Georgia’s economy has continued to weaken over the last months. An unprecedented drop in state revenues of $4.5 billion during the period has required the House to make even deeper budget cuts because of our slow economic recovery. We eventually found that simply cutting programs and services would not be enough to close Georgia’s budget shortfall. In order to fill the deficit, yet preserve our commitment to education and public safety, other measures had to be taken.
To help fill the budget gap and spur our economy, the House passed a revised version of House Bill 1055 this week. The original bill corrects inconsistencies in various fees that are charged by the state. Currently, some fees cover the cost of their respective service, while other fees fall short of covering the cost. Some state fees are regularly updated while others have not been adjusted in over 50 years. HB 1055 will correct these loopholes in current law and bring about 75 fees in Georgia up-to-date, resulting in approximately $96 million for Georgia.
In addition, House Bill 1055 was amended to reflect a partnership between Georgia’s hospitals and state government. In an effort to close the state’s Medicaid shortfall, organizations that represent Georgia’s hospitals, including the Georgia Hospital Association, the Georgia Alliance of Community Health and Hometown Health, have agreed to support a temporary three-year provider fee on certain hospitals to provide funding for the most vulnerable among us. This voluntary, self-imposed payment agreement will allow the state to receive federal Medicaid dollars by a three-to-one ratio while also preventing a possible 10.25 percent Medicaid rate cut to physicians and hospitals. Our hospitals in District 157 are classified critical access facilities and would be exempt from the fee.
HB 1055 was also amended to include a tax-cutting measure to stimulate economic growth and provide relief to Georgians. The measure eliminates the state quarter mill property tax. This will get the state out of the property tax business and provide manageable and meaningful tax relief to Georgia property owners. The state quarter mill of property tax will be phased out over a five-year period beginning in 2012. For tax years beginning on or after Jan. 1, 2016, there will be no property tax quarter mill levied by the state, reducing taxes by an estimated $94 million per year after it is fully implemented.
The other tax cut in HB 1055 will implement a five-year phase out of the senior income tax starting in 2012. Once fully implemented, all retirement income for taxpayers age 65 and older will be excluded from state income tax. This tax cut will provide an incentive for retirees to relocate to Georgia and contribute to the local communities to which they move. Once all provisions are fully phased in, these four measures included in House Bill 1055 will save Georgia taxpayers approximately $140 million.
After filling our budget gaps through House Bill 1055, the House was finally able to pass House Bill 948, the Fiscal Year 2011 state budget bill. This budget will direct state spending from July 1, 2010 through June 30, 2011 and totals $17.8 billion.
If adjusted for both population and inflation, the FY11 budget is near mid-1990s levels. Making these kinds of cuts was not easy. To account for this decline, most agencies are taking reductions between seven percent and 11 percent. Other cuts included eliminating $45.6 million in program and subprograms, eliminating $60.5 million in contracts and activities, and removing 4,500 currently authorized state positions.
Despite these reductions, the House of Representatives continues to prioritize K-12 education funding. We restored $100 million in Quality Basic Education funding and fully funded K-12 enrollment growth and teacher training and experience. We were also able to restore a base level of funding for the Regional Education Service Agencies (RESAs), which had been proposed for elimination by the governor. We also found a way to realize efficiencies but still provide the vital functions of Math Mentors, Educational Training Centers and school improvement by funding these functions through the RESAs.
Behind the Department of Education, the University System of Georgia accounts for the second largest percent of the budget. Although some cuts were necessary, we ensured that reductions were not excessive in order to keep tuition affordable for Georgia students. A total of almost $150 million is designated toward enrollment growth funding for the University System of Georgia and Technical College System. Another $22.4 million is restored to the Tuition Equalization Grant program.
While measures were taken to preserve the future of higher education, the lottery expense continues to grow. This is due to economic downturn and recent layoffs, which have encouraged people to return to school. The House preserved the future of the lottery by reversing a proposal to supplant state general funds with lottery dollars. This action will allow continued funding for Georgia students while leaving lottery funds dedicated to funding our HOPE and Pre-K programs.
The Department of Community Health is the third largest percentage of the FY11 state budget. While some cuts were needed, Medicaid and Peachcare will continue to remain fully funded. Six state licensure inspector positions will also be funded to eliminate a backlog and create a more efficient system for licensing healthcare facilities. The sooner these facilities are licensed, the sooner they will be able to provide care and contribute to the economy.
Finally, the House also passed its final adjournment schedule of the 2010 legislative session. According to this schedule, April 29 will mark the 40th and last day of this year’s legislative session. As we complete these final days, I encourage you to contact me with any questions or concerns that you might have regarding our state. As your representative, I would like to know your opinion on these bills and other issues that concern you and your family.
You can reach me at my Capitol office at (404) 656-5116 or my email at jon.burns@house.ga.gov. Thank you for your time.
