Georgia Budget and Policy Institute

This Week in the Georgia Legislature

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State Revenues  

State revenues for the first eight months of this fiscal year are running 9.2 percent ($853 million) ahead of the FY 2010 revenue collections. More than $226 million of the growth is accounted for by a decrease in the number of refunds distributed. Discounting fewer refunds distributed, actual revenue growth is 4.6 percent. The FY 2010 revenue estimate is based on 4 percent revenue growth.

 

It appears likely that FY 2010 will result in a surplus of between $300 to $400 million. Surplus funds will be used to begin to replenish the Revenue Shortfall Reserve.

House and Senate Calendar 
  
The House and Senate are scheduled to be in session for the 31st legislative day on Monday, March 21, the 32nd legislative day on Tuesday, March 22, and the 33rd legislative day on Wednesday, March 23. They are scheduled to be out of session Thursday and Friday, and back in session for the 34th legislative day on Monday, March 28.
from the State Budget: FY 2011 Amended and FY 2012

Process

Governor Nathan Deal released his proposed budgets on January 12, 2011.  (Download the proposed budgets.) 
  
Although there were differences between the versions of the Amended FY 2011 Budget (HB 77) as passed by the House and Senate, a Conference Committee was not appointed. Instead, due to only minor differences, amendments to the Senate version of HB 77 was offered by the House. On March 7, both the House and Senate agreed to the Senate version of HB 77 with amendments by the House.  
  
The House of Representatives passed their version of the FY 2012 budget (HB 78) by a vote of 132-33. The budget is now in the Senate where the Senate Appropriations Sub-Committees are continuing their hearings.
  
HB 78 contains more than $500 million in additional cuts as compared to the FY 2011 budget. Total budget cuts since FY 2009 equal $2.9 billion.
  
The House version of HB 78 closed an additional $250 million shortfall in the State Health Benefit Plan as well as restored some of the governor's recommended cuts. Highlights for the House of Representatives' budgets for the Department of Human Services, Department of Community Health, and the education agencies are contained in the fact sheets below:

 

Analysis of the governor's original proposed budget are below:

 

Fiscal and Tax Policy 
 

Tax Bills Moving to the Senate Will Cost $46 Million in FY 2012

 

The House passed fewer tax bills this year than usual; however, the following three bills have a fiscal impact for the state:

  • HB 168 conforms Georgia's tax code to the federal tax code, and makes definitional changes to bring the sales tax into compliance with the Streamlined Sales Tax Agreement. The bill will result in a loss of $19 million in FY 2012.
  • HB 234 extends the sales tax exemption for aircraft parts, mostly enjoyed by customers of Gulfstream in Savannah. The tax break costs an estimated $7 million annually. 
  • HB 322 extends the sales tax exemption on jet fuel for Delta Air Lines, costing $20 million in FY 2012. 

As these bills move to the Senate, tax breaks should be brought into the discussion of how we prioritize our limited state resources. Download GBPI's fact sheet for more information.

 

Comprehensive Tax Reform Bills and Resolutions Still Waiting for Action

  

HB 385 incorporated the Tax Council's recommendations in full and now awaits action by the House and Senate. Three other bills (HBs 386, 387, and 388) include the same language as HB 385 and also could be vehicles for tax reform.

 

Education Bills that Have Passed the House and Senate

HB 172 - Extension of multiple flexibility provisions

 

House Bill 172 extends the date by which school systems must decide whether to request increased flexibility or remain status quo. By June 30, 2015 school systems must decide whether to become a charter school, enter into an Investing in Educational Excellence partnership with the state, or remain in status quo form. Furthermore, this extension pertains to flexibility in maximum class size requirements and to certain expenditure control waivers related to earned state funding.

 

 

HR 495 - Creates Joint Higher Education Finance Study Committee

 

 

House Resolution 495 creates a Joint Higher Education Finance Study Committee to study the funding formula for the University System of Georgia and higher education funding. The committee would undertake a comprehensive study and evaluation of the cost and resources needed to educate a child through a review of the core issues relating to higher education financing and by evaluating the various components of the funding formula. The committee would consist of 14 members and would report its findings and recommendations to the General Assembly and the governor, with suggestions for proposed legislation, by December 31, 2011.

 

SB 119 - Revises provisions for Tuition Equalization grants

 

Senate Bill 119 extends the period for which a private higher education institution, which was previously accredited but currently working to regain such accreditation, is considered an approved school from seven to 11 years. In addition, SB 119 deems an eligible high school for HOPE scholarships and grants to include schools that were accredited within the previous two years between July 1, 2011 and June 30, 2013.

Unemployment Insurance Update

Georgia's unemployment trust fund is insolvent in part due to continued employer state unemployment insurance (UI) tax breaks. See GBPI's recent brief, Georgia's Unemployment Trust Fund: More than $600 Million Owed to the Federal Government, for more background.

 

Recently passed bills will not put Georgia on the path to solvency. The latest example is HB 292.

 

HB 292 - Employment security; extend rates and credits; change certain provisions

 

From 2002 forward, Georgia policymakers passed legislation to suppress employer state UI tax increases that would build back the unemployment trust fund. HB 292 (like SB 151) continues to suppress the overall rate increase through 2012, but gives the DOL commissioner discretion to increase the overall rate by a maximum of 50 percent (up from 35 percent). This bill passed out of the House on Monday, March 11.

