Today is the 34th day of the 40 day legislative session. The General Assembly will be in session Monday through Thursday this week. There has not yet been a calendar set for the final three legislative days.
HOUSE & SENATE APPROVE FY 2012 SUPPLEMENTAL BUDGET
Last Monday, the House and Senate agreed on an $18.08 billion dollar FY2012 supplemental budget. The version passed by the Senate was lower that the version previously approved by the House, due to projected revenue estimates that were lowered by Governor Deal after the House had completed its work. The House then agreed to the Senate’s changes later the same day. Governor Deal signed the FY 2012 supplemental budget into law on Thursday.
TAX REFORM
Regular readers of this update will recall that there has been a lot of talk this session about tax reform directed at incentivizing economic development and spurring job creation. Despite the talk, there was no legislation moving forward regarding any of these various tax reform proposals that had passed the House prior to Crossover Day (the Georgia Constitution requires all legislation dealing with taxation to originate in the House). However, there are exceptions to the Crossover Day rule and tax reform legislation that gets vetted by the Special Joint Committee on Georgia Revenue Tax Structure (comprised of both representatives and senators) is one of those exceptions. This morning, that committee held a hearing on HB 386, a formerly 127 page omnibus tax reform bill that was introduced last year and has which has now been replaced with a 53 page committee substitute version that incorporates the tax reform plan that has been hammered out in behind the scenes negotiations between legislative leadership and the Governor’s Office. Despite the magnitude of what is proposed, with only a few legislative days left, the bill may be voted out of committee early this week and head to the House and Senate for an up or down vote (with no amendments from the floor) later this week. Provisions include:
- Elimination (phased over three years) of the state sales tax on energy used in manufacturing and agriculture. Local governments will be authorized to impose a local excise tax on energy used in manufacturing (avoiding the negative impact that would have resulted on local governments, particularly as to SPLOSTs and E-SPLOSTs).
- Elimination of the sales tax and ad valorem taxes on motor vehicles sold after March 1, 2013, replacing it with a new, one time state and local title fee, paid at the time of purchase (starting at 6.5% and going up to 7% in 2015).
- Raising the personal income tax exemption for married taxpayers filing jointly from $5,400 to $7,400 (married taxpayers filing separate returns can each claim $3,700).
- Tightens the requirements to qualify for land conservation tax credits.
- Eliminates the sales and use tax exemption for the sale or lease of film production equipment or services.
- Eliminates the taxation of energy and machinery or equipment used in agriculture.
- Reinstates the sales tax holiday for back-to-school clothes, supplies, etc. and energy efficient products (October 5-7, 2012 and October 4-6, 2013).
- Attempts to expand the collection of sales tax to internet sales transactions, focused on vendors or others with a physical presence in Georgia (a requirement under a 1992 U.S. Supreme Court opinion).
- Creates a new exemption from sales taxes on construction materials used in “competitive projects of regional significance” as determined by the Commissioner of the Department of Economic Development. Proposed exemption is limited to the period between January 1, 2012 and June 30, 2014.
REGIONAL TRANSPORTATION REFERENDUM EDUCATION TV ADS DEBUT
On Thursday, the Metro Atlanta Voter Education Network (MAVEN) unveiled television and radio ads that begin to educate commuters about the cost of Atlanta’s notorious traffic congestion.
“Metro Atlanta commuters know how much time they personally waste sitting in traffic, but we want to make sure the entire region realizes the cumulative effect of years of failing to invest in an adequate transportation system,” said Bob Voyles, chair of the MAVEN Board of Directors. “We believe this is the kind of information voters will want to know before making a decision on how to vote on the July 31 Regional Transportation Referendum.”
On July 31st, voters in the 10-county Metro Atlanta region will vote on a proposed one-cent sales levy to build 157 transportation projects. In addition to those projects, 15 percent of the funds raised will be returned to local jurisdictions to address local priorities such as repaving, sidewalks and traffic signals.
MAVEN hired R&R Partners to produce the ads. R&R has a winning record of ad work for transportation referendums. The firm has also partnered with Sports Illustrated and ESPN, and is responsible for the “What Happens in Vegas, Stays in Vegas” campaign. The ads will begin running immediately on broadcast, cable TV and radio stations throughout the region. For more information visit www.transformmetroatlanta.com and to and to view the television ad go to http://transformmetroatlanta.com/blog/a-calculated-approach.
MAVEN is a coalition of more than 100 businesses, organizations and individuals that have joined together to educate voters about the July 31 referendum. MAVEN does not advocate any position, instead focusing on informing voters about the details and particulars of the referendum.
