Columbus, Georgia

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GBPI LEGISLATIVE UPDATE











For Session 2008:

www.legis.state.ga.us/





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March 28, 2008



Overview of legislative action by the Georgia General Assembly on:

State Budget

Fiscal and Tax Policy

Healthcare Policy









State Revenue



State revenue figures released March 10th show a continued slowing of revenue

growth. February 2008 revenues were only 0.5 percent greater than February

2007 revenues. For the first eight months of FY 2008, year to date revenue

growth is only 1.9 percent. Revenues must grow by 3.3 percent to meet the

Governor's revenue estimate.







House and Senate Calendar



Monday March 31st is Day 37; Tuesday April 1st is Day 38; Wednesday April 2nd

is Day 39; Adjourned Thursday April 3rd; Friday April 4th is Day 40. This

schedule is subject to change by another resolution.







State Budget: FY 2008 Amended and FY 2009



The FY 2008 Amended Budget was passed by the House on February 8th and by the

Senate on February 21st. The Conference Committee report passed the House and

Senate on March 20th. The Governor signed the bill March 21st.

The FY 2009 budget was passed by the House on March 20th and by the Senate on

March 28th. Due to a slowing economy, the Governor revised his FY 2009 revenue

estimate by $245 million. The FY 2009 Budget as passed by the House

appropriates $17 million more than the Governor's revenue estimate. The Senate

version equaled the Governor's revenue estimate.



Highlights of the differences between FY 2009 House and Senate budget

recommendations include:

? The House restored $90 million to the QBE funding formula leaving an

austerity cut of $51.5 million, while the Senate restored $56 million to the

QBE funding formula leaving an austerity cut of $85.5 million;

? The House provided $10.7 million in additional funds for QBE

equalization, while the Senate deleted these funds;

? The Senate increased HOPE Scholarships for Private Schools by $7.6

million (from $3,000 to $3,500);

? The Senate restored $18.9 million in cuts made by the House to the

Department of Corrections;

? The Senate added $17.2 million in TANF funds to be used for child care.



For the FY 2008 Amended Budget Bill, click here.

For the FY 2009 House and Senate Differences click here.



For highlights of the Governor's original budget proposals, click here







Fiscal and Tax Policy



Senate passes tax cut package, which will result in a $1.2 billion revenue loss

when fully implemented. The Senate substitute for HR 1246 and HB 1244 would

reduce income tax brackets by 10 percent over 5 years, eliminate the state

quarter-mill property tax, and implement assessment caps tied to government

inflation, with the ability of local governments to exceed the cap given a

local act of the General Assembly and voter approval. On Thursday, the Senate

Finance Committee removed the TABOR-like spending cap from the proposal. On

Friday, March 28th, the Senate passed both measures. These tax cuts were

approved in spite of the fact that Georgia is 49th in spending per capita. A

conference committee will be assigned to find a compromise between the House's

car tag tax elimination and the Senate's income tax cut. GBPI analysis of the

tax reform proposals prior to Thursday's changes can be found here:

? Policy Brief on Senate Proposal

? One-page Overview of Senate Proposal

? Revenue Growth Fact Sheet on Senate Proposal

? One-page Overview of House Proposal

? Fact Sheet Comparison to Virginia Experience for House Proposal.



Regional Sales Tax for Transportation Passes the House - As passed by the

Senate, SR 845 would authorize each county and cities within the county to

jointly levy an additional 1 cent local option sales tax to fund the

construction of transportation projects and mass transit networks. Ninety

percent of funds would stay in the district in which they were raised, with 10

percent of total funds going to mass transit in the district. The remaining 10

percent of funds would go to the state general fund to be spent solely on

transportation projects. The House passed a modified version on March 27th,

which would allow special transportation districts to levy the additional penny

rather than counties. These districts would have the same boundaries as the

regional commission areas (RDCs). All of the funds raised in a district would

remain in that district for transportation projects. In addition to the new

local 1 penny for transportation, an amendment approved by the House dedicates

sales tax funds currently going to the general fund to transportation

projects. Currently, one penny of the sales tax on motor fuels goes to the

state general fund, while the rest flows to the Dept. of Transportation for

highway projects. The amendment dedicated the $190 million raised from that

one penny to transportation projects rather than general appropriations

beginning in FY 2010. For a fact sheet on the resolution, click here. The

Senate disagreed with the House changes and a conference committee will be

assigned.



Several bills passed the Senate Finance Committee this week. A few of the

bigger ticket items are:

o HB 1133 - Income tax credit for individuals and corporations donating to

student scholarship organizations, which provide scholarships for students to

attend private schools. The aggregate amount of tax credits is capped at $50

million per year.

o HR 1276 and HB 1211 - Conservation use assessments for forest land.

