State revenues for the first nine months of this fiscal year are running 4.7 percent ahead of the FY 2011 revenue collections. March revenues showed an increase of 5 percent over February of 2011. The FY 2012 budget is based on 4.25 percent revenue growth.
Moderate revenue growth throughout the remaining three months of the fiscal year should enable full funding of the FY 2012 budget. It is doubtful that such growth will drive a surplus large enough to fund the Education Mid-Year Reserve and increase the Revenue Shortfall Reserve.
The Education Mid-Year Adjustment Reserve funds K-12 student enrollment growth in the amended or mid-year budget. Without an adequate Education Mid-Year Adjustment Reserve, cuts would need to be made in other budget items in order to fully fund the increased cost of newly enrolled students.
The RSR acts as a savings account or “rainy day” fund for the state should revenue collections decline unexpectedly. Increasing the funds in the RSR is important for keeping Georgia’s AAA bond rating, which saves the state millions of dollars in interest payments, and helps minimize budget cuts during the next economic downturn.
The FY 2013 revenue estimate is a projected 5.2 percent growth over the FY 2012 revenue estimate. The tax package (HB 386), passed this week, has a projected loss of $49 million revenue in FY 2013. The governor has not adjusted his revenue estimate accordingly. The Georgia State University Economic Forecasting Center’s February quarterly forecast projects FY 2013 revenue growth of only 4 percent.
See the GBPI Beyond the Numbers Blog for an analysis of the March revenue numbers.
House and Senate Calendar
The Georgia General Assembly concluded the 2012 Legislative session on March 29. Governor Deal has until May 8 to either sign or veto the bills passed by the General Assembly.
State Budget: FY 2013
The House and Senate passed the FY 2013 budget Conference Committee agreement on the 39th legislative day (March 27th). The Governor has 40 days from the end of session to sign the budget.
Of the almost $1 billion revenue growth in the FY 2013 budget: $575 million funded population growth and shortfalls in Medicaid, K-12 Education, Board of Regents and the Technical College System; $231 million covered increases in state employee and teacher health benefits, retirement obligations, unemployment insurance, liability insurance and other administrative items; $112 million went to fund economic development projects in the OneGeorgia and the Regional Economic Business Assistance Programs. Only $74 million was used to fund new or expanded programs.
For additional information, download the FY 2013 General Budget Talking Points from the Georgia State Senate Budget and Evaluation Office.
GBPI analysis of the FY 2013 budget will be forthcoming in May.
Fiscal and Tax Policy
Several tax bills made it through to final passage and await Governor Deal’s signature:
- HB 386, the tax package, explained in GBPI’s full report and blog statement on the bill, includes some positives but falls well short of the comprehensive tax reform proposed by the Special Council on Tax Reform and Fairness for Georgians. Lawmakers will need to return to the table in coming years for the more fundamental reform Georgia still needs.
- HB 48 enables counties, via referendum, to cut their inventory taxes (taxes paid by businesses on their stock of unsold goods) up to 100 percent. A similar measure was vetoed in 2010 by Governor Perdue.
- HB 100 creates a special court within the Office of State Administrative Hearings – the “Georgia Tax Tribunal” – that will have jurisdiction over tax disputes traditionally resolved by the Department of Revenue. Its goal is to provide faster responses on personal income tax liens and sales tax remittances for businesses.
- HB 743 includes an extension of the motor fuel tax exemption for public transit and campus vehicles through 2015, which will cost an estimated $8.7 million over three years. Before passage, the Senate amended HB 743 to include a provision that shields major airlines from having to pay local SPLOST taxes – specifically those levied by Clayton County – on jet fuel purchased at Hartsfield-Jackson International Airport. The Senate then passed a different amendment meant to weaken the blow to Clayton County’s tax revenue, but it was stripped out by the House and is not included in the final bill.
- HB 868 contains a series of technical changes to Georgia’s jobs tax credits proposed by Governor Deal’s Competitiveness Council. The original bill contained costly expansions, but the House reduced it.
