The Center Square lined the new digital Town Hall hosted by way of the left-leaning Georgia Budget and Policy Institute (June 2023). With a nebulous objective to “stabilize and strengthen our state and communities,” the institute wants “a restructuring of Georgia’s damaged techniques.” They want to chase cross-state rankings in spending on health insurance coverage, specific funding for students in poverty, and “need-based aid for college students.”
Georgia is a balanced-budget state which results in Georgia’s state government ranking as one of the most frugal in the nation. Georgia’s constitutionally mandated budget control is also an important factor in maintaining its AAA bond rating and low borrowing rate. (This factor is increasingly important just as the rating of federal debt is downgraded with concomitant increased in federal borrowing costs.) Georgia’s cautious use of taxpayer funds is also a major factor in its high ranking as an attractive place to do business and Georgia is ranked 8th in the country for its economic performance.
What would happen to future tax surpluses if state officials chased questionable and unwarranted state rankings on various measures of education and health? Georgia would increase spending at the expense of economic growth to raise its rankings. Other states may follow suit as their rankings decline…and so it goes. Spending to chase rankings rather than in response to careful cost-benefit analyses would eventually involve Georgia and other states in a cycle of increasing income tax rates and depressed economic growth.
This is also how states come to embrace socialist policies and lose commitment to their constitutional or statutory mandate for budget discipline, becoming less and less prosperous and bleeding population to more fiscally responsible and growing states. In addition, Georgia is a pro-growth state that is ratcheting down income tax rates as state surpluses allow. Rather than being an “outmoded” accounting trick as the Georgia Budget and Policy Institute alleges, these guideposts and commitments to fiscal responsibility are forward-thinking, pro-growth commitments to maintain Georgia’s attractive rate of economic growth. This means more and better jobs, better education and better healthcare, and greater self-reliance for all residents, dynamics most attractive to residents on the lower end of the economic ladder and in underdeveloped communities.
Georgia’s funds surpluses come from its institutionalized dedication to fiscal accountability. The commitments aren’t immoral, as GBPI implies, except it’s immoral to foster growth and prosperity for all.
Christine P. Ries is professor of Economics at Georgia Institute of Technology
This article First seemed in the center square