If the old saying is true that no man’s life, liberty or property are safe while the legislature is in session, then we can all breathe a big sigh of relief now that the 2012 Session of the Georgia General Assembly has come to a close. Legislators adjourned Sine Die (Latin for “without a day” meaning they adjourn without a day designated to return) around midnight on Thursday.
Several positive legislative accomplishments were achieved this session, including significant tax reform and economic development initiatives designed to make Georgia more competitive and criminal justice reform designed to transform Georgia from being “tough on crime” to being “smart on crime.” Many of those legislative victories came down to the last few days of the session. Below is a listing of notable legislation that passed the General Assembly and now awaits the signature of Governor Nathan Deal (who has 40 days from the end of the legislative session to sign or veto legislation).
TAX REFORM & ECONOMIC DEVELOPMENT
HB 386 – The tax reform plan that was hammered out in behind the scenes negotiations between legislative leadership and the Governor’s Office. While the bill passed both chambers only 4 days after it was first introduced, many of its provisions had already been well vetted, having been based largely on the recommendations of the Governor’s Special Council on Tax Reform and informed by the feedback received from the business during the Georgia Competitiveness Initiative process. Provisions include:
• Elimination (phased in 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 “birthday tax” on motor vehicles sold after March 1, 2013, replacing it with a new, one time 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.
HB 48 – Will expand Georgia’s existing freeport tax exemptions to allow local governments to exempt business inventory, making Georgia more competitive with neighboring states which have no tax on business inventory.
HB 100 – Will create a Georgia Tax Court (as a pilot project) to handle taxpayer disputes involving the Georgia Department of Revenue.
HB 1027 – Would tighten the requirements for productions to qualify for Georgia’s existing film, television and interactive gaming production tax credits, eliminating the sales tax exemption for production equipment and materials and allowing video game productions to qualify for the credits, 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).
EDUCATION
HR 1162 – Is a Constitutional amendment that would allow charter schools to be approved by the state over the objection of local school boards. 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. Constitutional amendments are not subject to approval or veto by the Governor. This proposed Constitutional amendment will be on the November 2012 ballot.
HB 713 – 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.
SB 302 – Will 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.
CRIMINAL JUSTICE REFORM
HB 1176 – A comprehensive criminal justice reform bill designed to stem Georgia’s unsustainable prison population growth, including alternative sentencing options for low-level, non-violent offenders to get treatment or job training and the expansion of specialized drug courts. The bill incorporates some 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. Georgia currently spends more than $1 billion per year on its corrections system and that number is projected to grow by more than $200 million per year if present incarceration trends continue.
HB 641 – Comprehensive overhaul of Georgia’s juvenile justice system.
OTHER LEGISLATION OF NOTE
HB 347 – Will 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.
HB 636 – Will allow residents of the proposed City of Brookhaven in DeKalb County to vote on whether to create the latest new Georgia city. The vote will occur on July 31, 2012 and if approved, the new city’s mayor & council would be elected this November.
HB 954 – Shortens the period for elective abortion to the first 20 weeks (from the current 26 weeks). Exemption added on Day 40 to exempt abortions of “medically futile” pregnancies or those performed to “avert the death…or risk of substantial and irreversible physical impairment of a major bodily function” of the mother.
SB 33 – Will bring “zero-base” budgeting to Georgia’s budget process, requiring every state agency to submit a zero-base budget once every six 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.
HB 456 – “Sunset legislation” bill that would create a “Legislative Sunset Advisory Subcommittee” that would regularly assess all state programs, departments and agencies to make a recommendation on whether they should be consolidated, privatized or abolished.
SB 402 – Will allow up to 5% of the Georgia Employee Retirement System’s funds to be invested in “alternative investments” including venture capital funds.
Andersen, Tate & Carr, P.C. 
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