospitals will have to reduce services or look for other sources of revenue such as increasing rates for those who are able to pay: the insured. Insurance companies, in turn, are likely to raise the costs to consumers. This, in effect, passes the tax to Georgia’s insured taxpayers.”

The fact is, the health care community vigorously opposed the hospital tax increase for two years until the current governor made direct threats to reduce Medicaid reimbursements and remove the sales tax exemption on non-profit hospitals if his proposal was not approved.

Then there was HB 1055, the $96 million plus fee increase proposal, hiking the cost to taxpayers for using approximately 80 different state services that range from civil court filings to business license fees to subscriptions to the Market Bulletin. HB 1055 passed the House on March 26, and an amended version passed the Senate on April 14.

Quaking in terror over the prospect of a Tax Day Tea Party revolt and the upcoming candidate qualifying period, those in power worked overtime to artificially sweeten the taste of the tax hike poison. The solution they came up with was to combine the hospital tax increase into HB 1055 with the fee tax increase and, for political cover, put in a couple of relatively minor tax cuts.

One of these would gradually eliminate the income tax on retirement income for Georgians 65 and older between now and 2016. Because retirement income of up to $35,000 for individuals and $70,000 for couples is already exempt, this action would actually help only a relatively few people.

The other tax cut would phase out the state’s 0.25-mill property tax over a five-year period, an almost insignificant gesture considering how much of the tax burden the state has shifted to local property owners over the past eight years.

In all likelihood, the impact of these two “tax cuts” will cost taxpayers more in increased county property taxes than they receive from the cuts themselves. Shifting the tax burden from the state level to the local level has proven to have unintended consequences that are costly to local property owners.

There is an additional concern over whether the legislation is even legal because it combines tax code changes with fee increases. HB 1055 opens the state up to legal challenges that, if successful, would overturn even the very minor tax cuts included in the legislation.

Later this year, the politicians who voted for a tax increase last week will be telling voters that HB 1055 was actually a “tax cut.” When they come to you, as the road signs throughout our district said a few years ago, “Don’t Drink the Kool-Aid!”

FY 2011 Budget: I was joined by 51 fellow House members who voted against the $17.8 billion state budget for fiscal year 2011, approved by the majority last week. My reasons for doing so are very simple: the budget is likely out of balance due to premature spending of federal stimulus/bailout dollars by Gov. Perdue in the current fiscal year, and the new budget shifts another $527 in Quality Basic Education formula funding for local school systems onto the backs of local property owners. This brings the total shift in education funding under the current governor to more than $2.1 billion.

GEFA Loan Sell-Off: Also last week, a slim majority of House members voted to approve an amended version of HB 244, which includes the governor’s proposal to sell a portion of the Georgia Environmental Facilities Authority (GEFA) loans on Wall Street in order to raise some $290 million to help balance the budget. I voted “no” because these loans are valued at $676 million, and it makes no sense to sell off these assets at less than 50 cents on the dollar for a one-time budget fix, and an “iffy” one at that. GEFA loans are made by the state to local governments at low interest rates to finance infrastructure projects across the state. Selling off this revolving revenue source will likely destroy the program, ruin Georgia’s AAA bond rating and force more expensive borrowing by local governments.

Inter-Basin Transfers: Throughout this session, Rep. Tom McCall of Elberton and I have worked with a number of House colleagues from rural areas in an attempt to pass legislation that would regulate the transfer of water from one river basin to another. The metro Atlanta business community has successfully fought our efforts, keeping that legislation from moving out of committee. I want to tip my cap to Rep. Doug McKillip of Athens, who last week was able to amend SB 442 to include language regulating inter-basin transfers. The current House majority whip, who is from Atlanta, predicted the legislation will not reach the House floor for a vote before the end of the session, but the fight continues.

Rep. Alan Powell (D-Hartwell) represents the 29th District (Franklin, Hart and Madison counties) in the Georgia House of Representatives. Contact him at 507 Coverdell Office Building, Atlanta, GA 30334; by phone at 404-656-0202 or by e-mail at alanpowell23@hotmail.com. For more information, visit http://www.alanpowell.net.

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