Notes from the Senate, April 10 (Sen. Chance, Georgia)

FY 2012 BUDGET PASSES SENATE

This past week the Senate approved its version of the FY2012 Budget, by a vote of 47-4. This concludes the Senate stage of the process, and the bill will now go to conference committee for finalization.

The Senate FY2012 Budget focuses on enhancing customer service by moving funds to the Department of Revenue's customer service department and the licensing section of the Secretary of State's Office.. Additionally, the Senate proposal adds more agencies to "shared services," which includes combined payroll and other services for greater efficiency.

The State Health Benefit Plan's $270 million shortfall is being partially addressed through shorting the State's Medicaid fund. To help meet the overall shortfall, the Senate is proposing to add new auditors and investigators to the Department of Revenue who are estimated to be able to collect $100 million or more in taxes due the state.

The Conference committee of the House and Senate has been working to resolve differences between their versions over the past week.

THE 2011 SESSION ALMOST COMPLETE

The legislature has three legislative days remaining before the end of session. During this time we will continue to work diligently on passing the tax reform bill. Our tax code has not been modified since the 1930's and I don't have to tell you that much has changed in past 80 years. Now is the time for this reform and we simply cannot afford to wait another year to enact this reform.

This legislation has been much debated with many moving parts. But it is essential to understand that the proposal we are considering combines many components that have been vetted over many months and the final product will have to be a net benefit to the taxpayers of Georgia.

It is our responsibility to achieve the proper balance to stimulate future economic growth and to bring jobs to Georgia. We take this process very seriously and are working meticulously to fine tune the proposal. We asked how it would affect our state budget, which still requires cuts to carefully balance. We consulted with financial experts as to how the changes would affect each group of Georgia taxpayers. We looked at our neighbors to the north and south to find the strengths and weakness that exist in their current tax systems.

Countless hours of thought and study has gone into this vital issue. We know that lasting change must come from the General Assembly this year. The final outcome will move us closer to a modernized tax system that will benefit Georgians now and in the future. Through the priorities set forth in our state's budget and our Tax Reform legislation, we are continuing to prepare Georgia for competitive business, increased jobs, and economic growth.

One of the most important job-creating aspects of this bill is the elimination of the sales tax on energy used in manufacturing. Manufacturers are among the largest users of electricity and natural gas. By eliminating the energy tax we instantly make Georgia more attractive to these industries and help Georgia's manufacturing community sustain and create jobs.

This proposal as it is currently written also flattens the personal income tax rate-lowering it from 6% to 4.6%. This reduction allows us to be more competitive with our neighboring states, which have little or no income tax. To offset the reduction to the state income tax and elimination of the energy tax, the bill broadens consumption taxes through the implementation of a communication services tax, which ultimately establishes market parity.

This is a proposal that cuts income taxes on Georgians by nearly $200 million. Although some people believe that Georgia should be raising revenues in this economy, I believe that leaving that $200 million in the hands of the consumers is economic stimulus at its best. We are committed to achieving tax reform that will benefit all Georgians and we will continue working with our colleagues in the House to reach a final compromise.

IMMIGRATION REFORM

The latest version of the bill aimed at combating illegal immigration, HB 87, has undergone a number of changes by committees in both the House and Senate. The focal point, however, remains a provision requiring contractors doing business with state or local governments to use the federal work authorization program, commonly referred to as E-Verify. The main impetus for this came from public pressure following a few high-profile instances where illegal aliens were found to be working on public works projects. Additionally, the bill would eventually require private employers with five or more employees to use E-Verify for new hires, and would make an intentional violation a misdemeanor.

One fairly consistent feature has been a provision that allows law enforcement to check immigration status if an officer has probable cause to believe that someone has committed a crime. The idea, of course, is that more active enforcement of immigration law by local authorities will help expedite the process of detaining and handing over suspects who may be in the U.S. illegally to federal authorities. This was a feature loosely drawn from Arizona's recently passed law, and has been a staple of most of the legislative proposals to this point.

During the next three legislative days, we hope to fine tune the bill and pass a measure that will strongly address this ever growing problem in Georgia.

MARCH REVENUES HOLD UP

State revenues grew at a 10.7% rate in March continuing a very encouraging trend. Total revenues for the month totaled $1.1 billion with an increase of $107 million.

