GEORGIA HOUSE OF REPRESENTATIVES
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Daily Report Number 40
April 7, 2004

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The 40th legislative day brought final resolution to some very important issues for the state. Arguably the most important was the last minute resolution to the FY 2005 budget, which funds all government programs and operations. House lawmakers voted 155-15 to accept the conference committee compromise on HB 1181 with only a half an hour to spare before time ran out on the 2004 session.

There were various smaller differences between the House and Senate budget proposals, but the two documents mainly diverged in three key areas.

First, House lawmakers were determined to find as much money for the state's public education system as possible. Governor Perdue's proposed FY 2005 budget slashed some $380 million from the per pupil payments made to Georgia's schools. House budget writers heard testimony from superintendents and school board members all across Georgia who said the cuts would force them to lay off workers, and raise property taxes on their local citizens. Estimates are that the Governor's proposed cuts could have led to more than 7,000 school employees like paraprofessionals, administration personnel, and even teachers losing their jobs. This option was considered unacceptable by most House legislators, and so experienced House budget writers set about finding the money where they could, trying to make Georgia's education system whole. House lawmakers were able to find some $277 million to put back into Georgia's schools, but Senate budget writers reduced that number to $156 million.

The second sticking point is closely related to the first. The House plan to put $277 million back into Georgia's schools entailed partially delaying approximately $90 million in Medicaid funds in the FY 2005 budget. House budget writers noted that the money could be restored during the next legislative session in the supplemental budget. Such maneuvering has been very common in years of late, and lawmakers have always allocated the necessary funds to cover Medicaid costs. However, this year threw a new wrinkle into the process. The unusually contentious session led to a delay in final passage of the FY 2004 supplemental budget, leaving Medicaid payments unfunded for a few days, and forcing the department to temporarily raid the reserve fund to cover payments to hospitals and nursing homes. This led Senate lawmakers to demand full funding of Medicaid up front.

The third major difference was over the Governor's plan cut Medicaid spending by reducing the income cap down to 185 percent of the national poverty level. According to department estimates, this would have meant refusing medical and prenatal care for some 27,000 of Georgia's low income children and pregnant women. Again, House lawmakers deemed it unacceptable to balance the budget on the back of the state's most vulnerable citizens. They therefore worked to find nearly $5 million to set the limit at 200 percent, restoring the necessary medical and prenatal care for some 15,000 of the poorest children and pregnant women. However, the Senate budget proposal set the cap at 195 percent, saving around $1.6 million, but cutting around 5,000 enrollees in the process.

After many long days and nights of deliberation and negotiation, House and Senate conferees were able to find a middle ground on HB 1181 which both bodies finally agreed to accept.

First, the compromise version would restore some $204 million in education funding for Georgia's schools. This was not nearly as much as House lawmakers would have liked, but members feel the additional funds will help protect the jobs of more than 5,000 public school employees. Likewise, House legislators hope the restored funds will be enough to help local systems avoid implementing a property tax hike on their citizens.

Secondly, the compromise version of the FY '05 budget redirects the remaining $77 million from the House's proposed education funding to eliminate the Medicaid funding delay. This money would be combined with an additional $5 million found by conferees to bring Medicaid funding just $12 million shy of the $376 million which was originally requested by Governor Perdue.

Finally, House and Senate budget negotiators decided to adopt the House position and set the income gap for Medicaid eligibility at 200 percent of the national poverty level. This will cost the state an additional $5 million next fiscal year, but will preserve medical care for some 15,000 of the state's most vulnerable citizens.

In order to pay for these priority items, House and Senate lawmakers agreed to delay the Governor's proposed 2 percent pay increase for teachers and state employees. This means teacher and state employee pay raises will not take effect until January 1, 2005.

There were also a number of areas where House and Senate priorities were identical. For example, both the House and Senate versions of the FY '05 budget requested nearly $116 million in lottery proceeds to fully fund book and fee payments by the HOPE scholarship. Following a study committee recommendation, the Governor had cut that money from the FY '05 spending plan. However, many House lawmakers lobbied to restore book and fee payments, which are financed solely by lottery revenues, noting that these costs could run as high as $1100 per year at some state universities. Senate members agreed with the House sentiment, and the Governor decided to increase the revenue estimate to fully fund the payments.

Likewise, both House and Senate versions of HB 1181 had recommended fully funding the Katie Beckett Waiver Program, which helps parents coping with severely mentally disabled children. This too was reflected in the conference committee compromise.

Other aspects of the finalized FY 2005 budget include:

  • •$1 million to prevent the closure of the Craig Nursing Home in Milledgeville, Georgia.

  • •$350,000 for Georgia's public libraries

  • •$900,000 in additional funds for the PINES system which helps libraries share books and resources statewide.

  • •$500,000 for the state's Quick Start Program, which works with new industries to provide specialty job training for potential workers.

  • •$60 million in bonds for major repair and renovation projects throughout Georgia's University System.

  • •$21 million in bonds to help the state Department of Technical and Adult Education to replace existing equipment, and purchase new equipment at various state technical colleges.

