2014 PROPOSED CONSTITUTIONAL AMENDMENTS AND BALLOT QUESTIONS
AMENDMENT 1: Prohibits the legislature from increasing the state income tax above 6%
BALLOT QUESTION: Shall the Constitution of Georgia be amended to prohibit the General Assembly from increasing the maximum state income tax rate?
Summary: Georgia currently has a 6% state income tax rate for all income over $7,000, which creates a flat income tax for the majority of tax payers in the state. If passed, the amendment would prohibit the legislature from increasing the income tax without passing a subsequent constitutional amendment.
Stacey’s Position: I opposed the legislation and will vote NO on Amendment 1 on several grounds.
A. Reduces Ability to Respond to Fiscal Emergencies: Capping the income tax rate severely limits the ability of the legislature to respond to fiscal crises. We can only place constitutional amendments on the ballot during election years, which could mean a 2-year stretch of inaction. For example, during the Great Recession, Georgia balanced its budgets due to substantial federal transfers of cash to support education, health care and other obligations. According to a report in the Atlanta Journal Constitution:
“Federal funds made up about $10.4 billion of state agency spending in fiscal 2008, according to an Atlanta Journal-Constitution review of budget records. Four years later, that figure was more than $12 billion, in part because the state had some leftover federal stimulus money. But the total will likely approach or top $12 billion again in the upcoming year. That’s roughly 31.6 percent of state spending, up from about 27 percent in 2008.”1
Had the stimulus funds not been available and this amendment been in place, Georgia would be forced to either cut 30% of its budget or increase sales taxes.
For context, consider this current allocation of budget spending in Georgia2:
• K-12 and Postsecondary Education: 52 cents of every dollar spent
• Health Care: 21 cents
• Public Safety: 9 cents
• Debt Service: 6 cents
• Transportation: 4 cents
• Department of Human Services: 3 cents
• Judicial and Legislative branches: 1 cent
Income tax accounts for more than 45% of Georgia’s revenue. Without the ability to adjust our income tax to address fiscal crises, Georgia could not cut its way to fiscal health without severely impacting education and health care.
Eliminating all other services would not result in the appropriate revenue adjustments.
To make up the difference in lost revenue, Georgia would have to increase sales tax by up to 14.5 percent and increase total taxes on up to 80 percent of Georgia taxpayers.3
B. Reduces Ability to Address Income Inequality: Georgia currently has a flat income tax rate, which treats incomes of $7,001 the same as $70,000 and $700,000.
• Income between $0 and $750 is taxed 1% on every dollar earned.
• Income between $751 and $2,250 is taxed 2% on every dollar earned.
• Income between $2,251 and $3,750 is taxed 3% on every dollar earned.
• Income between $3,751 and $5,250 is taxed 4% on every dollar earned.
• Income between $5,251 and $7,000 is taxed 5% on every dollar earned.
• Income between $7,001 and over is taxed 6% on every dollar earned.
The challenge with such a system is that it does not allow for a more progressive system that may reduce taxes on those in the lower tax brackets by increasing taxes on those in higher brackets.
C. Short-sighted: Georgia has had a steady income tax rate since the 1930s, and it is one of the lowest taxing states in the nation. We collect the second-lowest amount of state revenue per capita in the country and rank sixth lowest for state and local revenue collected per capita. However, this low taxation has also led to cuts in education spending, transportation and health care. As the state continues to grow, which it has consistently for the last decade, an income tax cap will stymie attempts at thoughtful tax reform that recognizes the economic diversity of our population.
Business competitiveness relies most heavily on providing the proper infrastructure and education, both of which will continue to suffer in Georgia if we fail to make the proper investments.
AMENDMENT 2: Adding reckless driving penalties or fees to the brain and spinal injury trust fund
BALLOT QUESTION: Shall the Constitution of Georgia be amended to allow additional reckless driving penalties or fees to be added to the Brain and Spinal Injury Trust Fund to pay for care and rehabilitative services for Georgia citizens who have survived neurotrauma with head or spinal cord injuries?
Summary: Amendment 2 will allow the addition of penalties to reckless driving charges with the funding directed to the Brain and Spinal Injury Trust Fund.
Pro: This funding will increase the available dollars for health care and rehabilitative services for those who have experienced neurotrama.
Con: The addition of penalties and fees will increase court fees paid by defendants who may not have the ability to pay.
Stacey’s Position: I voted in favor of the amendment and will vote YES on Amendment 2. However, I am sensitive to a national trend of increasing fines and fees on defendants, which can lead to a level of indebtedness that results in the poor being incarcerated for an inability to pay. Georgia’s current system of fines and private probation call into question the fairness and equity of such fee increases, and I will continue to evaluate requests for increased court costs with this effect in mind.
REFERENDUM 1: Allows property owned by the University System of Georgia and operated by providers of student housing and other facilities to remain exempt from taxation
BALLOT QUESTION: Shall property owned by the University System of Georgia and utilized by providers of college and university student housing and other facilities continue to be exempt from taxation to keep costs affordable?
Summary: Referendum 1 will allow the University System of Georgia to privatize student housing and related facilities. More importantly, those private companies would receive the same tax treatment as the state: construction costs would be tax-exempt.
Pro: The current system of construction costs for student housing and facilities relies on heavy bond indebtedness by the University System or the schools themselves. By privatizing this function, the system can engage professional companies to perform construction and maintenance, while held to cost controls required by contract with the entities.
Con: Privatization of these functions could eventually cost students more; and granting tax exempt status to private activities drains state revenue.
Stacey’s Position: I voted in favor of the amendment and will vote YES on Amendment 3. Smaller, less well-financed schools can often not afford the costs associated with dorm construction and maintenance, and campuses that need refurbishment must balance those costs against competing needs. By allowing for privatization with tax exemption, the University System can offer incentives for construction and maintenance on a broader range of campuses, and the private builders assume the risks. The legislation package included provisions to protect against gouging students and the system retains ownership of the land and improvements.