Become A Georgia Budget Expert: Georgia Vs. Neighboring States

 

This is the final and longest segment in our Becoming A Georgia Budget Expert Series from PolicyBEST.  It will hopefully help put into perspective how Georgia’s spending in major categories compares to our neighboring states, most of which are not only our closest competitors for attracting new residents and businesses, but also have similar stated philosophies of fiscal governance.

First, we note that Georgia is next to last in per capita spending of all Southeastern states.  Only Florida is lower – a state that doesn’t have the same education burden as most states given that their population skews older.  (Remember, education spending is the primary state responsibility, with roughly half our tax dollars going towards educating Georgians.)  All other southern states spend more per person.  Some by a little.  Others, like Arkansas, spend 78% more than Georgia does on each citizen.

Please do not miss this point, as it is common when we start debating tax reform and tax cuts:

What matters on total tax burden is what the total tax bill is.  People openly wonder why we can’t have Florida’s income tax or South Carolina’s gas tax, but insist on keeping Georgia’s narrow sales tax base (and our exemption on taxing groceries).  For a state to be competitive it must pay to provide essential services while keeping the tax burden low.  The bottom line is that Georgia is doing that.

When you look at state spending by category, it shows where Georgia places its priorities relative to other states.  We spend more than any other neighboring state in K-12 education, and are the third highest (and well above average) in spending on our colleges and universities.  We’re dead last (using FY 15 numbers) in transportation spending and spending on Medicaid.  Even with the passage of HB170, or transportation spending will be about 8% of our budget, still less than fast growing states like Florida and North Carolina, who have already had many years of a head start on infrastructure investment.  Meanwhile, a portion of our rural hospital closure crisis can be attributed to the fact that we fund Medicaid less than our neighbors, which results in fewer double federal matching dollars coming to Georgia – and thus reimbursing our doctors and hospitals below the cost of service on these patients.

Budget critics that usually respond that we need to just get people off of welfare should note that most of these programs are federally funded, and thus cutting the .1% (or $4.30 per person) of public assistance that comes from the Georgia budget would be a literal rounding error in terms of effect.

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