State revenues for the first eight months of this fiscal year are running 9.2 percent ($853 million) ahead of the FY 2010 revenue collections. More than $226 million of the growth is accounted for by a decrease in the number of refunds distributed. Discounting fewer refunds distributed, actual revenue growth is 4.6 percent. The FY 2010 revenue estimate is based on 4 percent revenue growth.
It appears likely that FY 2010 will result in a surplus of between $300 to $400 million. Surplus funds will be used to begin to replenish the Revenue Shortfall Reserve.
House and Senate Calendar
The House and Senate are scheduled to be in session for the 29th legislative day on Monday, March 14th and for the 30th legislative day (cross over day) on Wednesday, March 16th. They are scheduled to be out of session Thursday and Friday, and back in session for the 31st Legislative day on Monday, March 21st.
from the State Budget: FY 2011 Amended and FY 2012
Governor Deal released his proposed budgets on January 12, 2011. (Download the proposed budgets.)
Although there were differences between the versions of the Amended FY 2011 Budget (HB 77) as passed by the House and Senate, a Conference Committee was not appointed. Instead, due to only minor differences, amendments to the Senate version of HB 77 was offered by the House. On March 7, both the House and Senate agreed to the Senate version of HB 77 with amendments by the House.
The House of Representatives passed their version of the FY 2012 budget (HB 78) by a vote of 132-33. The budget now moves to the Senate where the Senate Appropriations Sub-Committees will continue their hearing throughout next week.
HB 78 contains more than $500 million in additional cuts as compared to the FY 2011 budget. Total budget cuts since FY 2009 equal $2.9 billion.
The House version of HB 78 closed an additional $250 million shortfall in the State Health Benefit Plan as well as restored some of the governor's recommended cuts. Highlights for the House of Representatives' budgets for the Department of Human Services, Department of Community Health, and the education agencies are contained in the fact sheets below:
Human Services: Still "Down to the Bone" With Modest Gains
Analysis of the Governor's original proposed budget are below:
Fiscal and Tax Policy
Ways and Means Committee Passes Several Bills
Among the bills passed by the Ways and Means Committee this week were:
HB 168 to conform Georgia's tax code to the federal tax code, and make definitional changes to bring the sales tax into compliance with the Streamlined Sales Tax Agreement. The annual conformity bill did not conform to some of the most expensive federal provisions, but did conform to the federal extension that allows higher income taxpayers to take itemized deductions with no limit.
HB 325 to revise tax credits for donations to student scholarship organizations for students attending private K-12 schools. The substitute version of the bill did not include the expanded cap from $50 million to $62.5 million. (Note: The substitutes passed by the sub-committees and full committee are not available online yet.)
Ways and Means sub-committees spent time this week considering bills to expand Jobs Tax Credits, renew the exemption on jet fuel for major airlines, allow new exemptions for rail companies, redirect a portion of motor fuel funds from the general fund to airport programs, and renew exemptions for Gulf Stream, among others.
As lawmakers move forward with the budget, tax breaks should be brought into the discussion of how we prioritize our limited state resources. Download GBPI's new fact sheet to read more.
Comprehensive Tax Reform Bills and Resolutions Still Waiting for Action
HB 385 incorporated the Tax Council's recommendations in full and now awaits action by the House and Senate. Three other bills (HBs 386, 387, and 388) include the same language as HB 385 and also could be vehicles for tax reform.
HB 326 - HOPE Reform and changes to Pre-K program
A substitute to HB 326 passed the Senate and was agreed to by the House this week. It now moves to the governor for signature.
HB 326 addresses HOPE's structural deficit by decoupling HOPE awards from tuition, and covering 90 percent of tuition for FY 2011. In addition, HOPE funding for fees and books will be eliminated and HOPE scholarships will no longer cover remedial courses. In order to maintain HOPE grants for technical education, students will be required to earn a 3.0 GPA by the first checkpoint. HOPE awards will be adjusted each year based on lottery revenue, while a Zell Miller Scholarship program will be created to retain the state's brightest students. Additional changes are reviewed in GBPI's policy brief.
The Senate substitute included two major changes to the House version. The substitute guarantees full scholarships for the top two students at each high school. It also revises the proposed changes to Pre-K by keeping the 6.5 hour day and, instead, shortening the days covered from 180 to 160 days. The bill adds 2,000 Pre-K slots and increases class sizes by two children per class.
Read GBPI's commentary on the need to prioritize lottery funds on getting the greatest educational bang for our buck.
Bills that Impact Georgia's Unemployment Trust Fund
Georgia's unemployment trust fund is insolvent in part due to continued employer state unemployment insurance (UI ) tax breaks. See GBPI's recent brief, Georgia's Unemployment Trust Fund: More than $600 Million Owed to the Federal Government, for more background.
Recently introduced bills are one step forward and two steps back on what should be a thoughtful strategy to put Georgia on the path to solvency.
