State Revenues for the first seven months of this fiscal year are running only 4.5 percent ahead of the FY 2011 revenue collections. January revenues showed weak growth of only 0.7 percent, which followed a 1.2 percent decline in December. As a result of the recent flat revenues, on February 20 the Governor lowered the FY 2012 revenue estimate by $47.2 million, causing the projected revenue growth for FY 2012 to decrease from 4.5 percent to 4.25 percent. Every 1 percent shortfall in the revenue estimate equates to s revenue shortfall of approximately $173 million. The Revenue Shortfall Reserve contains only $328 million. Even if revenues pick up in the remaining five months of the fiscal year to fully fund the FY 2012 budget, it is questionable whether such growth will drive a surplus large enough to fund both the Education Mid-Year Reserve and increase the Revenue Shortfall Reserve. The February issue of the Georgia State University Economic Forecasting Center’s quarterly forecast projects FY 2012 revenue growth of only 4.5 percent.
Considering the downward revision of the FY 2012 revenue estimate, the FY 2013 revenue estimate is now projected at 5.2 percent growth over the FY 2012 revenue estimate. The February issue of the Georgia State University Economic Forecasting Center’s quarterly forecast projects FY 2013 revenue growth of only 4.0 percent.
The House and Senate are scheduled to go into session for the 29th legislative day on Monday, March 5 and the 30th legislative day (crossover day) on March 7. The legislative calendar is set through Monday, March 12 (31st legislative day).
Amended FY 2012
The House passed the Amended FY 2012 budget (HB 741) on Friday, Feb. 3 by a vote of 159-0.
The Senate passed HB 741 on Thursday Feb. 23 by a vote of 51-1.
The Senate incorporated the Governor’s $47.2 million lowering of the revenue estimate through eliminating the increased funding of the Care Management Organization payments within the Low-Income Medicaid Program and the PeachCare Program (savings of $82.2 million).
There are only relatively minor differences between the House and Senate budgets. The Senate Budget:
- Adds $34.4 million to meet projected expenses in the Low-Income Medicaid Program, resulting in a $19.3 million increase from the Governor’s budget proposal.
- Eliminates funding for revised co-payment proposal in the Low-Income and PeachCare Programs that would have implemented smaller co-pays ($2 million).
- Adds $1.2 million in the Public Health budget for the Children 1st Program, to replace lost TANF funds.
- Adds $3.8 million for virtual State Special Charter Schools.
Although there have been no public meetings, HB 741 remains in the Conference Committee.
FY 2013 Budget
The House is scheduled to vote the FY 2013 budget out of the Appropriations Committee on March 5 with action by the House on March 7. The Senate is continuing to hold hearings on the FY 2013 budget. Download the proposed budget.
Dowload FY 2013 Budget Analyses:
With Crossover Day scheduled for next Wednesday, most observers now expect that the Governor will introduce an omnibus tax bill in the Special Joint Committee on Georgia Revenue Structure, which was specially-created for the current two-year session as a venue for working on “tax reform.” Comprised of members from both chambers, the Joint Committee is not held to the same 30-day rule as normal legislation. Although firm details do not exist, the expected omnibus package could include the sales tax exemption on energy for manufacturers; reforms to Georgia’s existing jobs tax credits; and various revenue-enhancers in order to keep the bill revenue neutral.
HB 993 had its first hearing in the Sales Tax Subcommittee on Tuesday. The bill contains two provisions: first, it would enact a so-called “Amazon law” that would require certain Georgia retailers to collect sales taxes on purchases made via the Internet. Second, it would reinstate Georgia’s sales tax holiday for 2012 and 2013. Because of the costly nature of sales tax holidays, the bill could cost the state up to $37 million in FY 2013 and $30 million in FY 2014. For an analysis of HB 993, see the HB 993 Substitute (LC 34 3380S) Fact Sheet.
HB 920 is currently in the House Rules Committee, awaiting passage to the full chamber. It would expand Georgia’s annual tax expenditure report to include a statement of each tax credit’s purpose and a cost-benefit analysis of whether that goal is being achieved (e.g. job creation). The proposed changes would strengthen lawmakers’ ability to analyze the effectiveness of tax expenditures.
HB 868 passed the Ways & Means Committee on Tuesday, but in drastically-altered form. Originally written to reform Georgia’s job tax credits at an estimated cost of up to $75 million per year, the major aspects of the bill were removed before passing committee. HB 868 now contains only a series of technical changes to existing law that are unlikely to affect revenues; however, it is assumed that the costly portions of the bill will reemerge in the Governor’s forthcoming package. For background on HB 868, see the HB 868 (LC 34 3275) Fact Sheet.