 

HB 292 also contains provisions that keep employer standard state UI tax rates level for the next five years. Under current law, new employers were scheduled to pay an increased state UI tax rate of 2.7 percent (up from 2.62 percent) beginning in 2012; however, HB 292 suppresses that increase for five years. Also, HB 292 would suppress the scheduled increase in the employer state UI tax rates until after December 31, 2016.

  

Suppressing the surcharge and keeping employer state UI tax rates level for five years will not move the unemployment reserve to solvency.

  

Fix needed to continue unemployment benefits for 22,000 Georgians

 

A small technical fix is needed to continue federally funded unemployment extended benefits for 22,000 Georgians each week. Georgia currently receives $29 million per month from the federal government for this program. The most recent federal extension legislation continues these benefits through 2011, and may be extended again. However, the legislation changed the qualifying formula to determine which states meet the high unemployment threshold, providing a more generous three year lookback in place of the two year lookback. Without adopting this new formula, Georgia would lose out on approximately $175 million from July through December 2011, which would not only sustain workers unemployed due to no fault of their own, but would provide a boost to local economies across the state.  

Health Care Legislation

 

Several health care bills that address a wide variety of health care issues were passed by their originating chamber before crossover day, though many did not. Key bills that are still alive in the 2011 session are listed below.

 

Private Insurance Regulation

 

HB 47 is similar to legislation introduced in recent years to allow health insurance companies to sell health insurance products licensed in other states. This bill would allow Georgia insurers to offer policies they currently offer in other states, even if those policies do not cover services required under Georgia law. The bill has passed the House and is assigned to the Senate Insurance Committee. 

 

SB 17 would create a Special Advisory Commission on Mandated Health Insurance Benefits, effective in 2012. The Commission would be charged with a variety of duties, including developing a system to assess the effect of mandated benefits taking into account the costs and impact of treatment and the cost savings to the health care system. This bill has passed the Senate and is assigned to the House Insurance Committee.

 

State Health Care Programs

 

HB 214 would create a new state Department of Public Health as a separate cabinet-level agency reporting directly to the governor. This bill implements a recommendation by a special commission created to help guide the long-term structure of the state's public health activities; it passed the House and is assigned to the Senate Health and Human Services Committee.

 

SB 63 has undergone significant changes since it was originally introduced, though the goal of the bill to reduce provider and consumer Medicaid fraud is still the same. 

 

The version of the bill that passed the Senate would direct the Department of Community Health to conduct a pilot program to develop a new Medicaid smart card to be used to verify eligibility and identity at the point of service. This version no longer requires the pilot program to include biometric finger imaging.

 

The current bill gives the agency more flexibility in crafting the pilot program and in deciding whether to implement the program on a statewide basis.

 

A fiscal note was prepared on the original version of the bill, and estimated only a portion of the costs of the proposal. In particular, the costs of the new cards and other equipment was estimated to be $575,000 and $600,000, for a three- or six-month pilot program, respectively. These costs would total $23.2 million in the first year, with ongoing annual costs expected to be at least $3.2 million. 

 

Additional costs for computer and information system upgrades could not be estimated; however, these costs could be significant.

 

The fiscal note was unable to forecast potential savings because of the difficulty in estimating what portion of existing fraud could be curtailed by this program as well as the potential for new types of fraud that can arise with new technologies.

 

The bill has passed the Senate and is assigned to the House Health and Human Services Committee.  

 

Affordable Care Act

 

Several bills have been introduced that seek to prevent state agencies from, or limit the ways in which state agencies go about, implementing the Affordable Care Act that did not make it past crossover day.

 

One notable bill that did not survive was HB 476, which would have created the Georgia Health Insurance Exchange Authority as the governing body for the state health insurance exchange required under the Affordable Care Act. The governor has indicated that he will use executive authority to create an advisory committee to study the issue and make recommendations to the state on how to proceed. 

March 18, 2011 

Alan's Signature

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Corporate Welfare in Time of State Budget Crisis: Why?

 

The House of Representatives voted to pass House Bill 322, which continues a $20 million special interest tax break to Delta Air Lines, despite the state's billion dollar budget shortfall and Delta's multi-million dollar profit in 2010. In this week's commentary, GBPI Executive Director Alan Essig challenges the rationale behind the bill, especially given the dire fiscal crisis Georgia is facing.

 

Click here to read the commentary.

2011 Legislative Session:

 

 

GBPI in the News

 

 

Ledger Enquirer
 
Atlanta Journal-Constitution

 

Macon Telegraph
 
Athens Banner-Herald

 

Atlanta Journal-Constitution

 

New  York Times
  
Atlanta Journal-Constitution

 

Atlanta Journal-Constitution

 

Times Herald
 
NPR Weekend Edition
 
Atlanta Journal-Constitution
 
Savannah Morning News
Rome News-Tribune

GBPI's Latest Analysis

 

 

FACT SHEETS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
POLICY BRIEFS:

 

  
  
 
  
  
  
  


Have We Hit the Bottom?

An overview of the governor's FY 2012 budget

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GBPI is the state's leading independent, nonpartisan nonprofit engaged in research and education about the fiscal and economic health of the state of Georgia. GBPI provides reliable and timely analysis of Georgia's budget and tax policies and promotes greater state government fiscal accountability, improved services, and an enhanced quality of life for all Georgians. Visit www.GBPI.org for more information.