| Georgia Budget & Policy Institute |
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| This Week in the Georgia Legislature |
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State Revenues
Revenues for January were 8.7 percent below January of 2009. State revenues for the first seven months of this fiscal year are running 12.9 percent behind FY 2009 revenue collections.
The governor's FY 2010 revised revenue estimate projects a decline in revenues of 8.9 percent. Revenues will need to increase by 4.3 percent over the remaining five months of this fiscal year in order to meet this estimate.
The governor's FY 2011 revenue estimate, which includes new taxes and fees, is an increase of 8.1 percent compared to FY 2010 projected collections. Without adding in his new revenue proposals, the governor's FY 2011 revenue estimate projects a 3.9 percent increase. |
| House and Senate Calendar
This week, the House and Senate are scheduled to go into session for the 18th legislative day on Tuesday, February 16th and remain in session through the 20th legislative day on Thursday, February 18th. |
State Budget: FY 2010 Amended and FY 2011
The continued decline in revenues raises doubts about the adequacy of the FY 2010 revenue estimate. Unless revenues reverse trends and begin to grow over the remaining five months of the fiscal year, revenues may run $200 million to $300 million short of what is necessary to balance the budget. In that the Revenue Shortfall Reserve only contains $103 million, it may be necessary to move several hundred million dollars in Federal Recovery Act Funds from the FY 2011 budget into the FY 2010 budget in order to address the shortfall. Such a movement of funds would open up a several hundred million dollar hole in the FY 2011 budget.
FY 2010 Amended Budget
The House passed their version of the Amended FY 2010 budget (HB 947) on February 11th. Major changes from the governor's proposal include:
- Replacing the governor's cut of $17.5 million in Quality Basic Education Equalization funding in the Board of Education Budget.
- The governor had supplanted more than $32 million of state funds with lottery funds in various scholarship programs funded from the Student Finance Commission. The House removed the lottery funds and put state funds back into these scholarship programs.
The Senate will be finalizing their version of the FY 2010 Amended Budget next week with a full appropriations committee meeting scheduled on February 16th. The bill is expected to be taken up on the Senate floor by the end of the week, with the Conference Committee to immediately follow.
FY 2011 Budget
The House should begin hearings on the FY 2011 budget next week. Major questions leading up to the consideration of the FY 2011 budget include:
- Will the General Assembly agree with the governor's proposal to implement a 1.6 percent fee on hospitals and CMOs to both increase provider rates and fill a $274 million hole in the Medicaid budget? If not will the General Assembly will need to find another funding source (i.e. increase cigarette tax), or will it decide to cut the budget an additional $274 million?
- Will the General Assembly agree with the governor's proposal to securitize a portion of the Georgia Environmental Facilities Authority loan portfolio and raise $290 million? If not, an additional $290 million would need to be cut from the budget.
- In light of a continued decline in revenues, will the governor lower the FY 2011 revenue estimate of 3.9 percent revenue growth? For every 1 percent drop in the revenue estimate, lawmakers need to cut an additional $168 million from the state budget.
- Will the governor move $200 million to $300 million of Federal Recovery Act funds from the FY 2011 budget to the FY 2010 budget to cover potential revenue shortfalls in FY 2010? If so, lawmakers will have to cut an equivalent amount from the budget in FY 2011 or add an equivalent amount of new revenues.
Please see the following reports for analysis of the governor's budget proposals:
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| Fiscal and Tax Policy
Transparency for Tax Breaks
Senate Bill 206, which would require an accounting of tax breaks currently in the tax code, passed out of the House Appropriations Committee this week. The bill is currently in the House Rules Committee. The bill passed the Senate unanimously last year. Read information on the topic here.
House Bill 1023 -- The so-called JOBS Act
House Bill 1023 is almost identical legislation to the so-called JOBS Act the governor vetoed last session. Rather than going to the House Ways and Means Committee, as is typical for tax bills, it was assigned to the Special Committee on Small Business Development and Job Creation.
The bill would provide a tax credit for hiring unemployed workers, give a holiday for business filing fees, eliminate the corporate net worth tax, create a $10 million angel investor tax credit, and reduce the tax on capital gains 50 percent.
The main changes are the angel investor tax credit and a trigger mechanism for the capital gains tax cut (the rainy day funds would have to return to $500 million for the cut to take place). Read the Institute's analysis of the cost of these cuts and how they would add to the deficit (analysis is of last year's bill).
HB 1023 was heard by the Special Committee on Small Business Development and Job Creation Subcommittee on Wednesday. The bill was moved forward to the full committee without a fiscal note. Read the testimony before the committee by Georgia Budget and Policy Institute Executive Director Alan Essig.