TODD LONG TO BECOME GEORGIA DOT DEPUTY COMMISSIONER
Current Planning Director Todd Long will be transitioning into a new transportation position. Long will become the GDOT Deputy Commissioner on April 16, 2012. In this new role, Long will report to GDOT Commissioner Keith Golden. The position of Planning Director was created as part of the Transportation Investment Act (TIA) and Long is the only person to have served in that role, which reports directly to the Governor (rather than the GDOT Commissioner or GDOT Board). Long was originally appointed by Governor Sonny Perdue and was then retained by Governor Nathan Deal when he took office. As Planning Director, Long had primary responsibility for the transportation project selection process, including shepherding the Regional Roundtable process that resulted in unanimous approval of the TIA project list that Metro Atlanta voters will vote on in July 2012.
Other legislation of note
HB 48 – Would expand Georgia’s existing freeporttax exemptions to allow local governments to exempt business inventory, making Georgiamore competitive with neighboring states which have no tax on business inventory. STATUS: Passed out of House Ways & Means Committee on February 24, 2011. Passed the full House on March 2, 2011 (by a vote of 166-1). Passed the Senate Finance Committee on Tuesday, February 7, 2012 but was recommitted to Senate Finance Committee on February 17, 2012. Senate Finance Committee passed a revised version on February 29, 2012. The full Senate passed that version on March 12, 2012 (by a vote of 44-0) and the House approved the Senate version on March 14, 2012 (by vote of 164-0), sending the bill to the Governor for his signature.
HB 100 – Would create a Georgia Tax Court (as a pilot project) to handle taxpayer disputes involving the Georgia Department of Revenue. STATUS: Introduced in 2011 session and passed out of House Judiciary Committee on February 29, 2012. Passed the full House (by a vote of 165-0) on March 7, 2012. Pending in Senate Judiciary Committee.
HB 641 – By Rep. Wendell Willard, would overhaul Georgia’s juvenile justice system. STATUS: Passed out of House Judiciary Committee on February 24, 2012. Passed the full House (by a vote of 172-0) on February 29, 2012. Pending in Senate Judiciary Committee.
HB 713 – Bill will delay until 2013 the implementation of the college and career readiness initiatives that were scheduled to go into effect this fall. These initiatives include requiring some level of career awareness education for students in all grades (K-12) as well as the “career pathways” program in which career focused programs of study in at least 16 defined career areas would be created for all high schools and students would follow a course schedule partially focused on the particular career interest they select beginning in 9th grade. Department of Education officials indicated that more time was needed to make sure that these programs are implemented in the right way. Status: January 12, 2012. Passed the full House on January 24, 2012 by a vote of 162-1. Passed by the Senate Education & Youth Committee on February 15, 2012. Passed the full Senate (by a vote of 44-8) on March 14, 2012. Bill awaits the signature of the Governor.
HB 868 – By Rep. Doug Collins seeks to modernize the current structure of income tax credits used to attract and retain businesses creating new jobs in certain designated strategic industries in Georgia. The current system offers much higher job tax credit amounts to businesses locating or expanding in poorer counties (Tier 1) and conversely, much smaller incentives in more affluent counties (such as Gwinnett, Fulton, or Cobb, which are Tier 4). The bill would also lower the minimum job creation threshold needed to qualify for the tax credits available to businesses creating “new quality jobs” (defined as jobs paying at or above 110% of the average wage in the county in which the job would be located). STATUS: Introduced on February 1, 2012. A watered down version passed out of the House Ways & Means Committee on February 29, 2012 and was passed by the full House (by a vote of 167-0) on March 7, 2012. Passed out of the Senate Economic Development Committee on March 13, 2012. Pending in Senate Rules Committee.
HB 954 – Shortens the period for elective abortion to the first 20 weeks (from the current 26 weeks). STATUS: Passed the House Judiciary Non-Civil Committee on February 27, 2012 and passed the full House (by a vote of 102.65) on February 29, 2012. Pending in Senate Health & Human Services Committee.
HB 994 – By Rep. Ed Lindsey, would encourage the redevelopment of designated brownfield sites by extending the preferential tax assessment of those properties for up to 15 years. STATUS: introduced on February 16, 2012 and passed out of the House Ways & Means Committee on February 28, 2012. Passed the full House on March 7, 2012 (by a vote of 157-0). Pending in Senate Finance Committee.
HB 1027 – Would tighten the requirements for productions to qualify for Georgia’s existing film, television and interactive gaming production tax credits. The original version of the bill specifically excluded video game productions from qualifying for the credits but the current version allows video game productions to qualify, while limiting the total amount of tax credits available to all video game productions in Georgia to $25 million (and to no more than $5 million for any individual company). Alabama, Florida, North Carolinaand Louisianaare all nearby or adjacent states that offer tax incentives targeted at attracting interactive gaming production. Georgianow ranks 4th among states in film and television production (behind California, New York and Louisiana). If all individual film and television productions were combined and treated as a single “employer,” film and television production would rank as one of Georgia’s top 10 employers (and if you excluded public sector employers, would be Georgia’s 3rd largest employer). Georgia’s film and television tax credits have resulted in a 1,000% increase in production activity in the state (from $244 million in 2008 to $2.4 billion in 2011) and have created an excellent return on investment when measured in direct economic impacts (such as jobs and direct spending) but are even more impressive when ancillary economic impacts, such as tourism and marketing Georgia are taken into account. STATUS: passed out of House Ways & Means Committee (by committee substitute) and the full House (by a vote of 154-0) on March 7, 2012. Pending in Senate Finance Committee.
