Mar 15, 2017

Georgia Legislative Update

The Georgia General Assembly is set to adjourn on Thursday, March 30. We expect that schedule to be met, and — as always — anticipate most major policy issues being settled in the remaining two to three weeks before adjournment. Generally speaking, this session has been relatively low on controversy and conflict between the House and Senate. As we move into an election year in 2018, we anticipate things heating up significantly. Following are some of the key issues before the legislature and a brief status on each issue.

Budget: The Senate just released its version of the next appropriations bill. The House version of the bill largely tracked Gov. Nathan Deal’s proposal, and the Senate version of the budget differs only modestly from the House version. Given this, we expect a smooth budget conference and a relatively fast agreement. Most of the differences are minor and consist of the standard adjustments the two chambers make in terms of adding and deleting small appropriations and tinkering the bond package that funds state buildings and other capital needs. Major changes in the budget include reimbursement increases for many healthcare providers, long overdue salary increases for state workers, and funding for major capital projects, such as a new judicial complex on Capitol Hill.

Tax: This has been a very interesting year so far in tax. The House passed several bills, most of which use targeted tax cuts to help grow specific industries, cut the overall rates, or expand the sales tax base to cover new goods and services to raise revenue. In the first category, legislation to enable boat repair businesses for large watercraft in Georgia, make modifications to the state business incentive system, exempt arts facilities construction from taxation, and extend the historic rehabilitation tax credit have made good progress. In the second category, the House passed a major overhaul of income tax that would, in essence, move Georgia closer to a flat tax structure for income tax. The Senate is expected to pass this bill. In the last category, the House passed a package of tax legislation that aims to extend the sales tax net to cover Internet-based transactions such as ridesharing, vacation home rentals, ticket sales and smaller retail sellers. It is unclear at this point what the Senate will do with these bills.

Balance Billing: This issue has turned into one of the highest-profile healthcare battles in the legislature this year. The goal of policymakers has been to protect consumers from having to pay large amounts in unplanned medical costs when an out-of-network provider treats them in hospitals in situations where they cannot consent (e.g., emergency services, anesthesiology, pathology). The mechanics of implementing this have proven complicated, with physicians and insurers proposing dramatically different approaches to calculating a fair rate. This issue is likely headed to some kind of House-Senate negotiation.

Gaming: Legislation to create casino gaming in Georgia came up short in the state Senate. The sponsor has indicated he will pursue an education process around the state over the summer and reintroduce the bill next year. A package to regulate fantasy sports in the state is doing better, and appears to be moving toward passage.

Certificate of Need: Several bills were proposed to target the certificate-of-need (CON) process in Georgia. Georgia’s CON laws are some of the tightest in the country and significantly curtail the construction of new healthcare facilities and the improvement of existing ones. No CON bills were successful in leaving committee this year. However, discussion continues, at all levels of the legislature, regarding the right steps to take to reform this program in future sessions.

Transit: Legislation to expand transit service in DeKalb County was defeated in a Senate committee this year. Following the city of Atlanta’s successful push for transit funding last year, other counties continue to look toward expansion, largely because of the critical role transit service plays in economic development for metro Atlanta cities and counties. The House and Senate have both proposed major reviews of transit in Atlanta, and we expect to see action on this issue in the upcoming sessions of the legislature, as well as a robust look at transit funding and governance this summer.

Transportation Funding: The House and Senate both created subcommittees to appropriate transportation funding. This is unusual in Georgia, because funds have historically been sent directly to Georgia’s Department of Transportation (GDOT), as mandated by the Constitution. However, a recent funding-increase bill created new funding sources that are now subject to appropriation for the first time. The new subcommittees did some earmarking around the edges of the overall funding stream this year, and we expect that trend to continue in future years. However, GDOT’s funding structure in the budget remains generally unrestricted.

Energy/Telecommunications: The session began with active discussion on a range of energy and telecommunications issues. On the telecom front, this included several ideas on expanding rural broadband, such as lowering taxes on telecommunications infrastructure, creating broadband-ready communities and (most controversially) enabling electric co-ops to enter the telecommunications business. These issues will continue to be discussed, likely in a study committee process over the summer. In energy, efforts to restrict disposal of coal ash and expand rooftop solar installations in Georgia have been largely thwarted, while debate over a controversial petroleum pipeline on the Georgia coast continues.

Alcoholic Beverages: A compromise among brewers, distributors and the craft brewing industry is headed toward final passage. This removes one of the most controversial issues in this area from debate, at least for the time being. An effort to allow restaurants to sell alcohol during brunch on Sundays has stalled for the year, but will likely be considered next year. Another measure to expand shipping of bulk wine and grapes into farm wineries appears headed toward passage.

Education: This has been a controversial year for higher education, with bills dealing with sexual assault reporting, sanctuary campuses, and free speech policies all emerging in the legislative process. Additionally, a push to allow the carrying of concealed weapons on college campuses is still under active consideration. In the K-12 space, recommendations for a funding rewrite did not emerge in the process in full form this year, although some reform components have been introduced as individual bills. We expect to see further progress on this issue next year and final action this year on a statutory version of Gov. Deal’s proposal to turn around failing school systems.

Victims’ Rights: The Georgia Senate passed, by a 50-4 margin, a constitutional amendment to protect the rights of crime victims in Georgia. The measure is in House committee.

Medicaid/ACA: Uncertainty surrounding policy in Washington continues to slow discussion on what the state may do in a changed environment around Medicaid and the Affordable Care Act. Gov. Deal is clearly poised to take a leadership role in this discussion, and has successfully urged caution until specifics about federal policy are known. A special Senate task force met to start looking at state insurance options if the ACA is repealed, and we anticipate that Gov. Deal’s team will strongly consider moving toward more waivers and flexibility in Medicaid as the Centers for Medicare & Medicaid Services clears the path for those kinds of approaches in the future.

For additional information, please contact Brad Alexander or a member of McGuireWoods Consulting’s Georgia State Government Relations Group.

Brad L. Alexander, Director

Joshua N. Albert, Vice President

Robert L. Fortson, Senior Vice President

Lauren C. Greer, Assistant Vice President

Ashley S. Groome, Senior Vice President

Misty H. Holcomb, Senior Vice President

Eric Johnson, Senior Advisor

Danica R. Key, Assistant Vice President

Victor L. Moldovan, Senior Advisor

Russ Pennington, Vice President

Michael T. Shelnutt, Senior Vice President

William M. Talmadge, Assistant Vice President