2010 BUDGET: With HB 119, the General Assembly passed an $18.6 billion budget proposal on the final day of the session. The $18.6 billion plan uses $1.3 billion in federal stimulus money to balance Georgia’s budget and the plan includes $1 billion in spending cuts. However, the budget as passed includes a $480 million tax increase on homeowners because it fails to fund the Homeowners Tax Relief Grants. Beginning this fall, homeowners will either have to pay, on average, an additional $200 to $300 on their property taxes or local governments may be forced to cut services. Local schools will also be forced to furlough teachers, at a time when education funding has faced sharp declines reaching more than $2 billion over the last seven years. On the issue of Transportation funding: In HR 206 and HB 277, the House and Senate failed to agree on the appropriate approach on the issues of funding and governance for transportation projects. Neither House nor Senate Republican leadership compromised.
Transportation governance: In SB 200, Gov. Perdue proposed removal of the authority of the state Department of Transportation (DOT) board and replaced it with a new State Transportation Authority. The members of the new authority would be solely appointed by the governor, lieutenant governor and House Speaker. Concerns exist that eliminating the current process of the legislature electing the DOT board members by congressional districts would weaken the voices of many areas of the state; however, proponents are concerned that the absence of strong executive control will lead to dysfunction within the department. The resulting hybrid creates a dissonance in operations, pitting a DOT Commissioner answerable to the DOT Board against a Planning Director who reports directly to the Governor. The bill fails to give clear operational guidelines and may impede the fair allocation of transportation projects and funds across the state. All politics is local and I don’t feel good about the above mentioned leaders’ concerns about rural Georgia.
I know you heard a lot of discussion about MARTA funding, and to assist the Metro Atlanta Regional Transportation Authority with more spending flexibility, SB 120 sought to eliminate the 50/50 split between operating and capital expenditures. The House approved SB 39, which lifted the cap to 60/40; however, the 60/40 split does not remedy the existing operational deficit and is inconsistent with national norms. Of greater concern, maintaining the split will cause MARTA to set aside excess millions for capital costs that are not required, particularly in light of federal stimulus funds that must also be restricted to capital uses. Instead, the MARTA system may have to cease operations on weekends or during one day per week. The House failed to consider SB 120, and therefore, MARTA will not be able to access $65 million in reserve funds this year. Thank goodness for a Federal System that may be able to offer some relief in an area of the state where more and more people are dependent upon Marta for Transportation.
CAPITAL GAINS CUT FOR WEALTHY - The General Assembly adopted the conference committee report on HB 481, which provides a $2,400 tax credit for corporations that hire those who have been unemployed for at least 4 weeks. However, the legislation was amended on the last day of the session to cut the capital gains taxes by 25 percent on investment earnings in 2010 and 50 percent in following years. The bill’s sponsors failed to proffer a fiscal note as is typical for revenue bills; however, policy analysts point out that the price tag for 2008 would have been $340 million. Typically, the wealthiest Georgians pay capital gains, while the Homeowners Tax Relief Grant benefits a broad cross-section of Georgians. This is not a totally bad idea, because it offers critical jobs funding; however, I am concerned about the last-minute addition of a capital gains tax cut for the wealthy at the same time we eliminate local property tax relief in the midst of a recession and at a time of impending teacher furloughs.
PROPERTY TAX INCREASES - HR 1 and SB 83 sought to divert attention from the Republican decision to eliminate the Homeowner’s Tax Relief Grant in favor of a tax shift from the state to local governments and schools. HR 1 would have placed an assessment cap on both residential and commercial property, which has led to an increasing tax burden on homeowners in every state where the scheme has been implemented. Sponsors suggested that local governments and schools simply raise the millage rate to continue to provide services or cut back on critical services. SB 83 proposed an increase in the homestead exemption, but had two key flaws: (1) rather than the $200 to $300 per household received for the HRTG, homeowners would have received an average of $25 to $60 off their bills and (2) the state would have forced cash-strapped schools and local governments to pay the costs. HB 143 rescinded the HTRG for this coming fiscal year and for the foreseeable future. I was opposed to these disguised property tax increases because they would have shifted costs from the state to struggling schools and local governments and would not save most homeowners. The state should fully fund its obligations rather than overriding local control by passing unfunded mandates down to local governments.
We are all going through these economically distressed times, many of us more so than others. I hope you can interpret for yourself if the outcome of the bills that were passed will truly improve your quality of Life. As always, feel free to contact me State Representative Carl Von Epps, 512 LOB Atlanta, Georgia 30334.
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