HB 1052 – By Rep. Mike Jacobs, would overhaul the structure of the MARTA Board of Directors, staggering terms, imposing term limits and requiring representation of geographically diverse areas within MARTA’s jurisdiction. It would also impose new transparency and competitive bidding requirements for the award of MARTA contracts as well as new accounting and finacial disclosure procedures. Under the proposal, the MARTA Board would have one nonvoting member (the Executive Director of the Georgia Regional Transportation Authority) and 11 voting members, as follows: 3 residents of the City of Atlanta nominated by the Mayor and appointed by the City Council; 3 DeKalb County residents appointed by the Board of Commissioners (at least one of which would be from south of the City of Decatur and one of which would be from north of the City of Decatur); 1 DeKalb County resident appointed by a majority vote of the mayors of all the cities in DeKalb; 1 Fulton County resident from south of the City of Atlanta appointed by the Fulton County Board of Commissioners; 2 Fulton County residents from north of the City of Atlanta appointed by a majority vote of the North Fulton mayors; and the Planning Director of the Georgia Department of Transportation. STATUS: Introduced on February 16, 2012 and passed out of House Transportation Committee on February 29, 2012. Passed the full House (by a vote of 115-55) on March 7, 2012. Pending in the Senate Transportation Committee.
HB 1176 – A comprehensive criminal justice reform bill designed to Georgia’s unsustainable prison population growth, including alternative sentencing options for low-level, non-violent offenders to get the treatment or job training that can help them become contributing members of society rather than a drain on taxpayers. The bill incorporates some (but not all) of the recommendations of the 2011 Special Council on Criminal Justice Reform and would transform Georgia’s criminal justice system from the “tough on crime” mentality prevalent in the 1990s to a more “smart on crime” system. Georgiacurrently spends more than $1 billion on its corrections system and that number is projected to grow by more than $200 million if present incarceration trends continue. The Governor’s Office has indicated some concerns with HB 1176 as currently drafted and that they would like to see changes that would incorporate all of the recommendations of the Special Council on Criminal Justice Reform. STATUS: Rather than following the normal process of being vetted by one chamber before being sent to the other, this bill has been assigned to a House-Senate Special Joint Committee on Georgia Criminal Justice Reform that will work with the Governor’s Office to try to work out all of the remaining issues with the bill in the short amount of time left. HB 1176 is not subject to the Crossover Day requirements.
HR 1162 – By Rep. Jan Jones, is a Constitutional amendment to allow charter schools to be approved by the state over the objection of local school boards. Under the current proposal, charter schools would first apply to the local board of education in the jurisdiction in which they are located and if denied, they could then apply to the Georgia Charter Schools Commission for a charter and such approval would entitle a charter school to only the state portion of school funding, not any local school system funds. This Constitutional amendment is in response to (and would overturn) the May 2011 decision of the Georgia Supreme Court which declared that only local school boards could approve charter schools. STATUS: Passed out of House Education Committee on February 2, 2012. Failed to pass by the required Constitutional 2/3 majority on February 8, 2012 (10 votes short of the required 120). House voted to reconsider on Thursday, February 9, 2012 and Passed the House on February 22, 2012 (by a vote of 123-48). Approved by Senate Education & Youth Committee on February 24, 2012 and was debated by the full Senate before being tabled (presumably because they were short of having the necessary 2/3 majority) on February 29, 2012. The bill is eligible to be pulled from the table and brought up at any time in the Senate.
SB 33 – By Sen. David Shafer, would bring “zero-base” budgeting to Georgia’s budget process, requiring every state program, agency or department to submit a zero-base budget once every four years. A zero-base budget would require every budget to start at zero and for every line item for a particular program or agency to be justified, rather than the current scenario where the starting point for budget discussions is the previous year’s budget amount and the discussion is how much that amount will be raised or lowered. STATUS: Passed the Senate (by a 48-1 vote) and House (by a 135-38 vote) last year but in different versions. Working out the two versions is pending in a House-Senate Conference Committee.
SB 223 – “Sunset legislation” bill that would create a “Legislative Sunset Advisory Subcommittee” that would regularly assess all state programs, departments and agencies (each agency would be reviewed at least every 8 years) to make a recommendation if they should be consolidated, privatized or abolished. STATUS: Passed the House (by a 120-56 vote) and Senate (by a 42-9 vote) last year. Senate Conference Committee version was passed by the Senate on January 30, 2012 by a vote of 37-12. Senate Conference Committee version pending acceptance, amendment or rejection by the House.
