Weekly Legislative Update, January 27, 2012

 

This Week in the Georgia Legislature

State Revenues
House and Senate Calendar
State Budget: FY2012 Amended and FY 2013
Fiscal and Tax Policy
Drug Testing of Applicants for Public Assistance

 

State Revenues

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

House and Senate Calendar

The House and Senate are scheduled to go into session for the 10th legislative day on Monday, January 30th. They will be in session this week through Thursday, February 2nd (13th legislative day).  The legislative calendar is set through Monday, March 12th (31st legislative day).  Back to top

 

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State Budget: Amended FY 2012 and FY 2013

Process
Governor Deal released his proposed budgets on January 11, 2012. The House and Senate appropriations subcommittees held budget hearings last week and  will continue to meet throughout the week on the Amended FY 2012 Budget. (Download the proposed budgets.)

GBPI Analysis

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:

FY 2013 Budget Analysis: Budget Overview

FY 2013 Budget Analysis: PK-12 Education

FY 2013 Budget Analysis: Higher Education

FY 2013 Budget Analysis: Behavioral Health and Developmental Disabilities

FY 2013 Budget Analysis: Public Health

FY 2013 Budget Analysis: Human Services

 

Fiscal and Tax Policy

SB 203, CAPCO – On Monday, Jan. 23rd, the Georgia Senate voted down SB 203, which if passed would turn the expensive and ineffective CAPCO scheme into law. The bill’s future now looks bleak, but CAPCO could still emerge in either conference committee or an alternative bill. For more details on why CAPCO is unwise policy, see GBPI’s report, CAPCO: A Bad Investment for Georgia.

HB 718 – This proposal would create a new program within the Department of Economic Development – “Invest Georgia” – that would work to increase Georgia businesses’ access to venture capital. As described in our full analysis of the bill, HB 718 appears to be well-designed; however, its expensive price tag means it must be judged within the context of competing state priorities. The House Insurance Committee’s Subcommittee on Administration and Licensing approved bill on 1/24.

Competitiveness Council – Gov. Deal’s Competitiveness Council released its final report this week, laying out a series of recommendations in six areas: business climate, education and workforce, innovation, infrastructure, global commerce and global efficiency. Noteworthy suggestions include removing the energy tax used in manufacturing and “modernizing” certain jobs tax credits. No specific legislation has been filed.

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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 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).

So far, the Georgia Department of Human Services has completed a fiscal note for HB 668 with several assumptions that may underestimate the cost. Back to top

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