HB 811 is in Senate Appropriations after passing the House. The bill would restrict legislators’ ability to divert the revenue collected from fees intended to fund a specific purpose (e.g. tire removal, police training). It would require legislators to instead appropriate the revenue from fees as intended, with some exceptions, rather than redirecting it to the General Fund.
HB 319 awaits action in the House Rules Committee. The bill would restore certain sales tax exemptions for federally-qualified nonprofit health centers; nonprofit volunteer health clinics; qualified food banks; food donated for disaster relief purposes; and for Goodwill career centers. The exemptions cost a combined $1 million to $3 million per year.
HB 1050 is in the Sales Tax subcommittee of House Ways and Means. The bill would scale back a generous sales tax break for tourism attractions that was signed into law in 2011. Originally, companies spending at least $1 million to construct new attractions could qualify, but the new bill would raise this threshold to $100 million and extend companies’ eligibility period from 10 to 25 years. Read more here: http://onlineathens.com/local-news/2012-02-20/generous-tax-break-due-tightening
HB 48 was passed by the Senate Finance Committee after already passing the House last year. It would enable counties, via referendum, to cut their inventory taxes (a taxes paid by businesses on their stock of goods) up to 100 percent. A similar measure passed in 2010 before being vetoed by Governor Perdue. Read more here: http://www.macon.com/2012/02/07/1894819/business-tax-cut-looks-likely.html
HB 718, which would create a new $200 million program called “Invest Georgia,” appears stalled in the House Insurance Committee. Modeled on a similar program in Maryland, the bill is designed to increase Georgia businesses’ access to venture capital. For additional information, download the HB 718 (LC 34 3233S) Fact Sheet.
SB 402 would reform Georgia’s pension system so as to allow the state’s Employees Retirement Fund to invest in various “alternative investments,” such as venture capital and private equity. A maximum of 5% of pension assets could be invested in alternatives, and teacher pensions would be excluded from the reform altogether. The bill has passed the Senate and is now in the House Retirement Committee.
HB 743 is currently in the House Rules Committee. It would extend the exemption from motor fuel taxes currently enjoyed by public transit agencies, which has been in existence since 1978. The exemption costs around $10 million per year.
HB 890 has not yet been heard by the Income Tax Subcommittee of Ways & Means. It would create two new tax breaks related to the commercial use of natural gas, such as the construction of natural gas fueling stations for commercial trucks and taxis. While there is not an official fiscal note yet, the chairman of the committee estimated the new credits would cost $117 million over five years.
HB 862 is in House Ways & Means but has not yet been heard by subcommittee. It would expand the Georgia Qualified Education Expense Tax Credit, which allows individuals and companies to claim a credit against their income taxes in exchange for donating to qualified “student scholarship organizations.” HB 862 would enable companies to claim the credit against additional taxes beyond the income tax, such as alcohol or insurance premium taxes, but would not change the program’s $50 million annual cap.
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. This situation came about because of federal law changes that prevent insurance plans from excluding coverage of pre-existing conditions for children. In particular, the creation of an “open enrollment” period will allow for children in need to get coverage, while protecting insurance companies from “adverse selection” that occurs when people wait until they are sick to purchase coverage.
The bill has been favorably reported by the House Insurance Committee.
HR 1162 (LC 33 455s), proposes amendment to state constitution that clarifies state’s authority regarding K-12 education. The substitute version of original House Resolution 1162 (HR 1162 LC 33 4555S) 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. If HR 1162 passes both the House and Senate, the amendment would be presented to the citizens of Georgia, who would vote for or against the measure. House favorably passed bill upon reconsideration following prior failed House vote on February 8. On February 29, the bill was debated but tabled (not voted on) in the Senate.
HB 760, makes several changes to the K-12 education Capital Outlay Program. Currently, the program consists of four sub-programs: Exceptional Growth Program, Regular Program, Advanced Funding Program, and Low-Wealth Program. Notable changes within HB 760 include:
- Eliminate Exceptional Growth Program and transfer funding to the Regular Program. The maximum annual entitlement level for the Exceptional Growth Program is $100 million. These funds can only be used for new construction, or additions to existing facilities, and cannot be used to renovate or modernize existing facilities.
- Expand maximum entitlement level for Regular Program from $200 million to $300 million with the transfer of exceptional growth funds to Regular program. Regular growth funding provides greater flexibility – e.g. funds can be used for new construction as well as renovations – relative to the exceptional growth funding. Accordingly, HB 760 aims to allow school systems to benefits from a larger Regular Program.
