Josh McKoon: Tobacco tax no way to fund early education

October 4, 2013 

With their household finances strained by ever-increasing government taxes and stagnant incomes, many hard-working Georgians' pocketbooks may soon be hit with unforeseen tax increases to fund a new government spending program touted by President Obama and Secretary of Education Arne Duncan. Including a stop in Atlanta last Monday, Secretary Duncan has been travelling state-to-state to garner support for the President's early learning initiative, which will be funded by a combination of $75 billion federal taxpayer dollars and untold billions in precious state taxpayer dollars.

While this program is well-intentioned, its funding mechanism, a 93% increase in the federal excise tax on cigarettes and its overreliance on already strained state budgets, deserves some scrutiny.

Increases in the cigarette tax, arguably one of the most regressive taxes, will disproportionately affect lower-income individuals. Furthermore, cigarette excise taxes are an already declining revenue stream, as they may increase illegal black market sales in our communities which are largely untaxed. Using an unsustainable funding source to pay for a program with costs that will continuously increase makes little sense, particularly considering the importance of the program. A predictable, consistent funding source would better serve the program participants, as well as taxpayers.

One of the most alarming aspects of the President's plan is the dramatic shift in the program's state-federal funding mix over the first ten years. The first year of the program allows states to voluntarily enroll and receive the full benefits of the program while only covering 9 percent of the actual cost. The federal government foots the rest of the bill in year one, but contributes less and less with each passing year until the state is responsible for shouldering the majority of the program's cost. By the tenth year, the states that choose to participate will be responsible for matching 300% of federal government's financial contribution to the program.

Looking just one year ahead and determining what costs to account for in a state budget is a process that legislators already find difficult. The President's proposed plan makes participating states take on the inexact task of estimating whether they will have the money to pay for this program ten years from now. Since it is impossible to predict what emergency costs and expenses a state may incur over the next 10 years, no state legislature can possibly know whether its state will have the resources necessary to almost exclusively fund this program in 2023.

Governor Deal and our state legislators are already very familiar with budget gaps, as our state faced a $700 million shortfall as recently as mid-January. Due to present budget constraints, Georgia is simply not in the position to take on any new programs with uncertain costs and risks. One might also add that our state's early learning program is already one of the best in the country according to the person who would know best, State Commissioner of Early Care and Learning Bobby Cagle. Regarding his concern about Georgia's ability to fund the program, Commissioner Cagle noted "The real challenge is going to be the financing and where the money is going to come from."

The funding plan for the program could leave Georgia with a much greater debt burden than it already faces. The revenue taken from a 93% increase in the federal excise tax on cigarettes could likely underperform, falling short of the projections made by the President, and possibly leading to yet another tax levied on taxpayers to make up the difference. With these things in mind, we should be comfortable telling the President and Secretary Duncan to go back to the drawing board.

Josh McKoon, R-Columbus, represents Georgia Senate District 29.

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