Just as 12 months of tax reform effort appeared to be, as Shakespeare said, “sound and fury signifying nothing,” the Joint House/Senate Committee on Tax Reform chair has unveiled legislation that could be called “reform light.”
With less than a week left in this session, it also must become “reform fast.” Capping three months of behind-the-scenes discussions over the Special Tax Counsel’s tax restructuring recommendations, House and Senate leaders are bringing out a bill they believe has the necessary votes to pass. It will be in committee at 4 p.m. Monday. Here is the basic outline of the new proposal:
- Income tax rates will drop from 6 percent to 4.5 percent, but many deductions and exemptions will be reduced or eliminated; thus the total income tax bill for Georgians who itemize won’t change much.
- Sales taxes will accrue on a limited range of services like auto repairs, telecommunications services like cell phones and satellite television, and automobile sales between individuals (they’ll know about it when filing for the registration and tag).
- For now, basic services like haircuts, non-profit services and Girl Scout cookies are safe. So are most tax credits that were due to sunset in January 2014.
- Tobacco taxes will not increase, and groceries will not be re-taxed.
- Sales taxes on energy used in manufacturing are eliminated, and senior income tax exemptions are retained, though frozen at $35,000. Full details will emerge over the next few days.
The legislature also pressed the accelerator on this year’s session by agreeing to meet all five days this week, recess next week for Spring Break and reconvene the following week for a Tuesday/Thursday wrap-up. As a result, a large volume of bills must be approved this week if they are to become law. The Senate schedule, particularly, will be jam-packed since it must now pass both the budget and tax reform in the session’s waning days.
This session has moved fairly briskly, particularly after the first week of law-making was interrupted by the “Great Snow Storm” of 2011. Since a truncated Week One was followed by the MLK Week recess, the session really didn’t begin until late January, and the last day of the 2011 session is now set for April 14th.
The speedy session can be attributed to a more harmonious Capitol atmosphere among the governor’s office and the two legislative chambers.
Here is the status of the major pieces of legislation:
SB 10 – Senator John Bullock: The Senate version of the Sunday alcohol sales legislation allows counties and cities (which already allow package sales) to approve the package sale of beer, wine and distilled spirits on Sunday from 12:30 p.m. to 11:30 p.m. A county commission must first authorize this via a resolution or ordinance, specifying the effective date. The proposal would then go to a vote of the public with a simple majority prevailing. —SB 10 Passed Senate / Approved by House Committee / Ready for floor action.
HB 87 – Representative Matt Ramsey / SB 40 – Senator Jack Murphy: The Senate bill varies significantly from its House counterpart. SB 40 removes all penalties for business, though they still must E-Verify all new hires. It retains significant penalties, including removal from office, for public officials who willfully and knowingly violate the provisions of the act. The House version has more teeth and more business regulation, including:
- Allowing a right of private action for any legal resident against a local or state government for violating the legislation’s Systematic Alien Verification for Entitlements (SAVE) Program, E-Verify or immigration sanctuary requirements;
- Empowering the Attorney General to file criminal or civil action against local governments to enforce compliance with the act;
- Creating the crime of aggravated identify theft for anyone knowingly using a fake identification to obtain employment, which is punishable by one to 15 years incarceration and fines up to $250,000;
- Requiring anyone who applies for a taxpayer-funded benefit to provide secure, verifiable, photographic identification (each year the Attorney General will publish a list of acceptable secure, verifiable identification documents) and to sign a SAVE affidavit to prove their status, and making willful violation of this a misdemeanor;
- Allowing law enforcement officers to verify the immigration status of anyone they suspect of committing a crime using one of several approved documents, and also, when authorized by federal law, allowing local officials to arrest any individual for federal immigration violations;
- Requiring local governments issuing a business license, occupation tax certificate or any other documents required to operate a business to obtain the E-Verify number for any entity with five or more employees, and making these local governments report annually each license or certificate they issue, including the person’s name, business and E-Verify number of each recipient. The House Judiciary Committee will hold a hearing on SB 40 at 8:45 a.m., March 28.
SB 113 – Senator Buddy Carter: Exempts energy savings performance contracts from the bidding requirements of the local public works construction law. This bill implements a constitutional amendment passed last November allowing governments to approve projects if an evaluation demonstrates the project can pay for it through energy savings. —Passed Senate / Pending in House.
Economic Development Legislation
HB 30 – Representative Wendell Willard: Redefines the types of contracts considered illegal or void under Georgia law, removing contracts in restraint of trade. This bill would update the state code after voters approved a constitutional amendment last year strengthening enforcement of non-compete and similar employment contracts. This bill makes it easier for Georgia to recruit high tech and other businesses that need to protect intellectual property. —Passed the House / Pending in the Senate / Senate Judiciary Committee held a hearing March 28.
