ATC Capitol Update – Week 7, February 28, 2012   Leave a comment

By: Michael L. Sullivan

Today is the 27th day of the 40 day legislative session. The General Assembly is in session Monday through Wednesday this week with a rush of activity leading up to “Crossover Day” which is currently scheduled to be next Wednesday (March 7th). Crossover Day is the 30th legislative day and the day by which, according to the rules of the House and Senate, legislation must have passed out of one chamber in order to be considered by the other chamber. Crossover Day is the second busiest legislative day, second only to “Sine Die,” which is the final legislative day of the session (Sine Die is Latin for “without a day” meaning legislators adjourn on that day “without a day” specified to return). Like Sine Die, Crossover Day is often filled with legislators working feverishly to try to get their bill added to the calendar and voted on before the clock strikes midnight, at which point they are forced to adjourn to avoid burning off another legislative day.

Bills that haven’t passed out of one chamber or the other by the end of the 30th day are dead for the rest of the session, allowing legislators (and lobbyists) to focus on a much smaller number of viable bills in the final 10 days of the session.

Well, sort of. The rules allow most bills to be amended as long as the amendment is “germane” (meaning the amendment should deal with the same subject matter as the bill being amended). What is germane is determined by the presiding officer and one of the safest definitions is whether both the bill and amendment deal with the same portion of the Georgia Code. The last ten days of the session often find legislators (and lobbyists) looking for viable and arguably germane bills to which they can attempt to attach their “dead” bills to bring them back to life.

CHARTER SCHOOL CONSTITUTIONAL AMENDMENT PASSES HOUSE

On Wednesday, the Constitutional amendment to allow charter schools to be approved by the state over the objection of local school boards was approved by the House of Representatives by a vote of 123 to 48 (120 votes are required to pass a Constitutional amendment in the House). 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). Pending in the Senate Education and Youth Committee.

 

CRIMINAL JUSTICE REFORM

In our January 16th Capitol Update, we told you to watch for Governor Deal’s “comprehensive criminal justice reform legislation later this session that will address Georgia’s unsustainable prison population growth and which may include some Texas-type reforms, such as creating alternative sentencing options for non-violent offenders and more focus on the treatment of drug addiction and job training for inmates.” Well, we didn’t think the wait would be quite this long but with only three more legislative days to go before Crossover Day, HB 1176 was finally introduced yesterday. This 75 page long criminal justice reform 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 that still locks up dangerous offenders but which will now give low-level, non-violent offenders the opportunity to get the treatment or job training that can help them become contributing members of society rather than a drain on taxpayers.

Georgiacurrently has a 30% recidivism rate. Almost 1/3 of inmates are back in prison within 3 years of release. Alternative sentencing options for non-violent offenders (such as “accountability courts” for drug related offenses) have been shown to result in recidivism rates that are less than half that rate (some studies show between 7% and 13% recidivism rates).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. 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. STATUS: assigned to the Special Joint Committee on Georgia Criminal Justice Reform.

ECONOMIC DEVELOPMENT

Another huge component of Governor Deal’s legislative agenda is creating incentives that will result in immediate job creation and retention. Specifically, the Governor has indicated his support for (1) eliminating the sales tax on energy used in manufacturing, (2) allowing a sales tax exemption on construction materials used in building or expanding facilities deemed to be “projects of regional significance,” (3) modernize the current “tier” structure of income tax credits used to attract and retain businesses creating new jobs in certain designated strategic industries in Georgia, and (4) 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) from 50 new jobs down to 15 new jobs. While there are several bills that have already been introduced that would accomplish some of these goals (see HB 86 & HB 868, below), expectations are that a bill will be dropped this week that rolls all of these reforms into a single new piece of legislation which will phase in the sales tax exemptions over a period of several years (a compromise to local governments, that were concerned about the lost revenue from the local portion of energy sales taxes).

AMENDED FY 2012 BUDGET APPROVED BY SENATE

Every session, legislators have two budgets to pass. The first budget they deal with is the amended or “supplemental” budget for the current fiscal year (Georgia’s fiscal year runs from July 1 to June 30). This is where the budget passed by the previous year’s General Assembly gets reconciled up or down as actual revenues for the year are compared to the revenue numbers that were projected when that budget was originally passed. The other budget is the “big budget” or the budget for the coming fiscal year.

On Thursday, the Senate approved the Amended FY 2012 state budget (HB 741, by a vote of 51-1), increasing overall state spending by approximately $207 million over the version passed last year (for a total FY 2012 state budget of about $18.6 billion). Earlier this month, the House had approved the Amended FY2012 budget with a $255 million increase but the Senate reduced the overall amount at the request of Governor Deal, based on the most current revenue projections. Now negotiators from the House and Senate will get together to hash out a compromise between what Senate Appropriations Chairman Sen. Jack Hill called the “cosmetic changes” between the Senate and House versions. Of course, work also continues on the “big budget” (HB 742).