Sales tax collections for the state increased 16.4% or an increase of $58.3 million on sales tax collections of $413.1 million for March.

Motor Fuel tax collections in total were up 6.5% or $4.5 million, but higher prices began to push down consumption as the excise tax, based on per gallon, fell 1.3%.

The third month of the quarter showed an increase in corporate income taxes of $43 million or 32.6%. For the year, corporate taxes are up 12.3% or $53.1 million, hopefully an indication of businesses' profitability recovering..

Year to date, there are encouraging signs with total revenue up 9.4% or $959.9 million on total revenue of $11.2 billion after 9 months of the fiscal year.

SPECIAL SESSION

The legislature is tentatively planning to convene on August 15th for this year's special session to redraw State House and State Senate district lines, as well as Congressional district lines. The General Assembly is required by law to redraw these districts every 10 years based upon census numbers. As we move closer to August's special session, we'll have more updates on this process.

If you would like additional information regarding a specific piece of legislation, you may access the Georgia General Assembly website at http://www.legis.ga.gov/

Thank you for your interest. Please contact me if I may be of assistance at:
109 State Capitol
Atlanta, Georgia 30334
(404) 651-7738
(404) 651-5795 (fax)

ronnie.chance@senate.ga.gov

Senator Chance Appointed to the Commission on Regional Planning

State Senator Ronnie Chance (R-Tyrone) has been appointed to serve on the Commission on Regional Planning. The newly formed Commission will play a significant role in cementing the partnership between state government and regional commissions and in strengthening regional planning and cooperation statewide. As Chairman of the Economic Development Committee, Senator Chance will play a pivotal role on the Commission.

“I am truly honored by this appointment by Lieutenant Governor Cagle,” said Sen. Chance. “Regional planning is a vital aspect of economic development. As a small business owner and a State Senator, working with state and local leaders, I understand the importance of strong regional planning and the impact it has on the lives of millions of Georgians.”

The Commission on Regional Planning, chaired by Governor Deal, was created during the 2010 Legislative Session with the intent of coordinating state contract terms, identifying appropriate state and federal funding for commissions in the pursuit of shared service delivery goals, coordinating planning of state and federal resource allocation and state service delivery, and identifying issues and opportunities requiring state, regional, or local action.
Senator Ronnie Chance was first elected in 2004 and currently serves as Administration Floor Leader for Governor Nathan Deal and as Chairman of the Economic Development Committee. He is also a member of the Banking, Ethics, Finance, Higher Education and Reapportionment and Redistricting Committees. He was voted “2009 Legislator of the Year” by the Georgia Chamber of Commerce and named “2009 Champion of Economic Development” by the Metro Atlanta Chamber of Commerce. In 2010 he was named Legislator of the Year by the Southeastern Legal Foundation.

Senator Chance Co-Sponsors “Taxpayer Protection Act”

State Senator Ronnie Chance (R-Tyrone) has Co-Sponsored Senate Resolution 20 - “Taxpayer Protection Act of 2011.” The proposed Constitutional Amendment would limit how many tax dollars the state of Georgia can spend in any given year.

“This measure will guarantee that Georgia never over steps its bounds when spending the taxpayer’s money. The Taxpayer Protection Act is the responsible thing to do. This legislation will protect the taxpayers and force legislators to keep spending in check,” said Senator Ronnie Chance.

“Senator Chance understands that the money we spend in government is not ours, it’s the taxpayers. He also understands that we need to keep government the size it needs to be. The Taxpayer Protection Act will protect future generations of Georgians from government growing too large,” said Senate Majority Leader Chip Rogers, the sponsor of the Resolution.

Senate Resolution 20 would restrict the state from spending any money in excess of the previous year budget adjusted for inflation and population. Any additional revenue beyond the spending limitations would be required to go into the Rainy Day fund until it reaches a point of 15% of the previous year spending. Once the Rainy Day Fund is at 15% additional revenue would be used to slowly phase-out the state income tax.

The Amendment was approved Wednesday by the Senate Finance Committee in a unanimous bi-partisan vote.