HB 48 – Representative Jay Powell: Revises Freeport exemptions by allowing counties to exclude finished goods not for export from Georgia in the next 12 months. —Approved by House / Pending in Senate.
HB 384 – Representative Doug Collins: While it did not pass before Crossover Day, HB 384 is expected to be appended to another bill next week. This proposal updates state tax credits for the creation of new jobs or private investment. It essentially eliminates the controversial tier system where the economic rating of a county determines the value job creation tax credits. Enhanced incentives continue for counties that are Tier 1 or projects located in opportunity zones. Here are the highlights:
- A business that creates or relocates jobs here can qualify for a tax credit of $1,750 per job for five years.
- In addition to this credit, businesses may qualify for additional bonuses:
- $250 bonus for counties that participate in a Joint Development Authority.
- $500 bonus for each new full-time job created by an “existing business enterprise.”
- $1,500 bonus for jobs credits earned in Tier1 or Opportunity Zones.
- Credits earned in these areas are eligible to use against payroll withholding liability after 100 percent of income tax liability is exhausted.
- The credits are available beginning the first taxable year in which the full-time job is created and the four immediately succeeding taxable years.
- Qualifying job tax credits may be carried forward for up to 10 years.
- The number of eligible qualifying jobs will be determined by comparing the monthly average number of full-time employees for the current taxable year with the corresponding period the prior taxable year.
- The employer must also offer health insurance coverage to the employee filling the new job.
- The threshold for qualifying for quality jobs tax credits has been reduced to 15 quality jobs in the state.
This is one of Governor Deal’s top economic development initiatives, and the legislation sunsets these credits in 2014 unless extended by the legislature.
HB 179 – Representative Jon Burns: Allows clear cutting near billboards on the state road system —Passed the House and Senate / Awaiting governor’s signature.
SR 15 – Senator Ross Tolleson: Creates a Joint House/Senate Committee on Water Supply. —Passed Senate and House / Governor’s signature not needed.
SB 122 – Senator Ross Tolleson: Authorizes local governments and the state at their discretion to contract with private firms to build and operate water reservoirs in concert with the Georgia Environmental Facilities Authority. This is the first step in creating a system of public/private water systems to help the state increase its water supply. AGG Partner John L. Gornall Jr.1 was actively involved in drafting this legislation. —Approved by the Senate / Pending in the House.
HB 47 – Representative Matt Ramsey: Allows individuals, businesses and business groups to purchase accident and sickness insurance policies approved in other states. —Passed House / Pending in Senate.
HB 167 – Representative Steve Davis: Insurance Delivery Enhancement Act lowers the number of individuals from 25 to 10 who must be insured by a group of employers, trade association, labor union or similar group organized for the primary purpose of providing insurance coverage. —Passed House / Pending in the Senate / Hearing in Senate Judiciary Committee, but not votes taken.
HB 197 – Representative Barbara Sims: Requires any hospital or licensed health care facility that does not have a contract with a county government authority to provide emergency health care services to inmates. —Passed House / Pending in Senate.
HB 214 – Representative Mickey Channell: Removes the public health duties from the Department of Community Health and recreates the Department of Public Health. —Passed House / Pending in Senate / Committee hearing scheduled for Monday, March 28, 2011.
SB 17 – Senator Tim Golden: Creates the Special Advisory Commission on Mandated Health Insurance Benefits to evaluate the efficacy of state-imposed mandated insurance coverage. —Approved by Senate / Approved by House Committee / Pending floor action.
SB 39 – Senator Johnny Grant: Allows counties to create Mental Health Courts. It does not mandate them, but gives counties discretion. It is intended to save local governments the cost of court, jail and medical costs while providing a judicial alternative composed of mental health specialists with power to divert offenders into community mental health services rather than jail. —Passed Senate / Pending in House.
SB 67 – Senator Buddy Carter: Bans the use of the title “Nurse” by anyone not licensed as a registered professional nurse or a licensed practical nurse. —Passed Senate / Pending in House.
HB 24 – Representative Wendell Willard: Modernizes the rules regarding evidence in legal proceedings. —Passed House / Pending in Senate / The Senate Judiciary Committee held hearing March 28.
HB 41 – Representative Richard Smith: The House Judiciary Committee this week recommended passage of this bill to reduce the fee paid to superior court clerks for preparing trial records for appeal from $10 to $1 per page. — Passed House and Senate / Sent to governor.
