2017 Legislative Recap: Under the Gold Dome
In this year’s legislative session, there were pay raises, tax breaks, funds for Medicaid – and things left undone
Depending on your vantage point, there were some wins, some losses and some head-scratchers as the final gavel went down at the end of the General Assembly’s 2017 session. Most of the legislation that passed and was signed by Gov. Nathan Deal takes effect this month.
The controversial HB 280, the campus carry act, allows concealed weapons on public college campuses. Deal vetoed a similar measure last year but signed the 2017 version, saying it incorporates exemptions he requested. Both bills were opposed by the Board of Regents, and the one that passed may face lawsuits regarding its implementation.
The session started out briskly, as lawmakers passed a $23.7-billion budget pretty easily; then things slowed down, leaving a big crush of complicated bills to be dealt with – or not – in the final two or three days of the session, a situation many found disappointing.
“It’s frustrating,” says Kelly McCutcheon, president & CEO of the Georgia Public Policy Foundation (GPPF), a conservative think tank. “It’s not new, but it’s gotten worse – major pieces of legislation waiting till the last minute. Some things got stuck – like the adoption bill and the tax bill.”
Of course, there were some clear winners: Child welfare workers, teachers and law enforcement personnel got pay raises; the music industry got a welcome boost; yacht owners and rural downtown investors got tax breaks. Craft breweries and distilleries can now sell directly to customers; and rural hospitals got funding for uninsured patients’ care.
“While many bills that attracted headlines this session didn’t pass and remain alive for 2018, [some] tax legislation did advance that will strengthen our state’s economic development tools,” says the Metro Atlanta Chamber’s Chief Policy Officer Katie Kirkpatrick.
That includes the Georgia Music Investment Act, HB 155, which offers significant tax breaks for the music industry on musical or theatrical productions certified by the state. (Look for more about how HB 155 will affect Georgia’s music industry in the August 2017 issue of Georgia Trend).
To help sort through the work of the session, we asked some veteran General Assembly watchers for their appraisals of the session overall and their observations on key pieces of legislation.
They are: the GPPF’s McCutcheon; the metro chamber’s Kirkpatrick; Wesley Tharpe, research director of the Georgia Budget and Policy Institute (GBPI); Tom Gehl, director of governmental relations for the Georgia Municipal Association (GMA); Clint Mueller, legislative director for the ACCG; and David Raynor, senior vice president for public affairs for the Georgia Chamber of Commerce.
With the passage of SB 70, the state avoided a $900-million Medicaid gap by extending the hospital provider fee, or bed tax, for another three years. This requires hospitals to pay 1.45 percent of net patient revenue, which the state uses to obtain additional federal dollars for Medicaid and to help hospitals that have large numbers of uninsured patients – a boon for rural facilities.
The tax will raise more than $300 million and provide about $600 million in federal funds. Uncertainty over the future of the federal Affordable Care Act influenced this bill, which was backed by the powerful Georgia Hospital Association; it passed early in the session and was promptly signed by Gov. Deal.
The bill was a top priority of the GBPI. “To have not expedited the renewal of that fee, to put it lightly, would have created a large problem for Georgia’s ability to meet the state’s needs when it comes to healthcare,” says Tharpe. The GPPF’s McCutcheon is less enthusiastic: “Not crazy about it – we can’t depend on that long- term” as a solution.
Another successful healthcare bill, SB 16, expands the list of conditions eligible for treatment with medical marijuana to include Alzheimer’s; AIDS; autism; Tourette syndrome; peripheral neuropathy, in which nerve damage causes pain; and epidermolysis bullosa, a painful skin disease.
Firefighters got guaranteed cancer coverage, thanks to HB 146; both the ACCG and GMA worked on this bill, which provides a lump sum benefit and disability payments for firefighters who get cancer – with no need for litigation to prove the cancer was job-related. A somewhat similar bill, with a stricter burden of proof, was vetoed last year by Gov. Deal; this year’s version is less expensive for local governments.
HB 154 allows dental hygienists to practice in some clinics and nursing homes without the direct supervision of a dentist; supporters call this an important win for public health. Dentists had successfully opposed similar efforts in previous years.
