Georgia Legislative Preview 2020

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Overview

Georgia’s state legislators reconvene today for the second 40-day session of the 155th Georgia General Assembly. With an impending election in November 2020, Georgia representatives and senators on both sides of the aisle, especially those with difficult reelection campaigns ahead, are likely to judiciously avoid controversy. As such, don’t expect as contentious a session as we saw last year, when the legislature passed abortion restrictions and reforms to the state’s certificate-of-need process, while also considering a state takeover of Atlanta’s airport. That being said, there is plenty to prepare for as legislators head back to Atlanta.

Top of mind for the Republican majority will be issues that Governor Brian Kemp has explicitly identified as priorities, including tougher penalties for violent offenders and human traffickers, a crackdown on gang violence, loosening adoption regulations and finalizing the $5,000 teacher pay raise he promised during the 2018 campaign. In addition to the Governor’s priorities, here are a few topics to look out for in 2020:

State budget

Facing declining revenues and an outstanding promise to teachers to deliver the final $2,000 of the $5,000 pay raise Governor Kemp promised throughout the 2018 gubernatorial campaign, the Governor is tasking state agencies with finding inefficiencies and cutting costs rapidly. Specifically, the Governor instructed most state agencies to reduce spending by 4 percent in the current 2020 fiscal year and by 6 percent in FY2021. The cuts are aimed at shrinking the size of government, preparing for the possibility of a recession and finding funding for the Governor’s priorities in light of shrinking state revenue. Notably, the burden of the cuts will fall on just a handful of agencies, as three-fourths of state spending is exempt from the directive, including funding for education, Medicaid and transportation infrastructure.

Achieving a balanced budget is the only constitutional responsibility of the General Assembly, and given the restraints put on state agencies by the Governor expect the budget process to take up a large portion of the legislature’s time in 2020.

Tax cuts

In 2018, the legislature voted to reduce the state income tax rate by .25 percent—from 6 percent to 5.75 percent. The cut, along with declining federal revenues, contributed to lower overall state revenues. The 2018 cut was only a first step in what was originally intended to be a cut of .5 percent. The second reduction is now up for consideration. The General Assembly will debate lowering the income tax rate to 5.5 percent. However, given the well-known revenue problem it is unclear whether the measure will pass. Governor Kemp told the Marietta Daily Journal that it “depends on if there’s legislative support for that and how we would structure the budget.”

Health care

Health care was a top priority of the General Assembly last session and it remains a hotly debated policy issue going into the 2020 session. In 2019, the General Assembly gave the Governor the power to pursue a Medicaid waiver to set up a Georgia-specific process for insuring low-income citizens. Notably, the new waiver program will require a significant budget line in what is an already jam-packed state budget. In addition, last year the legislature implemented changes to the certificate of need (CON) process that regulates hospitals in the state. Smaller CON reforms may arise again as reform proponents try to build on their momentum in a changing state health care environment.  

Finally, Lt. Governor Geoff Duncan is wrapping up a blue-ribbon panel on lowering the cost of healthcare that has been particularly interested in how technology can lower delivery costs and expand access to rural Georgians. The Lt. Governor is likely to support Senate legislation that comes out of the panel focused on telemedicine, health information technology and data sharing.  Similar House and Senate study committees will likely produce legislation focusing on issues involving maternal mortality, indigent care, patient access and patient billing.

Tax credits

Senator Lindsey Tippins (R) is leading the crusade against ineffective, unproductive and inefficient tax credits as a mechanism to avoid budget cuts. Sen. Tippins is looking at many existing tax credits, including the film tax credit, which has been credited by Republicans and Democrats alike for sparking what is now a thriving film industry in the state. However, the actual economic impact of that tax credit is challenged by a recently released state audit. The audit concludes that the state is not getting as much return on investment as previously thought.

In regard to the budget, Sen. Tippins believes that Georgia doesn’t have a spending problem but rather an income problem and has cited tax credits as one of the best options for raising revenue. It is unlikely that the film tax credit will be fully repealed, but minor changes will garner significant support. Two interesting features of the credit, pointed out by the Atlanta Journal-Constitution, are likely to be points of discussion: first, there is no cap, and second, the credits are transferable. The ability to transfer tax credits has sparked a secondary market which has allowed companies unrelated to the film industry to avoid paying taxes by purchasing credits from the film industry.

Thus far, Governor Kemp has remained neutral in the debate over the film tax credit.

Gambling

Legalized gambling, sports betting and horse racing, like all other issues this session, are now being viewed through the lenses of revenues and expenditures. Legalized gambling is seen as a potential moneymaker for the state government, a source of revenue to shore up the HOPE scholarship and pre-K programs and potentially address other critical issues, such as health care.

That is why proponents, both in the legislature and the gaming industry, see new energy around this issue. This energy was supported by the creation of two special legislative study committees, one in the House and one in the Senate, which held hearings this past fall to consider whether to make a real push in the 2020 legislative session to legalize casino gaming, pari-mutuel wagering and sports betting in Georgia. Casino gaming and pari-mutuel wagering are currently prohibited by the Georgia constitution. While there are some that believe a constitutional amendment may not be necessary to make sports betting legal, that the legislature would only need to pass a law, the General Assembly’s Office of Legislative Counsel has admitted this is a grey area and has recommended the pursuit of a constitutional amendment to avoid years legal battles. 

The most likely course of action for any new form of gambling is that a constitutional amendment would be pursued, which would require a two-thirds vote in both chambers to pass, as well as approval from the public via a referendum. Notably, enabling legislation is not required to accompany the amendment, but some legislators may push for such legislation before the referendum phase.

Governor Kemp, who has historically opposed gambling, has noted that constitutional amendments are veto-proof so should the legislature and Georgia voters support such an amendment his personal opinions would be irrelevant.

Tort reform

Conservative business interests, including the Georgia Chamber of Commerce, are making tort reform a priority this session. They aim to remove legal roadblocks in an area of the law they see as favoring individuals over businesses. It is possible that lawmakers will base legislation on a Tennessee tort reform law that caps punitive and noneconomic damages.

Conclusion

In sum, in 2020, the budget is king. Almost every piece of legislation will be weighed against budgetary concerns as lawmakers remain on high alert to declining revenues and an economic expansion that, some believe, must come to an end in the near future. Moreover, upcoming elections will likely tamp down talk of highly partisan issues, such as a state takeover of ATL and religious freedom legislation. However, like every legislative session, the unexpected is inevitable. Stay tuned.