HB 64 – Representative Mike Jacobs: Removes a provision that automatically sets attorney fees in debt cases and allows judges to set reasonable attorney fees instead. —Passed House / Pending in Senate.
HB 149 – Representative Tim Bearden: Allows a magistrate to be removed from office for cause or failure to complete mandated training. —Passed House / Pending in Senate / Senate Judiciary Committee held hearing March 28.
HB 196 – Representative B. J. Pak: Allows judges to issue a search warrant after conducting a hearing via video conference. —Passed House / Pending in Senate.
HB 203 – Representative Mack Jackson: Requires Georgia Peace Officer Standards and Training Council (POST) to notify the head of a law enforcement agency, district attorney and judicial circuit solicitor whenever it initiates a peace officer investigation that could result in disciplinary action. —Passed House / Pending in Senate.
HB 238 – Representative Rich Golick: A bill by the chairman of the House Non-civil Judiciary Committee to revamp the state’s indigent defense system clarifying the roles and supervisory responsibilities of the Georgia Public Defender Standards Council (GPDSC) and has the local circuit public defender report to the Director of GPDSC. —Passed House / Pending in Senate / Senate Judiciary Committee held hearing March 28.
HB 265 – Representative Jay Neal: Creates a Special Council on Criminal Justice Reform to study the state’s criminal justice and corrections systems and make recommendations on improvements at all levels. —Passed House / Pending in Senate / Senate Judiciary Committee held hearing March 28.
HB 415 – Representative Wendell Willard: Creates a jury pool administered by the Council of Superior Court Clerks that replaces the local jury selection procedures to simplify the process of demographically balancing the jury pool. —Passed House / Pending in Senate.
SB 47 – Senator John Crosby: Creates a Georgia Magistrates Courts Training Council composed of senior magistrates with the authority to establish minimum annual training standards for all magistrates. —Passed Senate / Pending in House / House committee hearing March 28. Taxation
HB 95 – Representative Jay Roberts: Revises the existing credit for forest land conservation to allow the tract to stretch across multiple counties. —Passed House / Pending in the Senate.
HB 168 – Representative Mickey Channell: The annual bill to reconcile the state income tax code with changes in the federal tax code. —Passed House / Pending in the Senate.
HB 228 – Representative Rick Austin: Authorizes the Department of Revenue to distribute unidentifiable sales tax revenues to local governments on a pro rata basis. —Passed House / Pending in Senate.
HB 234 – Representative Ron Stephens: Extends the sunset on the sales and use tax exemption for aircraft engines, parts and equipment. The bill primarily helps Gulfstream in Savannah. —Passed House / Pending in the Senate.
HB 240 – Representative David Knight: Allows special-purpose local-option sales tax (SPLOST) funds to be dispersed when a project is removed from the project list or when a project is deemed no longer feasible. —Passed House / Pending in Senate.
HB 322 – Representative Ray Roberts: Extends the sunset of jet fuels tax. Passed while Delta was in bankruptcy, this bill continues the sales and use tax on fuels used in commercial aircraft in Georgia. —Passed House / Pending in the Senate.
HB 346 – Representative David Knight: Deals with stock options and deferred compensation for nonresident taxable income and empowers the Revenue Commissioner to develop regulations to determine the amount of Georgia tax owed using a “days worked in Georgia” method. —Passed House / Pending in the Senate.
HB 382 – Representative Edward Lindsey and Representative Stacy Abrams: Allows the municipalities of Fulton County to equalize its hotel/motel tax with other jurisdictions in Georgia. The rest of the state has an 8 percent rate, while Fulton County has a 7 percent rate. The extra revenue will go to the visitors and convention bureau. —Passed House / Pending in the Senate.
SB 21 – Senator William Ligon: Prohibits the Department of Revenue from initiating an audit on a sales or use tax return more than three years after the return is filed. —Passed Senate / Pending in House.
HB 110 – Representative Mike Jacobs: Requires any county that develops a registry of vacant property to include all vacant properties, not just foreclosed properties. —Passed House / Pending in Senate.
HB 123 – Representative Jay Powell: Adds tasers and stun guns to the list of weapons that cannot be removed from a public safety officer acting in the line of duty. —Passed House / Pending in Senate.
HB 181 – Representative Rich Golick: Allows the State Board of Education on a case-by-case basis to waive when medical conditions warrant the one-year public school attendance requirement for students seeking special needs scholarships for a private school. —Passed House / Pending in Senate.
HB 186 – Representative Nix: Allows high schools and post-secondary institutions to work cooperatively to develop courses of study to equip students with skills in career, technical and agricultural vocations. —Passed House / Pending in Senate.