Tale of two states: California & Georgia

By: Randy Evans

In 2010, Georgia voters again overwhelmingly voted for a one-party state. Republicans control the governorship, statewide offices, and have a veto-proof legislative majority in the Senate, and an almost veto-proof majority in the Georgia House. Republicans have controlled the governorship and the Georgia General Assembly since 2004.

In contrast, California voters also voted overwhelmingly for a one-party state. Democrats control the governorship, statewide offices, and have a veto-proof legislative majority in both houses of the California legislature.

Rarely have Americans been given such a clear contrast between the policies and results from two very different approaches to governance. Indeed, if anything, these two states illustrate just what can happen when gridlock gives way to direction — sometimes better; other times worse.

Californians have elected to pursue a tax-and-spend approach to government. Proposition 30 authorized the increase of both income and sales taxes by $50 billion. Notably, California’s income taxes were already among the highest in the country while its sales tax rate was, in fact, the highest (and, along with one of the highest gasoline taxes in the country of over 67 cents per gallon). With Proposition 30, it now has the highest state income tax. While all those taxes might seem like more than enough to solve any budget deficit, they have not.

Indeed, the Legislative Analyst’s Office found in a projection last November that California would face a $1.9 billion deficit “absent the lower debt payments to special funds.” Basically, for the past decade, California legislators have circumvented their state’s balanced budget obligation by borrowing money from special funds (revenue raised by specific fees and taxes) with a promise to pay them back. As a result, California Gov. Jerry Brown has acknowledged a “wall of debt,” which totals up to $28 billion.

All of this spending has not translated into a sunnier state, however. California now has the highest poverty rate (23 percent) in the United States. Although only 12 percent of Americans live in California, one-third of the country’s welfare recipients live there. Meanwhile, municipalities within California (like Stockton and San Bernardino) are filing bankruptcy. Only Illinois has a lower bond rating than California.

In some areas of California, unemployment has risen to above 20 percent. Traffic in California has never been worse, and the state’s illegal immigration problems have reached a potentially catastrophic stage. Businesses are leaving California faster than ever.

In fact, one survey of business executives rated California as the worst state in the country to do business for eight consecutive years. Not surprisingly, California ranked 50th out of all 50 states for new business creation.

Now compare that to Georgia. When Georgians elected Gov. Nathan Deal, he committed to make Georgia the No. 1 place in the United States to do business. Since then, based on various news reports, 900 businesses have located or expanded in Georgia creating 62,000 jobs. Indeed, Georgia’s unemployment rate has consistently moved in the right direction for more than 20 straight months — down by more than 1.5 percent.

Area Development Magazine and Site Selection Magazine both list Georgia as one of the top five states in the country to do business. Not surprisingly, this did not happen through tax increases, budget deficits and more regulations.

Instead, the Georgia legislature moved ahead to eliminate the marriage tax penalty. It eliminated the sales and use tax on energy used in manufacturing. Over three years, this will result in more than $62 million left in taxpayers’ pockets. In fact, according to the Tax Foundation, Georgia has decreased its tax burden over the last decade more than any other state.

It also means a more efficient government.

Adjusted for inflation, Georgia’s government spends 14 percent less per person than 10 years ago.

In part, this is a result of 9,000 fewer state employees than five years ago.

Rather than using “tricky accounting” to cover stealth deficits, Georgia has balanced its budget every year AND increased its “Rainy Day Fund” by 226 percent, bringing the total to $378 million. While other states teeter on the edge of insolvency, Georgia’s bond rating (according to all three major bond rating agencies) is AAA, the highest rating a state can achieve.

Not surprisingly, people are moving to Georgia as a result. According to the last census, Georgia’s population increased by more than 1.5 million people — an 18 percent increase. Since then, Georgia has been growing faster than the national average.

Leadership does make a difference. Georgia is a great place to live and there are a lot of reasons why. California used to be a great place to live, but no more. The facts do not lie.

So, Phil Mickelson, come on over; remember, Georgia also has the Augusta National Golf Club.

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