SB 151 - State-wide Reserve Ratio; extend suspension of adjustments; provide for increase in the overall rate
From 2002 forward, Georgia policymakers passed legislation to suppress employer state UI tax increases that would build back the unemployment trust fund. In 2003, Georgia enacted legislation that suspended the increase in employer state UI tax unless the State-wide Reserve Ratio was less than 1.00 percent at which point the DOL commissioner would have the discretion to increase the overall rate by a maximum of 35 percent. Similar legislation was passed to continue this provision through 2011. During 2007-2011, the DOL commissioner discretion provision applied if the State-Wide Reserve Ratio was less than 1.25 percent.
SB 151 continues to suppress the overall rate increase through 2012 but gives the DOL commissioner discretion to increase the overall rate by a maximum of 50 percent (up from 35 percent). This bill passed out of the Senate on Friday, March 11.
HB 292 - Employment security; extend rates and credits; change certain provisions
HB 292 contains the same surcharge provision as SB 151. It also contains provisions that keep employer standard state UI tax rates level for the next five years.
Under current law, new employers were scheduled to pay an increased state UI tax rate of 2.7 percent (up from 2.62 percent) beginning in 2012; however, HB 292 suppresses that increase for five years. Also, HB 292 would suppress the scheduled increase in the employer state UI tax rates until after December 31, 2016.
Keeping employer state UI tax rates level for five years will not move the unemployment reserve to solvency. The bill was passed out of the House Industrial Relations Committee and is now in House Rules.
Health Care Legislation
Several health care bills have been introduced in both the House and Senate that address a wide variety of health care issues, including private insurance regulation, Georgia's Medicaid and PeachCare programs, public health and trauma care, and the state's role in implementing the Affordable Care Act.
Private Insurance Regulation
HB 47 is similar to legislation introduced in recent years to allow health insurance companies to sell health insurance products licensed in other states. This bill would allow Georgia insurers to offer policies they currently offer in other states, even if those policies do not cover services required under Georgia law. The bill passed the House on March 10 and now moves to the Senate.
SB 17 would create a Special Advisory Commission on Mandated Health Insurance Benefits, effective in 2012. The Commission would be charged with a variety of duties, including developing a system to assess the effect of mandated benefits taking into account the costs and impact of treatment and the cost savings to the health care system. This bill has passed the Senate and is assigned to the House Insurance Committee.
State Health Care Programs
HB 214 would create a new state Department of Public Health as a separate cabinet-level agency reporting directly to the governor. This bill implements a recommendation by a special commission created to help guide the long-term structure of the state's public health activities; it passed the House and is assigned to the Senate Health and Human Services Committee.
SB 63 would direct the Department of Community Health to conduct a pilot program to develop a new Medicaid smart card to be used to verify eligibility and identity at the point of service. The version of the bill passed out of committee no longer includes provisions in the original bill that the card contain biometrics data and that patients submit to, and providers perform, fingerprint scans in order to receive care. (The biometrics component is now optional.)
The current bill requires the agency to implement the program statewide after a successful pilot program, which is defined as a program that reduces expenditures by 5 percent.
A fiscal note on the original version of the bill, prepared by the Department of Audits and Accounts, estimated only a portion of the costs of the proposal. In particular, the costs of the new cards and other equipment was estimated to be $575,000 and $600,000, for a three or six month pilot program, respectively. These costs would total $23.2 million in the first year, with ongoing annual costs expected to be at least $3.2 million.
Additional costs for computer and information system upgrades could not be estimated; however, these costs could be significant.
The fiscal note was unable to forecast potential savings because of the difficulty in estimating what portion of existing fraud could be curtailed by this program as well as the potential for new types of fraud that can arise with new technologies.
The substitute version of the bill was favorably reported by the Senate Health and Human Services Committee.
SR 140 proposes a Constitutional Amendment to dedicate $10 from the current vehicle registration fee to a trauma trust fund, to be established by the Legislature. If passed, the amendment would be placed on the 2012 ballot for ratification. The resolution is assigned to the Senate Finance Committee.
Affordable Care Act
Several bills have been introduced that seek to prevent state agencies from, or limit the ways in which state agencies go about, implementing the Affordable Care Act.
SR 55 proposes a Constitutional Amendment to declare that no Georgian could be required to participate in any health care system, in an attempt to prevent the application of the provisions in the Affordable Care Act that require most Americans to obtain health insurance in 2014. Because federal statutes take precedent over state laws, it is unlikely this Amendment would enable Georgians to avoid the requirement to have health coverage. This resolution failed to pass the Senate.
SB 22 directs the State Insurance Commissioner to seek a federal waiver of Medical Loss Ratio provisions that require health insurance plans to spend a certain amount of the premiums collected on health care services as opposed to administrative or marketing expenses. This bill was not reported from the full Senate Health and Human Services Committee.
SB 20 and SB 25 seek to prevent agencies from implementing any portion of the law without approval from the legislature, while SB 23 would prevent agencies from proposing or adopting any administrative rules regarding the implementation or enforcement of the Affordable Care Act without legislative approval. All three bills have been assigned to the Senate Health and Human Services Committee.
Georgia Needs More Than Budget Cuts to End the Fiscal Crisis
Georgia is facing the most severe fiscal crisis in more than 70 years. In this week's commentary, GBPI Executive Director Alan Essig urges policymakers to take a balanced approach -- one that includes revenues along with strategic cuts -- to the state's budget.