Restricts the growth in property taxes for forest land and creates a mechanism

for the state to reimburse local governments for lost revenue. According to

committee testimony, the bill will cost the state $34 million for the

reimbursements and cost local governments $20 million given that the state

reimbursements will not cover the entire loss.

o HB 1158 - Along with new language on the Georgia Trauma Care Commission,

HB 1158 creates a $10 motor vehicle fee to trauma care. While the $83 million

raised by the fee will not be dedicated, it is the intent of the legislature

for those funds to go to the trauma care network.

For a list of tax bills that can be considered by the Senate in the last days

of Session, see GBPI's "Adding Up the Fiscal Notes," which totals the cost of

tax bills that passed the House by the end of the 30th legislative day.



House Ways and Means Committee passes substitute for SR 20. As passed by Ways

and Means, SR 20 no longer contains a TABOR-like spending cap. The substitute

language restricts the spending of surplus funds to education enrollment

increases, reserves, debt service, and taxpayer refunds. The resolution also

makes the reserves "full" at 8%, rather than the current 10% of prior year

spending.





Healthcare Policy



HB 977 was amended in the House Rules Committee to include provisions

previously included in HB 1087, SB 383, and HB 1210. The Rules Committee

Substitute exempts high deductible health plans from both the state portion

(2.25%) and the local portion (1 to 2.5%) of the state insurance premium tax,

allows for income tax deductibility of monthly premiums paid for high

deductible health plans, and provides tax-credits to small employers who enroll

employees in high deductible health plans. The bill also changes GA insurance

code to fast track approval and encourage the marketing and promotion of

high-deductible health plans by the state Dept. of Insurance. The bill passed

the House on 3/11 and passed the Senate Finance Committee 3/26. (GBPI recently

released a report examining high deductible health plans which can be found

here as well as an overview of HB 977 and fiscal impact of the above tax

provisions, which can be found here.)



HB 1234 (Medicaid Care Management Organization Act) establishes and/or codifies

rules and requirements for care management organizations (CMOs) that contract

with DCH to serve Medicaid and PeachCare beneficiaries. Among other changes

the bill does the following:

Prohibits CMOs from requiring prior authorization for emergency services, sets

requirements for CMO reimbursement of emergency services provided by

noncontracted providers and requires CMOs to pay for emergency services based

on the "prudent layperson" standard;

Requires CMOs to contract with all critical access hospitals in their service

region and for CMOs to reimburse these hospitals for "all allowable costs";

Establishes payment procedures to assure that the CMO covering a pregnant woman

also pays for the newborn until the baby's discharge or that DCH pays for

infants born to Medicaid mothers in fee-for-service;

Allows providers to consolidate appeals and complaints rather than pursuing

them separately and requires CMOs to pay 18% interest on denied claims that are

later paid;

Requires CMOs to maintain an up-to-date, searchable, internet-based list of

in-network providers;

Requires DCH to pay for services provided if a provider verifies a patient's

eligibility even if the patient is later found to be ineligible or not actually

enrolled; and

Grants the Department of Insurance the authority to revoke or suspend a CMO's

certificate of authority or to impose a monetary penalty on a CMO for violation

of new or existing laws.

The bill passed the House on 3/11 and is assigned to the Senate Committee of

Government Oversight.



HB 1299 establishes that a Hospital authority created by 2 counties (in

particular, this bill applies to Grady Health System) shall be managed by a

non-profit hospital management corporation and that the non-profit corporation

shall be governed by a 17-member board. The board would be made up by 4

appointees each from the Governor, the Lt. Governor, and the Speaker of the

House; 3 appointees from the larger of the 2 counties; and 2 appointees by the

smaller of the 2 counties. This bill passed the House on 3/11 and is assigned

to the Senate Committee of Government Oversight.



SB 395 creates the safety net clinic grant program in the Department of

Community Health. The bill passed the Senate and has been assigned to the

House Appropriations Committee.



SB 404 (Georgia Health Marketplace Act) would create the Georgia Health

Marketplace as a web-based portal allowing for sale of certain traditional

health insurance products (including PeachCare for Kids) as well as

non-insurance products (such as pre-paid services contracts with individual, or

groups of, providers). The bill passed the full Senate on 3/6 and is scheduled

for a initial hearing in the Health and Life Subcommittee of the House

Insurance Committee 3/18.









The Georgia Budget and Policy Institute is the state's leading independent,

nonprofit, non-partisan organization engaged in research and education on the

fiscal and economic health of the state of Georgia. The Institute provides

reliable and timely analyses of Georgia's budget and tax policies and promotes

greater state government fiscal accountability, improved services and an

enhanced quality of life for all Georgians.









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