Additional legislation was introduced with individual components of the tax cut package, such as HB 998, which would repeal the corporate net worth tax. These bills were assigned to the House Ways and Means Committee.
Proposed Bills Would Raise Revenue or Improve Fairness
Several bills that would increase revenue or improve fairness are moving through the committee process:
- HB 928/HR 1109 removes the sales tax exemption from lottery tickets and dedicates the new revenues to K-12 education.
- HB 1066 adds a temporary one percent surcharge on income over $400,000.
- HBs 1065, 1067, and 1068 would temporarily reduce the value of tax credits by 15 percent.
- HBs 982, 983, 986, 1093, and 1137, among others, improve tax collections through electronic data management, coordinate information sharing between state and local governments, and close a tax loophole.
Additionally, HB 39, which would raise the cigarette tax by $1 a pack, remains active from last session.
GBPI Resources About Taxes
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Healthcare and Health Insurance Policy
Hospital and Managed Care Fees
The governor's FY 2011 budget proposes assessing a 1.6% fee on hospitals and managed care providers in Georgia. The nearly $345 million raised from these fees are directed to the Medicaid budget to 1) increase Medicaid and PeachCare reimbursement rates paid to hospitals, 2) provide funding to cover increased costs as a result of enrollment growth in FY 2011, and 3) replace one-time funding used in FY 2010 that is no longer available in FY 2011. For more information on the governor's Medicaid budget proposal, including a further discussion of the provider fee proposal, read the Institute's analysis.
This proposal was included in the governor's original FY 2010 budget as well, therefore House Bill 307, which was introduced in the 2009 Legislative Session, could again be used to implement the proposal. This bill is scheduled for a hearing in a House Appropriation Special Subcommittee on February 17th, at 1:30 PM.
Health Insurance Regulation
The following bills have been introduced and referred to the Senate Committee on Insurance and Labor:
Senate Bill 309 would allow insurance companies licensed and regulated in other states to sell accident and sickness policies in Georgia. Under this proposal, out-of-state insurers would be exempted from state laws governing required benefits and consumer protections that apply to health insurers licensed in Georgia. No state has enacted such a law.
SB 330 would eliminate the ability of insurance companies licensed in Georgia to impose lifetime or annual caps on benefits for patients. In addition, the bill would limit the ability of insurers to rescind existing policies or deny services in the case of misstatements or omissions on insurance applications. Finally, the bill would allow dependent children to remain on their parent's health insurance policy through the age of 25, even if the dependent is not a full-time student. (It is not clear whether the protections added by this bill would apply to policies licensed in other states that would be allowed under SB 309.)
SB 331 would allow small employers with 2 - 50 employees to pool with other small employers to purchase group health insurance policies, and would require all health insurers in Georgia to offer plans -- often called Association Health Plans -- designed for these arrangements.
Related to National Health Reform
There are several bills and resolutions that seek to assert that Georgia could exempt itself from provisions in national health insurance reform proposals that legislators find objectionable. In particular, SB 317 would make it a state law that Georgians could not be compelled to "participate in any health care system," and that the purchase or sale of health insurance products and/or direct healthcare services could not be prohibited. In addition, SR 794, SR 795, and HR 1086 seek to accomplish the same or similar goals through the constitutional amendment process, and as a result will require two-thirds majority in both the House and Senate to reach the ballot.
Although these bills are aimed at provisions in the national health insurance reform proposals in Congress that assess penalties for individuals that do not obtain health insurance (with exceptions related to affordability) through the federal income tax system, it is unclear as to whether these bills would enable Georgians to escape these federal rules if they are enacted.
SB 317, SR 794, and SR 795 have been favorably reported from the Senate Committee on Insurance and Labor, and HR 1086 has been referred to the House Committee on Health & Human Services. | |
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| For more info and reports, please visit:
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| GBPI in the News
Alternatives to Budget Cuts
Georgia, Oregon Become Economic Test Case Atlanta Journal Constitution
Stimulus Package Puts Nearly $10 million in Floyd Pockets
NorthFulton.com
Georgia Should Raise its Taxes to Close the Budget Shortfall and Modernize the State
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The Georgia Budget and Policy Institute, the state's leading independent, nonprofit, non-partisan organization, seeks to build a more prosperous Georgia. We rigorously analyze budget and tax policies and provide education to inspire informed debate and responsible decision-making, advancing our vision of a state in which economic opportunity and well-being are widely shared among all. |
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