  • •$13.7 million in bonds to construct and equip a new classroom building for Heart of Georgia Technical College

Although House and Senate lawmakers were able to pass a FY 2005 budget before the final gavel fell, a potential problem did materialize. House and Senate negotiators were unable to agree upon a compromise version of HB 869 which sought to create a funding mechanism for the state's newly created indigent defense system. This funding mechanism, which would have used court filing fees and additional fines and bond charges to generate money for indigent defense, would have raised approximately $58 million in FY 2005. This means that, technically, the budget could be considered imbalanced. Should the Governor choose to take this view, he could decide to veto the budget on those grounds, thus setting the stage for a special session where House and Senate lawmakers would have to start the entire budget process all over again.

Another important item which saw final resolution today was HB 1325, dealing with Georgia's successful and highly popular HOPE scholarship. Members voted 164-3 to pass the conference committee report which represented a compromise between the House and Senate versions of HB 1325. Actually, the plans as originally written were very similar. For example, both proposals would implement a new grading system to determine HOPE eligibility. Current standards allow students with an overall "B" average to earn the scholarship. The new language would convert grades to a 4.0 scale, and require an overall 3.0 GPA for HOPE eligibility. This new standard would be phased in over four years to give students and schools time to adjust. The move is expected to save the program more than $100 million. Likewise, both the House and Senate versions of HB 1325 would catch students who are attempting to game the system by implementing an automatic GPA check at the end of each spring semester in addition to the regular checks at 30, 60, and 90 semester hours. This would prevent students from taking fewer classes to delay their regular check points. Finally, both House and Senate lawmakers agreed to freeze fee payments from the scholarship fund at current levels.

However, there were some differences that were hammered out in a House and Senate conference committee. The main point of contention dealt with the differing approaches on actions to take if HOPE spending begins to outpace lottery revenues.

After much deliberation and negotiation, House and Senate conferees agreed to a three-tiered trigger mechanism. The first trigger would kick in after the first year in which HOPE expenditures begin to outpace lottery collections. This trigger would decrease book payments sent to HOPE scholars from $300 to $150 per year. Upon a second consecutive year of decreasing funds, book payments would be totally eliminated. However, Senate negotiators did concede to the House position, which maintains book payments for poor students who qualify for federal Pell education grants. The third trigger would take effect after three years in the red, and would totally eliminate fee payments from the HOPE scholarship fund.

House and Senate negotiators also agreed to a Senate position designed to aid Georgia's part-time students. The conference committee version of HB 1325 would set the GPA check for part-time students at the end of the third semester, rather than the regular check at the 30-hour point.

In the end, House and Senate lawmakers were driven by a higher motivation to work together to do what is best for the program. House members who worked on the conference committee noted that the HOPE Scholarship is arguably the most popular and effective government programs in state history. Such an important program, they suggested, demands deliberate and diligent action to protect it for generations to come. Members overwhelmingly agreed.

Another high profile issue which saw final resolution tonight was a legislative effort to help the City of Atlanta help itself with respect to its highly publicized sewer woes. Unfortunately, previous city administrations failed to update Atlanta's sewer system to account for the city's tremendous growth. The city's insufficient sewer capacity has led to overflows and sewer dumps of virtually untreated waste water into the Chattahoochie and other metro area rivers and streams. Current Atlanta Mayor Shirley Franklin has shown a commitment to undertake the daunting task of improving Atlanta's inadequate sewer system, but estimates for the complete overhaul run as high as $4 billion over the next ten years. Atlanta, like the state of Georgia, is under serious financial strain, and cannot afford the repairs without an additional revenue source. This led House members to pass HB 1612, which sought to allow the city to raise the necessary money by holding a referendum and passing a Special Purpose Local Option Sales Tax (SPLOST) dedicated to funding sewer and water system upgrades. However, that bill became mired in the legislative process, and failed to receive Senate passage.

Realizing the serious economic and environmental importance of fixing Atlanta's sewer infrastructure, House lawmakers decided to revive the intent of HB 1612 by adding a revised version of the bill into thelanguage of the conference committee compromise on HB 709. Under the compromise plan, the City of Atlanta would have the option of passing a city resolution calling for a referendum to create a local sales tax to pay for sewer upgrades. Once the city has passed a resolution, Fulton County would have ten days to decide whether to call a county-wide referendum. If the county chooses to do so, the city and county would split the funds generated from the tax according to population. Should the county refuse, the city would be allowed to hold a city-wide referendum to create a SPLOST which would only be levied inside the city limits. This SPLOST would be allowed to exist for a term of four years, after which the city would be allowed to renew it, by referendum vote, twice more for a maximum of 12 years. Finally, the proposal mandates that funds raised from this SPLOST would only be spent on upgrade and maintenance projects for the city's sewer and water systems.

Because the conference committee version of HB 709 was drafted as an omnibus tax bill, House lawmakers also took advantage of the opportunity to add the language from HB 1446, which passed the House on the 26th legislative day. HB 1446 would exempt the first $50,000 of a disabled veteran's home from ad valorem taxation. Currently, disabled veterans receive a homestead exemption for the first $43,000 of their home's value. As the authors of HB 1446 noted on its initial passage, it is the least we can do for these honorable men and women who have done so much to protect our country and its freedoms.

The conference committee compromise on HB 709 passed by a vote of 127-34. It now goes to the Governor's desk to be signed into law.With most issues nailed down, Speaker Terry Coleman slammed the final gavel of the 2004 session as the clock struck midnight, thus ending what turned out to be one of the toughest sessions in recent memory. Baring an unforseen special session, House lawmakers will not meet again until the second Monday in January, 2005.


Georgia House of Representatives
Public Information Office

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