The business community is applauding HB 192, called the Business Judgment Rule, which affects banks, trust companies and corporations. It establishes “gross negligence” rather than “ordinary negligence” – the result of a 2014 lawsuit – as the standard by which officers or directors may be held personally liable for their decisions and actions.
Both the Georgia Chamber of Commerce and the Metro Atlanta Chamber supported the bill. Raynor says the change “aims to return to an environment that facilitates reasonable decisions by corporate directors and officers” and will enhance Georgia’s reputation as a business-friendly state.
On the education front, HB 338, the so-called Plan B for last November’s failed Opportunity School District (OSD) amendment, gives the state the power to intervene on behalf of the lowest-performing public schools. It creates the post of chief turnaround officer, selected by the state school board, whose members are appointed by the governor; that official can intervene by turning the schools over to other districts or to private nonprofits.
The bill also allows the governor to suspend school board members in districts where at least half of the schools receive unacceptable ratings for five years or more. The measure had the support of the metro and state chambers. Some education groups that strongly opposed last year’s amendment were silent on this one, but the Georgia Federation of Teachers called it “a backdoor approach” to the OSD.
This year’s successful beer bill, SB 85, allows breweries and distilleries to sell their products directly to consumers. It drew strong support from the Georgia Chamber and the GMA and approval from the GPPF. Some see it as a leveling of the playing field, as wineries have been able to sell their products directly for some time.
The GMA’s Gehl views it as a break for community revitalization, since most of Georgia’s craft breweries are located in rehabbed downtown areas. “It can be a catalyst for other restaurants and for economic development,” he says. “It’s a real boon to breweries that want to come to the state and breweries that are already here.”
SB 191 regulates petroleum pipelines by requiring a company wanting to use eminent domain to build a pipeline to first get a permit from the state Environmental Protection Division and the Department of Transportation. The petroleum industry and environmental groups liked this bill, which also includes an appeals process to challenge pipelines in court. An earlier version of the bill sought, unsuccessfully, to ban coastal pipelines in 11 Georgia counties.
The eminent domain law got a tweak, courtesy of HB 434, which allows cities not only to condemn blighted properties, but immediately sell them for private development. Previously, such condemned properties could not be sold for 20 years. “It gives us a tool we don’t currently have,” Gehl says, “to get properties back into productive use.”
Both the GMA and the ACCG supported HB 134, which made modifications to single county Transportation Special Purpose Local Option Sales Taxes (T-SPLOSTs) to add flexibility; localities can now fund transportation projects and make use of fractional taxes.
The ACCG was a strong advocate of SB 222, which sought to create an independent Local Government 9-1-1 Authority to oversee the state’s 911 system. The bill passed but was vetoed by the governor, who thought the authority had too much autonomy. But he indicated plans to establish a government 911 authority under the auspices of the Georgia Emergency Management and Homeland Security Agency and said he will work with lawmakers next year to strengthen 911 services.
“We are pleased that the governor has recognized the importance of what we’re trying to do,” says the ACCG’s Mueller, “and that he is moving quickly, through his executive powers, to create the authority and to populate the authority. We look forward to working with him.”
Among the things Mueller wants the authority to do is evaluate and recommend technology standards for the state’s public safety communication network and 911 service.
“The current 911 system is built around voice,” Mueller says. “We have to modify it to move into the age of data, to take data into 911 systems,” especially medical information that could help first responders, such as knowing whether someone involved in an accident is a diabetic.
“Technology is ahead of government,” he says, and 911 systems are in need of upgrades, particularly in remote areas. “This is a big deal for everyone who lives in the state.”
Perhaps the most disappointing item in the didn’t-get-done column is a bill that sought to modernize Georgia’s adoption rules. It had broad support, but the bill got hijacked by some Republican senators who sought to add a provision that would have allowed private agencies to refuse to place children with LGBT families. Both Gov. Deal and House Speaker David Ralston opposed that add-on, asking for a “clean” bill, as did the metro and state chambers.
Additionally, there was no significant tax reform this year; that’s likely to be a big issue in the 2018 session for business and policy groups.
Other bills that didn’t make it through the session: one that would have authorized casino gambling and one that would have taxed Georgians’ online purchases. A failed “brunch bill” would have permitted restaurants to serve alcohol on Sundays ahead of the current 12:30 p.m. “pour time,” which is a remnant of a bygone era’s blue laws that does not apply to state-run restaurants and private clubs. And HB 59, a bill that had strong support in the House to amend the state’s historic preservation tax credits program, stalled in the Senate.