SB 302 – Would increase the cap on the bonding authority of the Georgia Higher Education Facilities Authority from $300 million to $500 million, allowing for more money to build new facilities on Technical College System and University System campuses. STATUS: Passed out of the Senate Appropriations Committee on January 30, 2012 and passed the full Senate on February 1, 2012. Pending in House Higher Education Committee.
SB 321 – By Sen. Renee Untermanwould make it much harder for thieves to sell stolen scrap metal by imposing stringent new requirements on metal recyclers who purchase scrap metal, including (1) prohibiting cash payments in scrap metal purchase transactions, (2) require recyclers to keep on file a copy of the seller’s valid photo ID and thumbprint, VIN number of the vehicle used to deliver the metal, digital photo of the metal items, thumbprint of the seller (all of which would be provided to the sheriff of that county), and (3) prohibiting recyclers from purchasing copper or aluminum coil from non-verified sellers (such as licensed contractors). STATUS: Approved by the Senate Regulated Industries and Utilities Committee on February 15, 2012. Passed out of the full Senate on February 29, 2012 (by a vote of 44-5). Pending in House Judiciary Non-Civil Committee.
SB 355 – By Sen. Renee Unterman, would require mandatory reporting of child abuse by anyone (other than clergy and attorneys bound by attorney-client privilege) to report evidence of possible child abuse (currently only seven specifically defined types of professionals, such as teachers, are required to report evidence of child abuse). The bill would also extend the statute of limitations on crimes against children to the victim’s 18th birthday plus 10 years (or plus 15 years, in cases of forcible rape). STATUS: Introduced on January 26, 2012. Passed out of the Senate Judiciary Committee on February 28, 2012 and passed the full Senate on March 5, 2012. Pending in House Judiciary Committee.
SB 402 – By Sen. Tim Golden would allow up to 5% of the Georgia Employee Retirement System’s funds to be invested in “alternative investments” including venture capital funds. STATUS: Introduced on February 7, 2012 and passed out of the Senate Retirement Committee on February 17, 2012. Passed the full Senate (by a vote of 50-4) on February 23, 2012. Passed out of House Retirement Committee on March 7, 2012. Pending in House Rules Committee.
SB 447 – By Sen. Fran Millar, would begin the process of repaying the approximately $720 million borrowed by the State of Georgia from the Federal Unemployment Account (which was necessary to pay out the unprecedented volume of unemployment benefit claims which depleted Georgia’s Unemployment Compensation Fund during the Great Recession) and return Georgia’s Unemployment Compensation Fund to solvency. It proposes to do this with a number of changes, including: (1) increasing the taxable wages subject to unemployment insurance contributions from $8,500 to $9,500 (effective 1/1/13), (2) creating an automatic increase in the unemployment insurance rate table rates, based on the then current percentage of the State-Wide Reserve Ratio, (3) reducing the maximum number of weeks for which an unemployed worker could receive benefits on a floating scale of 12 to 20 weeks (and reduced from the current maximum of 27 weeks to a new maximum of 20 weeks), which would be based on the state’s then current unemployment rate, and (4) imposes a one week waiting period before receiving unemployment benefits (effective 7/1/12). STATUS: Introduced on February 15, 2012 and passed out of the Senate Insurance and Labor Committee on February 22. Passed by the full Senate on February 24, 2012 (by a vote of 34-13). Pending in House Industrial Relations Committee.
SB 448 – By Sen. Don Balfour, the “Small Business Borrower Protection Act” would provide that a subsequent purchaser of a debt obligation (such as a mortgage) would be limited to recovering against the guarantor on a personal guaranty only the lesser of (1) the actual amount paid by the subsequent purchaser for that debt obligation, plus the interest rate on the note from the date it was purchased, or (2) the maximum amount permitted to be collected under the personal guaranty associated with that debt obligation. STATUS: Introduced on February 15, 2012 and passed out of committee on February 23, 2012. Passed the full Senate (by a vote of 45-0) on February 27, 2012. Pending in House Banks & Banking Committee.
SR 20 – Would place a cap on state spending, with increases limited to the previous year’s budget amount plus inflation and population increase (if any). Any excess revenues would be funneled to the Rainy Day Fund. STATUS: Passed the Senate last February (by a vote of 42-7) and is pending in the House Ways & Means Committee.
The Week Ahead
The current legislative calendar calls for the General Assembly to be in session Monday, March 19th through Thursday, March 22nd (which will be legislative day 37). At some point this week, the calendar will be set for the final three legislative days with the expectation that the session will conclude sometime before March 30th.
Andersen, Tate & Carr, P.C. 
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