Weekly Legislative Update, February 3, 2012
State revenues for the first six months of this fiscal year are running 5.2 percent ahead of the FY 2011 revenue collections.
The governor’s FY 2012 revenue estimate projects an increase in revenues of 4.5 percent. Although we appear to be on target to make the revenue estimate, revenues would need to grow between 7 and 8 percent of the remaining 6 months of the fiscal year to drive a surplus large enough to fund the Education Mid-Year Reserve and grow the Revenue Shortfall Reserve by $300 to $400 million.
The FY 2013 revenue estimate is a modest 4.9- percent growth over the FY 2012 revenue estimate. However, to fund the Education Mid-Year Reserve and drive a surplus of $300 to $400 million in FY 2013 to continue rebuilding the Revenue Shortfall Reserve, revenues would need to grow between 7 and 8 percent. Back to top
The House and Senate are scheduled to go into session for the 15th legislative day on Monday, February 6th. They will be in session this week through Thursday, February 8th (18th legislative day). The legislative calendar is set through Monday, March 12th (31st legislative day). Back to top
Amended FY 2012
The House passed the Amended FY 2012 budget on Friday February 3rd by a vote of 159-0. The House made several changes to the Governor’s proposal. Such changes include:
- $713 million in unspent Motor fuel Funds for various road construction projects with $300 million towards construction of the Northwest Corridor project.
- $2.86 million for Charter School System Grants
- $7.0 million for one-time funding for school systems with decreased Equalization earnings in FY 2013 due to new formula calculations per HB 824.
- $1.26 million to fund the first year phase-in for the new Public Health grant-in-aid formula to hold harmless all counties.
- $75,000 in the Department of Agriculture to provide funds for a H1B/H2A guest worker program
The Senate is expected to take up the Amended budget next week.
FY 2013 Budget
Both the House and Senate are continuing to hold hearings throughout the week on the FY 2013 budget. Download the proposed budget.
For the first time in several years there are no dramatic cuts in the governor’s budget recommendations. Even with new spending and an increase of $930 million in General Funds from last year, the FY 2013 budget is still nearly $2 billion less than the pre-recession budget of FY 2009. Overall, many state agency budgets are 20 to 30 percent less than their budgets in FY 2009.
Education funding continues to make up more than 51 percent of the state budget, with challenges in funding growth evident in some areas. For example, the FY 2013 budget fully funds student growth within the Department of Education (K-12), yet partially funds student growth within the Board of Regents (University System of Georgia).The Department of Education’s budget is $1 billion (12.5 percent) less than it was in FY 2009, while the Board of Regents budget is down more than $450 million (19.9 percent).
The majority of additional funding in the FY 2013 budget is for student enrollment growth, filling shortfalls in Medicaid and the State Health Benefit Plan, and making required payments to the State Employees and Teachers Retirement Plans. The FY 2013 budget also funds implementation of several recommendations from the Special Council on Criminal Justice Reform, including nearly $30 million to fund the third year of the Department of Justice Settlement Agreement for developmental disabilities and mental health consumers, and the Savannah Harbor Deepening Project. Many agencies face additional 2-percent budget cuts, including the Board of Regents which is cut by $35 million for personal services and operating expenses.
Even with moderate revenue growth, Georgia faces a structural deficit. In fact, Gov. Deal projects a $319-million deficit in FY 2014. Any additional tax cuts, currently mentioned as part of the Competitiveness Initiative will only increase the deficit. Without a significant improvement in the economy or tax reform that results in increased revenues, Georgia will continue to struggle to provide services to Georgians most affected by the recession. The state will also find it challenging to make the investments necessary for Georgia to prosper economically.
A balanced and targeted approach, one that includes additional revenues, would allow Georgia to position itself to prosper as the economy recovers, rather than relying on cutting prior investments and underfunding public resources such as schools and roads that are most important for future job growth. Back to top
Dowload FY 2013 Budget Analyses:
HB 868 was dropped on the House floor on Thursday the 2nd and referred to Ways & Means. Stemming from Governor Deal’s Competitiveness Initiative, the bill would revise Georgia’s Jobs Tax Credit and Quality Jobs Tax Credit. The primary changes to the Jobs Tax Credit include: increasing the amount of credit available for new jobs in Tier 3 and Tier 4 (i.e. more developed) counties from $750-$1,250 per job to $2,000 per job; lowering the new jobs threshold in Tier 1 (i.e. least developed) counties from five to two; lowering the jobs threshold in Tier 3 and 4 countries from 15-25 jobs to 10; and inserting new language to make existing Georgia businesses eligible for the credits as well. On the Quality Jobs Tax Credit, the primary change is lowering the jobs threshold from 50 to 15; there is not presently any language reducing the requirements for what constitutes a “quality” job (e.g. wage and health care).
