Apr 18, 2017

Georgia's 2017 Legislative Session... The Final Update

The 2017 session in Georgia was interesting primarily because the absence of any really large, partisan fights meant that smaller items became more contentious than they typically do. Both chambers moved a large volume of bills through the process, but House-Senate contention left several measures stranded when the final gavel sounded. This will set up a very interesting year next year, since the session will be jammed up against primary elections for every statewide office as well as all members of the House and Senate.

The following summary outlines some of the higher-profile issues that were discussed, explains where they ended up and offers some projections on what may occur with them over the summer and next year. As always, please contact us if you need more information on any of these items.

Tax: 2016 was a very interesting year on taxes. Several items passed with varying levels of debate, including a rural-focused tax credit investment fund, an exemption for marine repairs, a fix to the “leasing hole” in automobile taxation and a tax exemption for construction of arts facilities. The Governor’s Office was also successful in pushing for enhanced incentives for major corporate relocations and a new tax credit for post-production in the film industry. The biggest item on the table was a conversion of the income tax into a flat rate, which would have resulted in a fairly large tax cut for many individuals. This larger discussion bogged down in House-Senate differences over structure, but is virtually certain to come back next year. Additionally, the House made a large push to enhance taxation on a range of online retail transactions, which did not pass the Senate floor. A companion effort to increase taxes on rideshare companies and online payment processors did not pass. Of any issues that emerged this year, we expect this global tax conversation to be very active over the summer and next year.

Budget: This year’s budget was one of the smoothest in recent history. This is largely attributable to the generally good state revenue picture and the good working relationship the key budget players have established. The budget itself provided for a range of long overdue increases, primarily in healthcare reimbursements and state employee salaries. Growth in healthcare costs consumed a large portion of the year-over-year increase. The bond package in the budget was robust and funds a range of new state capital projects, most prominently including a new judicial building on the Capitol Hill footprint.

Telecommunications: This session began with a great deal of fanfare over telecommunications issues, with electric co-ops moving to get additional leeway to enter the phone and data business. This effort bogged down, but a compromise piece of legislation to centralize and streamline collection of 911 fees passed. Looking ahead to next year, we anticipate the discussion about how best to enhance data connectivity in rural areas to return. This will include both the co-op issue and other steps that have been proposed, such as lowering taxes on rural broadband investment.

Energy: On the energy front, the biggest piece of legislation to move was a rewrite of Georgia’s permitting process for petroleum pipelines. The basic permitting structure remains largely the same, with enhanced environmental and notice requirements. The new regime does allow for increased leeway for owners of existing pipelines to obtain eminent domain for repair and capacity enhancement projects near their current right of way.

Transportation: The biggest debate around transportation concerned transit governance, with the House and Senate proposing dueling approaches on how to study governance and operation of transit systems in metro Atlanta and around the state. It appears likely at this point that the effort will proceed with separate House and Senate study committees. Another measure that passed would increase the state’s ability to use revenue debt to deploy tolled interstate expansion projects. The House and Senate also agreed on a bill that will create rules of the road for autonomous vehicles. This marked the first year that the House and Senate began to use their new authority to earmark some transportation dollars. The exercise of that authority was fairly limited, but we expect to continue to see a larger legislative role in the road, rail and bridge funding process going forward.

Solid Waste: As in most sessions, there was debate this year about landfill issues. This mostly centered on payments to local governments and shipping of out-of-state coal ash into Georgia. Neither issue moved forward in a significant way this year, but these issues will continue to be present as tightening environmental rules and population growth further pressure the availability of waste-disposal options.

Medicaid: The session itself was largely devoid of discussion about reforming the Medicaid program, due primarily to the desire to get further federal guidance on the future of the program in general. We expect Georgia to be an early applicant for reform options that the Centers for Medicare & Medicaid Services may offer through waivers or other programs. Looking ahead, the Governor’s Office and the state’s Department of Community Health will likely drive this conversation.

Health Facility Regulations: The session began with a push by several parties to loosen the certificate-of-need restrictions currently contained in Georgia law. Ultimately, none of those proposals moved forward in the legislative process. This is a discussion that is certain to continue in the next legislative session.

Healthcare Funding: As mentioned above, the state budget included fairly substantial increases for a variety of healthcare programs (primarily Medicaid), including hospital, outpatient, primary care, dental, home care and mental health. Some of these increases were supported by general funds from state budget growth, while others were funded with one-time funds. Going forward, we expect the increases to remain in place. Given the funding mixture that supported the increases, it is uncertain whether the two-year trend of bringing reimbursement rates up will continue. This will depend largely on the future direction of the Medicaid program as well as general increases needed to fund the state employee and retiree health benefit program.

Gaming: A high-profile push to expand casino gaming in Georgia failed to move in the Senate despite substantial support from several key senators. Because this would require a constitutional amendment, advocates cited the difficulty of reaching the two-thirds mark in the upper chamber. Given the number of interested parties involved in this discussion, it is certain to continue next year, likely with some changes around the mix of public purposes that gaming revenues might support. With gaming enterprises operating in most of Georgia’s border states, there is a good possibility the state will eventually move to create an industry here. Our anticipation is that needs-based scholarships and support for rural hospitals will likely be the two driving factors that interest legislators in continued discussions about gaming and the revenues it generates.

Balance Billing: Georgia patients continue to be unprotected from balance billing by out-of-network healthcare providers. The House and Senate both proposed different versions of legislation that would set a minimum reimbursement rate and prevent patients from being balance billed in many circumstances. The two chambers were unable to agree on a rate that was satisfactory to all interested parties. These bills will await consideration next year, and given the impact on consumers here from the practice, we anticipate the discussion continuing until some kind of conclusion is reached.

Regulatory Reform: The Senate passed a broad regulatory reform package that would streamline a range of state and local processes, including professional licensing, building permit issuance, state permit issuance, and other government licensing processes that impact business operation. The measure ultimately fell victim to House-Senate politics, but we expect that it will move forward in some form next year.

Education: The larger rewrite of the education funding formula in Georgia was postponed for another year, not so much for political reasons as because it is so complicated that getting it to a place where most key stakeholders find it acceptable is very challenging. That said, some components of the education reform debate that applied to charter schools were enacted as part of a smaller reform bill for that sector. Additionally, a statutory version of the previous constitutional amendment that would increase the governor’s ability to address failing schools was successful. Finally, an effort to significantly expand private school scholarships fell short in the state Senate. In higher education, the legislature passed a bill that is now on the governor’s desk to allow students with concealed-carry permits to bring guns to many school buildings. Another effort to change the way schools deal with sexual assault allegations did not pass the Senate.

Alcoholic Beverages:

This seems an appropriate note on which to end a legislative session update. Two major bills passed this year. The first will give brewpubs and distilleries more leeway to engage in on-site tastings and limited package sales. The second will allow farm wineries to increase the amount of grapes and bulk wine they can import to compensate for bad yields in some years and meet customer demand for new wine varieties.

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

Ashley S. Groome, Senior Vice President and Director

Joshua N. Albert, Vice President

Brad L. Alexander, Senior Advisor

Robert L. Fortson, Senior Vice President

Lauren C. Greer, Assistant 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