- HB 1027 closes some loopholes in Georgia’s film tax credits and places a cap on the value of credits available to interactive gaming companies, which will bring in an estimated $11 million in revenue over the next three fiscal years.
- SB 402 reforms Georgia’s pension system to allow the state’s Employees Retirement Fund to invest in various “alternative investments,” such as venture capital. A maximum of 5 percent of pension assets can be invested in alternatives, and teacher pensions are excluded from the reform altogether.
HB 1166 requires health insurers operating in Georgia’s individual health insurance market to offer policies for child-only coverage. The bill also sets up rules for how these policies should be offered and notably establishes an “open enrollment” period of January 1 – 31, 2013 for families to sign up for coverage. Currently, none of the health insurers offering coverage through the individual market offer child-only plans. The bill passed both chambers and awaits the governor’s signature.
Several education bills made it through to final passage and await Governor Deal’s signature:
- HR 1162 (LC 33 4555s) The substitute version of original House Resolution 1162 proposes an amendment to Georgia’s state constitution. The amendment would explicitly state the General Assembly’s role in establishing state-wide education policies for public education. The amendment would also restate the state’s authority to establish special schools – which would include charter schools – in response to the ruling by Georgia’s Supreme Court in 2011 that the now-defunct Georgia Charter Schools Commission is unconstitutional. Once Governor Deal passes the amendment, it would be presented to the citizens of Georgia, who would vote for or against the measure.
- HB 181 authorizes the State Board of Education to waive the requirement that students eligible for the Special Needs Voucher Program must have been enrolled in a public school in the prior school year. The bill also specifies funding for the program and the manner in which parents of eligible students are notified about the program.
- HB 760 makes several changes to the K-12 education Capital Outlay Program. Currently, the program consists of four sub-programs: Exceptional Growth, Regular, Advanced Funding, and Low-Wealth. The bill eliminates the Exceptional Growth program and directs funding for this sub-program to the Regular program. The bill also changes eligibility criteria for the Low-Wealth program and allows the state to provide funding to local systems in the event of destruction or damage to an educational facility caused by fire or natural disaster.
- HB 797 is the enabling legislation for House Resolution 1162, which proposes amending the state constitution to allow for the creation of a state charter school commission. HB 797 articulates the authorities and responsibilities of the proposed state charter school commission – which would consist of seven appointment members – as well as the mechanism for funding authorized state charter schools.
- HB 824 makes changes to the state’s equalization grants program funding formula. The bill attempts to ensure that equalization funding is effectively directed to low-wealth school systems across Georgia. For additional information, download the HB 824 Fact Sheet.
- HB 1178 requires that a fiscal note be included with the introduction of a bill having significant impact on the anticipated revenue or expenditure level of the Department of Education. The fiscal note shall include a 10-year projection of the costs of any new program or funding category.
- SB 289 requires the State Board of Education to establish rules and regulations that maximize the numbers of students who complete at least one online learning course prior to graduation. Beginning with the 2013-2014 school year, local school systems are required to provide opportunities for all public school students in grades 3 through 12 for participation in virtual instruction program options.
- SB 403 stipulates that each local system shall earn funding for one nurse for every 750 full-time equivalent (FTE) students at the elementary school level and one nurse for every 1,500 FTE students at the middle and high school level. School systems with less than the minimum FTE student counts shall receive an unspecified base amount of funding. Local school systems must expend 100 percent of nursing funds earned for salaries and benefits for school nurses.
Human Services Policy
Drug Testing of Applicants for Public Assistance (TANF, Medicaid and UI)
Several bills were introduced this session that would require drug testing (mandatory or random) of adult applicants or recipients of Temporary Assistance for Needy Families (TANF) or of other public assistance. These bills may not be constitutional (e.g., if considered suspicion-less searches).
HB 861, effective July 1, was the prevailing bill for drug testing TANF applicants. The final version of the bill, which used language in the former SB 292:
- Allows for a cotton swab test
- Drug test to be conducted no later than 48 hours after eligibility for TANF is approved.
