Weekly Update March 8, 2013

Legislation Passed or Still Pending for this Session

HB 454 proposes taking a small step toward increasing the public’s ability to understand the trade-offs the state makes when it approves a new tax break.  It allows for an annex to be included in the Tax Expenditure Budget produced by the Department of Audits.  The annex would include more detailed analysis of specific tax expenditures.  The bill passed the House on Crossover Day.

SB 189 proposes to allow for-profit post-secondary schools to establish college and career academies, which are specialized charter schools. The bill passed the Senate this week and moves on to the House.

The academies now are developed collaboratively by school districts, technical schools, businesses and community members. The program is overseen by the technical college system. The academies enable high school students to take classes at technical schools and gain work experience while still in high school. Under SB 161, which was passed in 2011, state funding is available to establish the academies. Institutions within the technical college system and the university system, as well as nonprofit colleges and universities in Georgia, can participate in the academies.

HB 372 would return the grade point average (GPA) requirement for the HOPE grant to 2.0. The bill passed the House this week and moves on to the Senate. The HOPE grant is for students who are in certificate or diploma programs at colleges or universities in Georgia. Most grant recipients are in the state’s technical schools. In the 2011 session, the GPA requirement was raised to 3.0 as part of an effort to stabilize finances for all HOPE financial aid programs. Enrollment across the technical college system plummeted by more than 40,000 students, in part due to the new GPA rules. If approved HB 372 should help restore access to technical college programs, particularly for low-income students.

House Bill 266 (HB 266) combined two unrelated tax bills. It passed the General Assembly and was signed by Georgia Gov. Nathan Deal this week.

The first part of the bill offers a set of fairly technical changes to Georgia’s new system of taxing cars created last year. They include the elimination of a double-tax on Georgians who lease vehicles, a change to how the state values vehicles for tax purposes and a few minor changes to how and when the new system is implemented. The Senate attempted to include a massive tax break for “buy here, pay here” car dealers in the bill, but the two chambers compromised to remove the special tax preference. The car tax revisions should bring in an estimated $52 million in new revenue over five years.

The second half of HB 266 is this year’s Internal Revenue Code Update, which is legislation the General Assembly must pass each year to align Georgia’s tax code with relevant changes on the federal level. Because state and federal tax laws are closely linked, many national tax changes directly affect the size of Georgians’ state tax bills. This year, the “fiscal cliff” agreement in January and other Congressional action altered dozens of national tax laws that threatened to cost Georgia nearly half a billion dollars in the 2013 and 2014 fiscal years. Lawmakers made modifications designed to limit the decrease to about $87 million during that two-year span. For more information, see our blog:“Fiscal Cliff Fallout Hits Georgia Revenues.”

SB 224 proposes a new program called “Invest Georgia” designed to increase access to venture capital for the state’s businesses. The bill passed the Senate and moved to the House Ways and Means committee. The legislation is similar to HB 285, which proposed the same concept but stalled in the House. Both versions of the bill would fund the new program at $100 million over five years, though they differ on the method.For more information, download the SB 224 (LC 34 3791) Bill Analysis.

HB 164 extends until 2015 the sales tax exemption for engines and parts used in the maintenance of aircraft not registered in Georgia. The bill passed the House Tuesday. Created in 2007, the exemption allows out-of-state companies that have airplanes serviced in Georgia to avoid paying sales taxes on the parts involved in that repair. Savannah-based Gulfstream and a few smaller aerospace companies would benefit if the bill passes. It is expected to cost the state $5 million to $6 million in revenues per year.

HB 193 revives several small sales tax breaks aimed at charities that expired in June 2010. These include exemptions for food purchased by qualified food banks, food donated for disaster relief, purchases by certain nonprofit health clinics and purchases by Goodwill Industries Inc. It passed the House on Tuesday. The restored exemptions would last from July 1, 2013 to June 30, 2015 at an estimated cost of about $1.5 million per year.

HB 211exempts public school systems from Georgia’s motor fuel taxes from July 2013 through June 2015. Georgia would collect nearly $12 million less over two years from this tax, which is dedicated to transportation funding. The exemption would boost local school budgets by lowering the cost of transportation by $5 million to $6 million in state revenues per year. The bill passed the House on Crossover Day.

HB 272 extends Georgia’s Angel Investor Tax Credit, which allows businesses and individuals to reduce their tax liability in exchange for investing in Georgia-based startup companies. It passed the House on Crossover Day. Now set to expire July 1, 2013, the bill extends the credit through 2015 while reducing its maximum annual revenue cost to $5 million from $10 million.

 

Legislation that Failed to Pass Before Crossover day

HB 128, or the “Georgia Renaissance Act,” proposed the creation of $30 million worth of tax credits to help revitalize Georgia’s municipal downtowns. It would have become Georgia’s third largest economic development tax credit. For additional information, download the HB 128 (LC 34 3600) Bill Analysis.

HB 140 proposed to significantly expand Georgia’s controversial tax credit scholarship for private school students by increasing its annual cap to $80 million from $50 million. However, Senate Bill 243 (SB 243) addressed private school scholarships in a different way. Download our SB 243 bill analysis. Here is our HB 140 bill analysis.

HB 395 proposed to create a costly new tax break for insurance companies that invest in qualified “community development entities,” a special type of financial institution that invests in third-party businesses. The idea is a hybrid of two different initiatives: the federal version of the New Markets Tax Credit, which some other states are emulating, and CAPCO (short for Certified Capital Companies), a controversial state subsidy program that Georgia rejected in the past. For more information, download the HB 395 (LC 37 1578ERS) Fact Sheet.

 

 

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