Notes from the Senate

DOUBLE DIGIT INCREASE BEST IN 24 MONTHS - $48.2 million or 46%

State revenues took a jump in one of the two months normally associated with the Christmas buying season gaining 10.9% over December of 2009 for a total for the month of $1.55 billion or up $152.8 million. I don't recall a month anywhere near this increase for at least the past two years when virtually every month was under the same month a year before. Later in the column, we will try to put this six month trend in perspective, but December certainly topped any expectations. Individual income taxes (includes small businesses) came in at a 7.7% increase or up $60.2 million for a total of $856.7 million. That amount might just be the best December Income Tax collection month in five years.

Overall state sales tax collections were up by the same amount, 7.7% with collections of $26.6 million for a total of $374.1 million. December in sales tax collections tracked last year similar to other months this fiscal year... up over last year but under more "normal" years. Since sales tax collections trail a month behind, these numbers are really November's sales taxes and December's will come in the January report.

Motor Fuel Tax collections were up a total of 13.9% or $8.9 million. Both categories were up in December.

Corporate Income Taxes were up $46.2 million. A better gauge will be the six month figure we will review later.

In other categories, tobacco collections were up 0.2% and alcoholic beverages were up 11.6%.


YEAR TO DATE NUMBERS LOOKING STRONGER

With six months of the FY2011 in the books, the trend is certainly positive. Total revenues are $7.8 billion or an increase of $587.7 million over the FY2010 year; however, we must keep in mind the affects of the refunds paid out early a year ago. So the 8.1% gain is probably on the high side, but even if we deducted the $160 million in refunds from a year ago, the difference is still a growth rate of over 5%.

Individual Income Tax collections are up 7.9% or up $300.8 million for a total of $4.1 billion. Sales Tax collections are up 6.5% or $151 million for a total of $2.4 billion. Motor Fuel Taxes are up 17.2% YTD. Total collections have increased $69.1 million and are on track to reach $940 million for the year. Corporate Income Taxes are flat for the six months at minus 0.9%. Tobacco Tax collections are off by -2.7% YTD and alcoholic beverages are up slightly at 0.7%.

Looking back at FY10 months January through June, it appears that it will be difficult to maintain the level of increase the rest of FY11. The last six months a year ago started the trend that resulted in the positive revenue numbers this past June.


LAST QUARTER - SOLID GROWTH, PROBABLY NOT SUSTAINABLE

The last three months provide a "clean" quarter unaffected by any issues from one year ago. The good news is that the second quarter of the FY11 Fiscal Year shows an increase of a little over 8%. The two largest categories, Individual Income Taxes and Sales Taxes show slightly under 6% for the quarter. Looking at the last six months of the FY010, we realize that numbers started to creep up a year ago before turning positive in June. These increases, 5.7% to 5.9%, look realistic even if a good January starts off the second half of the fiscal year. Don't count chickens before the integrator picks them up, but irregardless, a 5.7% increase would certainly be a good kick-off for the FY12 budget year.

Thank you for your interest. Please contact me if I may be of assistance at
109 State Capitol
Atlanta, Georgia 30334
(404) 651-7738
(404) 651-5795 (fax)
ronnie.chance@senate.ga.gov

Senator Chance to Chair Senate Economic Development Committee

State Senator Ronnie Chance (R-Tyrone) has been appointed Chairman of the Senate Economic Development Committee for the 2011-2012 legislative term. Senator Chance was also named to the Banking, Ethics, Finance, Higher Education and Reapportionment and Redistricting Committees.  In addition to his committee assignments, Senator Chance is the Senate Floor Leader for Governor Nathan Deal.



The Economic Development Committee has purview over economic development, business and trade issues and any proposed measures that will affect the presence of tourism throughout the state. The committee works closely with the Georgia Department of Economic Development to recruit new businesses to the state, expand existing businesses and the implementation of job creation initiatives.  Senator Chance has served on the committee since 2005.



Senator Ronnie Chance was first elected in 2004 and formerly served as Floor Leader to Governor Sonny Perdue.  He was named “2009 Legislator of the Year” by the Georgia Chamber of Commerce and “2009 Champion of Economic Development” by the Metro Atlanta Chamber of Commerce.  In 2010 he was named Legislator of the Year by the Southeastern Legal Foundation.