- Approved TANF applicants who are also receiving Medicaid pay a nonrefundable “drug screening application fee” of $17. All other applicants pay the full cost of “administering the drug test”, which is reimbursed for individuals who test negative.
- No assistance payments are delayed because of drug testing and any payments made before a failing test result are recoverable
- Only one parent of a two-parent family is required to submit to a drug test.
- Teen parents, who are required to live with a parent, legal guardian or other caretaker are exempt from the drug test.
- Prior to the taking the drug test, TANF applicants may disclose prescription or over the counter medications taken currently.
- A list of substance abuse treatment providers provided to applicants who test positive for an illegal drug.
- If a parent tests positive, he/she may designate another individual, who must also submit to a drug test, to receive benefits on behalf of the parent’s minor child.
- “No testing shall be required… for any person who the department (DCH) determines is significantly hindered, because of a physical or mental handicap or developmental disability, from doing so.”
- Exempts applicants enrolled in enhanced primary care case management program or in one of the waiver programs listed in the bill
The House passed an amended version of HB 861 on March 7 and the Senate passed a substitute to HB 861 (that converted it to SB 292 language) on March 27. On the last day of session – March 29, the House agreed to the Senate version. The bill now awaits the governor’s signature or veto.
Proposed Transfer of Rehabilitation Services
HB 1146 proposes moving the Division of Rehabilitation Services from the Department of Labor to a newly created agency (Georgia Vocational Rehabilitation Agency) that would be attached to the Department of Human Services, effective July 1, 2012. The agency would be assigned to DHS for administrative purposes only. The bill also creates a Georgia Vocational Rehabilitation Services Board, appointed by the governor, consisting of nine members with vocational rehabilitation experience including five members who either have disabilities or have family members with disabilities. The executive director of the new agency would be nominated by the governor and approved by the Board. HB 1146 House and Senate and now goes to the governor.
Proposed Cuts to Unemployment Benefits
In the final days of the session, HB 347 became the bill for changes to Georgia’s unemployment insurance system, to avoid the constitutionality issue of SB 447, a revenue bill originating in the Senate.
HB 347, like SB 447 includes drastic cuts to unemployment benefits for those who have lost their jobs due to no fault of their own, makes tax cuts permanent for employers, and provides for a modest increase to funding the Georgia unemployment trust fund. Specifically, HB 347:
- Reduces the maximum number of weeks of unemployment benefits to a sliding scale of 14 to 20 weeks from 26 weeks, which is one of the worst in the country for the unemployed,
- Permanently suppresses the increased tax rate that would be in place, keeping the surcharge at 50 percent until the $766.7 million federal loan is repaid and there is a $1 billion balance in the Unemployment Insurance Trust Fund.
- Raises the taxable wage base from $8,500 to $9,500 in 2013.
Unlike SB 447, HB 347 did not impose a waiting week (a week delay of paying unemployment insurance benefits, which in essences eliminates one week of payments for half of the eligible recipients) and did not bring the sliding scale down to a low of 12 weeks.
The House Industrial Relations Committee passed SB 447 on March 26. HB 347 was passed by the House on March 4. On March 26, the Senate Insurance and Labor Committee substituted the language in HB 347 with the language in SB 447. On the last day of session, HB 347 went to a conference committee where only minor adjustments, as previously noted, were made. Both the House and Senate adopted the conference committee report. HB 347 now goes to the governor.
SB 312 Failed to Make it to Final Passage
SB 312 requires food stamp applicants to “engage in professional development activities”, such as “working toward a general education development (GED) diploma, if not a high school graduate, pursuing technical education; attending self-development classes; and enrolling in an adult literacy class.” The substitute bill includes exemptions for those who are –1) under age 16 or over age 59, 2) developmentally disabled, 3) caretakers with a child under age 6 or for an incapacitated adult, 4) working at least 30 hours a week, 5) participants in drug/alcohol rehabilitation program, 6) students who are at least part-time, or 7) unemployed insurance benefit recipients. The House Judiciary Committee passed SB 312 with an amendment to raise age of child to 16 for parent to be exempt; however, the bill was not voted on by the House.