TRANSIT GOVERNANCE BILL INTRODUCED

Last week, Senate Transportation Committee Chairman Jeff Mullis introduced SB 474, which would create a Transit Governance Council (TGC) under the auspices of the Georgia Regional Transportation Authority (GRTA) to oversee and coordinate all transit operations within the 13 county Metro Atlanta area (i.e. MARTA, Gwinnett Transit, Cobb Transit, Clayton transit and GRTA Express, etc.). However, all indications are that there will probably not be any hearings on SB 474 this session and that there will not be a transit governance bill passed in this session. The consensus among legislative leaders on this issue seems to be that doing transit governance right is more important than doing it now. And I couldn’t agree more.

Other legislation of note

HB 48 – Would expand Georgia’s existing freeport tax 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 7th but was recommitted to Senate Finance Committee on February 17, 2012.

HB 86 – Would eliminate all state and local sales and use taxes on energy used in manufacturing. Bill could be expanded to include agriculture and mining. STATUS: Introduced last session and still pending in House Ways & Means 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. Pending in House Rules Committee.

HB 705 – Would eliminate the requirement that was imposed on school systems a couple of years ago that 65% of all school system funds must be spent in the classroom. The change was recommended by the K-12 finance commission based on research finding no evidence of the 65% rule having any impact on student achievement (and the reality that at least 40 school systems in Georgiahave already been granted exemptions from the rule). Status: Passed by House Education Committee on January 12, 2012. Pending in House Rules 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. Pending in Senate Rules.

 

HB 718 – Would create a Georgia Capital Acceleration Fund of up to $200 million (financed by the sale of insurance premium tax credits sold by the state over an initial 3 year period). The fund would be administered by a Georgia Capital Acceleration Authority and could be used as venture capital for Georgia-based start-up companies. STATUS: Pending in the House Insurance Committee.

HB 868 – By Rep. Doug Collins, would 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 increase the incentive amounts for all tiers, while essentially flattening from four tiers to three (Tier 1 = $3,500 per year for five years for each “new full-time employee job” created / Tier 2 = $2,500 / Tier 3 & 4 = $2,000). 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) from 50 new jobs down to 15. STATUS: Introduced on February 1, 2012. Pending in House Ways & Means Committee.

HB 889 – By Rep. Joe Wilkinson, would restore the authority of the Georgia Government Transparency and Campaign Finance Commission (formerly known as the State Ethics Commission) to make, interpret and apply rules governing lobbying activities and campaign finance (authority which was taken away in 2009). Status: Pending in House Rules Committee.

HB 1027 – Would tighten the requirements for productions to qualify for Georgia’s existing film and television tax credits and would also specifically exclude video game productions from receiving those credits. Video game production is an important but often overlooked part of Georgia’s entertainment industry that creates high wage jobs and brings creative class employees to the state. These film and television tax credits have had a significant impact on Georgia’s economy since they were created in 2008. 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). Film and television tax credits have created an excellent return on investment when measured in direct economic impacts (such as jobs and investment) but are even more impressive when ancillary economic impacts, such as tourism and marketing Georgia are taken into account. STATUS: pending in House Ways & Means Committee.

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 321 – By Sen. Renee Unterman would 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. Pending in Senate Rules 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. Pending in Senate Judiciary Committee.

SB 391 – By Sen. Joshua McKoon, would substantially revise the Ethics in Government Act in a number of ways, including: (1) placing a $100 cap on gifts from lobbyists to public officials and a cap of $750 for travel to a meeting or conference paid for by a lobbyist, (2) expanding the disclosure requirements (and the proposed caps) to include disclosure of gifts from lobbyists to family members, employees and staff of public officials, (3) renames the Georgia Government Transparency and Campaign Finance Commission (formerly the State Ethics Commission) the State Accountability Commission, and (4) imposes a one year “cooling off” period during which former employees of the Governor’s Office and Lt. Governor’s Office would be prohibited from lobbying. Status: Pending in Senate Rules Committee but all reports are that this bill will not be moving forward.

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. Pending in House Retirement 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).

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 only the lesser of (1) the actual amount paid by the subsequent purchase for the 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 any personal guaranty associated with the 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 assignment to House 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 through Wednesday, February 29th this week. Next week, legislators will be in session on Monday, March 5th for legislative day 29 and on Wednesday, March 7th for Crossover Day.

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