A campus rape bill that sought to protect the rights of male college students accused of sexual assault was tabled late in the session; it went through considerable revision but was strongly opposed by women’s advocacy groups.
Most of our experts are already looking ahead to 2018 and a General Assembly session that will surely be enlivened by election year dynamics.
“We anticipate a conversation around tax reform,” says the GBPI’s Tharpe. “We’re looking for measured, marginal change, and we look forward to offering ideas that are good for families and for the state.”
“Infrastructure and transit remain priorities,” the state chamber’s Raynor says, and not just in Metro Atlanta. “We have an interest in looking at finance reform for K-12 public education. We’d like to revamp the QBE formula.”
The GPPF’s McCutcheon hopes for continued progress with criminal justice reform. Georgia has already established itself as a national model, and he’d like to see more incremental changes, including a look at sentencing options.
“Prison is not the right place for everyone – if someone is suffering from PTSD or substance abuse,” he says, there are better – and less expensive – places for treatment.
Kirkpatrick says the metro chamber “will continue to focus on core issues like transportation and transit and having an educated workforce.”
So, no rest for the weary: “There’s a lot still out there for 2018,” says Raynor.
Tax Breaks: Too Many or Room for More?
Tax relief figured prominently in the work of the 2017 session. The music industry, video game producers, donors to public schools, creators of quality jobs, downtown investors, concrete-mixing companies, people who own big boats and individuals who lease cars all got new or expanded tax credits or exemptions.
No surprise that people tend to like tax breaks that benefit their particular interests or those that have a tangible result. Ask the average Georgian about the state’s burgeoning film industry, energized by generous tax credits, and you are likely to get a thumbs-up.
This year’s HB 199 provides additional credits for post-production companies and video gaming. HB 155, the Georgia Music Investment Act, supported by the Georgia Chamber of Commerce and the Metro Atlanta Chamber, will provide some of the same tax benefits to the music industry. It takes effect in January.
Both chambers supported HB 265, the updated quality jobs tax credit, as an important incentive for economic developers.
The Georgia Municipal Association and the Georgia Chamber like HB 73, which provides new income tax credits for downtown revitalization. “The large majority of GMA members are small towns,” says Tom Gehl, “and they stand to benefit from the bill and the directly targeted tax credits for those who invest downtown.”
The state chamber’s David Raynor believes that SB 133, which establishes a new tax credit for financial companies that invest in rural businesses, signals a re-focusing on rural development.
Yet both the Georgia Budget and Policy Institute (GBPI) and Georgia Public Policy Foundation (GPPF) raise some questions about the value of tax breaks.
A GBPI report prepared by Tharpe estimates that tax measures approved by lawmakers in the 2017 session will cost the state an estimated $483 million over the next five years. The biggest cost, he estimates, comes from HB 340, which reduces the car tax on leased vehicles and will cost an estimated $226.9 million through 2022.
The tally for the bill offering exemptions for yacht owners is likely to be $5 million to $9 million over the five-year period. Supporters say that one is intended to make Georgia a center for yacht repairs.
“They all sound great,” the GPPF’s Kelly McCutcheon says of tax breaks, “but it’s a slippery slope. We don’t look at opportunity costs – how is that fair, why you [and your industry] are important” enough for a tax credit. “Credits for digital production, music, yacht repair, [various] industries – there are arguments for all of these, but it’s not worth it to the average Georgian.”
Tharpe sees a need for evaluating the available tax credits. “No one of them is large enough, by itself, to break the bank,” he says, “but the breadth of the breaks do raise questions. The bigger issue is how to know which are working and which aren’t working. Georgia does not have a good system for reviewing. We need more requirements in place to look at the costs and benefits.”
Raynor says the Georgia Chamber has no blanket position on tax breaks but evaluates them case by case. He believes those in effect have generally been beneficial.
“If you look, I think you will find that Georgia is a fiscally conservative state” he says. “The governor has made it a priority to keep the state’s AAA bond rating. And Georgia is the best state in the country to do business.” – Susan Percy