Georgia governor urges tax hikes

ATLANTA, Jan. 15 (UPI) -- Gov. Sonny Perdue, the first Republican governor of Georgia in 130 years, Wednesday called for $500 million in tobacco and liquor tax increases to deal with the state's budget crisis.

He also asked for a reduction in the homestead tax exemption, which would result in higher property taxes, producing another $280 million or more per year.

The liquor and tobacco taxes would sunset in four years, but the exemption change would not.

The state has a projected shortfall for the rest of this fiscal year of $620 million, and difficult problems for balancing the budget for the fiscal year beginning July 1.

The state is facing a slide in tax collections that has lasted a year and a half. Revenue was up 2.7 percent in December, but it's still off more than $200 million for the fiscal year as the result of the sluggish national economy.

"This is not the kind of budget I wanted to propose," Perdue said. "The cuts are real and will cause real pain."

"And no Republican governor wants to propose even a modest tax increase his first week in office. But this is the budget I believe the situation demands," he said.

The cigarette taxes would be increased from 13 percent to 36 percent, and there would be a new 36-percent tax on chewing tobacco and pipe tobacco.

The tax on beer would jump from 48 cents to 72 cents per gallon. Wine taxes would increase from $1.51 to $2.65 per gallon and the tax on distilled spirits would increase from $3.79 to $5.68 per half-gallon.

The homestead increase had been promoted for four years by Perdue's Democratic predecessor, Roy Barnes.

Barnes had already asked heads of agencies to make a 5 percent budget cut to achieve balance by the end of the fiscal year.

Perdue, beginning his first term, said he was open to suggestion by lawmakers, but he was more likely to get opposition than suggestions.

Democrats control the state House of Representatives and the Republican Party, which controls the Senate, is likely to be reluctant to raise taxes.

The budget for next fiscal year did not contain any of the traditional raises for teachers and other state employees.