HB 319 recently passed Ways & Means and is now in the House Rules Committee. The bill would restore a collection of sales and use tax exemptions that had previously been in place before expiring in 2011. Commencing in July 2012 and running through December 2014, the new exemptions would apply to: federally-qualified nonprofit health centers; nonprofit volunteer health clinics (i.e. the 94 free clinics statewide); qualified food banks; food donated for disaster relief purposes; and for qualified job training organizations (i.e. Goodwill career centers).
HB 747 is presently before the Ways & Means Committee. Sponsored by Rep. James Beverley (D-Macon) with bipartisan cosponsors, the bill would revise eligibility for Georgia jobs tax credits so that any census tract with a poverty rate of 45% or higher would be granted the same status as Tier 1 counties. The bill also loosens the definition of “less developed areas” under the Department of Community Affairs from ten or more contiguous census tracts to either a single census tract or two or more contiguous ones.
House Bill 824: Makes Changes to the State’s Equalization Grants Program Funding Formula
Bill Status: House Education committee favorably passed bill.
House Bill 824 (HB 824) attempts to ensure that equalization funding is effectively directed to low-wealth school systems across Georgia. Equalization grants are provided to qualifying school systems, which are allowed to spend the funds to meet the particular needs of their schools. HB 824 makes changes to the state formula used to calculate the amount of equalization funding earned by local school systems. The equalization program aims to facilitate funding equity across local school systems based on local tax property wealth.
Currently local schools systems earn equalization grants if their local per pupil wealth – the total value of all qualifying local taxable property divided by the total weighted number of full-time equivalent students – ranks below the 75th percentile local schools system in Georgia. Thus, a school system ranked in the 80th percentile – e.g. relatively high local wealth – does not qualify for equalization funding while a school system ranked in the 40th percentile – relatively low local wealth – qualifies for equalization funding.
HB 824 changes the eligibility criteria from the arbitrarily selected 75th percentile threshold to a state-wide average per pupil local wealth. School systems that fall below the state-wide average would qualify for equalization funding in an amount that brings their respective per pupil wealth levels up to the state-wide average. Furthermore, school systems would be required to levy a minimum of 12 mills in order to qualify for equalization funding. Finally, in years in which the equalization program is not fully funded, equalization grants will be proportionally reduced for all participating school systems. For FY 2013 and is expected to cost the state approximately $492 million for FY 2013.
House Bill 760: Makes Changes K-12 Education Capital Outlay Program
Bill Status: House Education committee favorably passed bill.
House Bill 760 (HB 760) eliminates the existing Advanced Growth program and transfers the annual funding allocations for the program into the Regular Growth program. HB 760 also eliminates various requirements for the Low-Wealth and Advanced capital outlay program in order to allow more school systems to participate.
Drug Testing of Applicants for Public Assistance (TANF, Medicaid and UI)
SB 292 referred to Senate Health & Human Services Committee
HB 464, HB 668, HB 697, HB 698, HB 699, (NEW) HB 861 referred to House Judiciary Committee
Several bills have been introduced that require drug testing (mandatory or random) of adult applicants or recipients of Temporary Assistance for Needy Families, Medicaid, State Unemployment Insurance, and possibly other “state or state-administered federal public assistance”. The bills generally require the applicant or recipient to pay for the cost of the drug test, which is reimbursed if the test result is negative, using federal funds. These bills may not be constitutional (e.g., if considered suspicion-less searches) or may not be allowable under current federal law that governs public assistance (e.g., current unemployment law does not allow drug testing).
The Senate Health & Human Services Subcommittee for Health Care Delivery Monday will hear SB 292 at 2 pm in 122 CAP. The subcommittee will also discuss SB 312 which requires “personal growth activities” for TANF and food stamp applicants.
HB 681 is the latest TANF drug testing bill to be dropped was also referred to House Judiciary. In addition, this bill seeks to encourage Georgia law enforcement officials to work with DHS to identify ”illegal substance abusers who are are receiving public benefits”
Proposed Transfer of Rehabilitation Service
House Bill 831 proposes moving the Division of Rehabilitation Services from the Department of Labor to the Department of Human Services effective July 1, 2012. The governor has included the transfer in the FY 2013 budget report. On February 2, 2012 the House Human Relations & Aging Committee heard testimony from the the bill sponsor – Representative McCall, DHS Commissioner Clyde Reese, DOL Commissioner Butler, and the public. The committee tabled a vote on HB 831 until its next called meeting (to be scheduled for the following Wednesday or Thursday).