- Allows state to provide funding to local systems in the event of destruction or damage to an educational facility caused by fire or natural disaster. Currently, local school systems must meet a local participation funding requirement in order to receive state capital outlay funding. HB 760 allows local systems to request state funding if they are unable to meet the required participation match. Any disaster-related advanced funding would be offset by capital outlay funds earned by the school system in the following year.
- Low-Wealth Program based on local property wealth and local sales tax revenues, per full-time equivalent, respectively. School systems ranked in the bottom 25 percent of local school systems for both metrics qualify for low-wealth funding. Furthermore, participating schools systems must levy a minimum equivalent of 12 mills. For each mill levied above the 12 mill minimum, local systems earn additional state funding for particular capital outlay projects under consideration. Accordingly, HB 760 aims to rewards local effort in regards to the Low-Wealth Program.
Senate Appropriations Committee favorably passed bill, which now moves to the Senate Rules Committee.
Drug Testing of Applicants for Public Assistance (TANF, Medicaid and UI)
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).
SB 292 requires drug tests for approved TANF applicants and Medicaid applicants The substitute allows for a cotton swab test, only tests one parent, and does not delay benefits. In addition, the substitute states that “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. The Senate Health & Human Services Subcommittee for Health Care Delivery passed a substitute to SB292 (by a 2-1 vote) on Wednesday, Feb. 15. The Senate Health & Human Services Committee held a hearing on SB 292 on Monday, Feb. 20. No vote was taken on the bill.
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:
- Under age 16 or over age 59,
- Developmentally disabled,
- Caretakers with a child under age 6 or for an incapacitated adult,
- Working at least 30 hours a week,
- Participants in drug/alcohol rehabilitation program,
- Ptudents who are at least part-time, or
- Unemployed insurance benefit recipients.
SB 312 would be piloted in five counties (to be decided by the Department of Human Services) and the bill’s effective date is contingent upon appropriations the DHS. No fiscal note has been made available on the substitute bill. The Senate Health & Human Services Committee passed SB 312 on Wednesday, Feb. 29. The bill now moves to the Senate Rules Committee.
HB 668– The Lane Subcommittee Judiciary Civil heard testimony on HB 668 on Wednesday, Feb. 15. At the conclusion of the testimony, the bill sponsor, Representative Spencer discussed possibly amending the bill to exempt certain people with mental disabilities and victims of domestic violence. No vote was taken.
HB 861, includes drug testing of TANF applicants, random drug testing of TANF recipients, and drug testing of TANF recipients who have been arrested for drug related offenses. The bill language states that the Department of Human Services “shall establish a procedure by which law enforcement agencies may report arrests for drug related offenses.” The Lane Subcommittee Judiciary Civil passed HB 861 on February 21. The bill now heads to the House Judiciary Committee.
Proposed Transfer of Rehabilitation Services
HB 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. The House Human Relations & Aging Committee passed HB 831 after hearing testimony on February 2 and February 6. HB 831 is now in the House Rules Committee.
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 was approved by the House Human Relations and Aging Committee on February 23, 2012 and is now in the House Rules Committee.
Proposed Cuts to Unemployment Benefits
SB 447 makes drastic cuts to unemployment benefits and makes small changes to funding of the Georgia unemployment trust fund.
For the unemployed, who lost their jobs through no fault of their own, SB 447 would:
- Impose a waiting week to ban payment of unemployment compensation for the first week of unemployment (which in essence eliminates a week of unemployment benefits for half of recipients).
- Reduce the number of weeks a person could receive unemployment benefits. The bill would drastically cut the maximum duration of unemployment benefits from 26 weeks to a sliding scale of 12 to 20 weeks, which is less than any other state in the country. Georgia already has the lowest average duration of benefits of any state in the country.
With regard to Georgia’s unemployment trust fund and outstanding $721 million loan to the federal government, SB 447 would:
- Continue to suppress the increased tax rate that would be in place, cutting the surcharge in half. This would reflect a small increase in the optional surcharge of 35 percent now in place and make it mandatory until the federal loan is repaid and there is a $1 Billion balance in the Trust Fund.
- Raise the taxable wage base from $8,500 to $9,500 in 2013.
SB 447 was read for the first time by the Senate on Thursday, Feb. 16 and was assigned to the Senate Insurance and Labor Committee. The bill passed the Senate on Friday, Feb. 24. For additiona information download the SB 477 Fact Sheet.