Georgia House sends pared-down state budget to Gov. Kemp

ATLANTA – The Georgia House of Representatives gave final passage Friday night to a $25.9 billion fiscal 2021 budget scaled back by the economic impact of the coronavirus pandemic on state tax collections.

House lawmakers approved the spending plan 104-62 in one of the final actions the House took before adjourning the 2020 legislative session. The state Senate had signed off on the budget on Thursday.

While lawmakers reduced state spending by $2.2 billion during the year starting July 1, the cuts in the final version of the budget were not as deep as had been feared.  

When Georgia businesses began shutting down in March to discourage the spread of COVID-19, Gov. Brian Kemp and legislative leaders told state department heads to begin preparing to reduce their budgets by 14%.

But after receiving the latest revenue reports showing a lower decline in tax revenues than had been expected, Kemp revised the across-the-board cuts first to 11%, then to 10% earlier this week.

That allowed legislative budget writers to avoid some key reductions, including eliminating furlough days for teachers and employees across state government, House Appropriations Committee Chairman Terry England, R-Auburn, told his legislative colleagues before the vote.

Despite a $950 million cut in the K-12 student funding formula, the budget still fully funds student enrollment growth in Georgia’s public schools, equalization grants for low-wealth school districts and student transportation, England said.

The budget also spared the state Department of Labor from absorbing any reductions, acceding to a request by Commissioner of Labor Mark Butler, who argued successfully that his agency is being forced to process a deluge of unemployment claims resulting from the recession.

The joint House-Senate conference committee that worked out the final budget deal also restored cuts to behavioral health services and to the state’s accountability courts, which have been credited with reducing Georgia’s incarceration rate.

Rural hospitals in Georgia, which have had trouble making ends meet for years, will receive additional grant funds.

“Putting the brakes on elective surgery [during the COVID-19 crisis] has impacted rural hospitals dramatically,” England said. “We’re set in a way to help those hospitals.”

Both during Thursday’s Senate debate and again in the House on Friday, minority Democrats argued the General Assembly should have looked for sources of additional revenue as well as cutting spending. Legislation to increase the state’s tobacco tax from 37 cents per pack to $1.35 failed to reach the floor of either legislative chamber.

The Georgia Budget and Policy Institute (GBPI) released a statement after Friday night’s vote criticizing that over-reliance on spending reductions.

As these cuts go into effect and Georgia’s schools, health care institutions and more are impacted, GBPI urges lawmakers to return in January and raise revenues so that our state can recover from COVID-19 and eventually prosper,” said Jennifer Owens, the group’s senior vice president.

The budget now heads to Gov. Brian Kemp for his signature.

Break times to pump breast milk required in legislature-passed bill

Employers will need to provide break time for mothers to express breast milk while at work under legislation that passed the General Assembly Friday.

House Bill 1090 requires employers to provide a private area that is not a bathroom for employees to express breast milk. Break times for that purpose would have to last for “a reasonable duration” and could not cut into an employee’s paid leave or salary.

Those rules would apply for school districts, government agencies and businesses with 50 employees or more, but not for employees working remotely.

Businesses with fewer than 50 employees would be given leeway to skip the requirements if creating private break rooms for employees to express breast milk would create “an undue hardship” either from cost or space constraints.

Sponsored by Rep. Debra Silcox, R-Sandy Springs, the bill passed out of the state Senate Thursday by a 45-1 vote. Sen. Bill Heath, R-Bremen, opposed it.

The bill then cleared the state House Friday evening by a 150-13 vote. It now heads to Gov. Brian Kemp’s desk for his signature.

Silcox’s bill mirrors legislation brought in the Senate earlier in the 2020 legislative session by Sen. Zahra Karinshak, D-Duluth.

Speaking from the Senate floor Thursday, Karinshak said the bill would help working moms in Georgia care for their newborns without fear of losing their jobs.

“It is a wonderful day for working families in Georgia to pass this bill,” Karinshak said.

Sen. Nan Orrock, D-Atlanta, agreed the measure would help Georgia women as well as their children who would also benefit from the workplace protections.

“Let us never forget that we have come full circle to understand that mother’s milk is what the infant needs,” Orrock said.

Georgia film tax poised for more scrutiny in legislature-approved bill

New scrutiny will be applied to tax credits that relieve film companies from having to pay billions of dollars annually in Georgia under legislation that passed out of the General Assembly Friday.

House Bill 1037, by Rep. Matt Dollar, R-Marietta, would require all film productions located in Georgia to undergo mandatory audits by the Georgia Department of Revenue or third-party auditors picked by the state agency.

It would also tighten rules for how film companies could transfer or sell unused tax credits to other businesses, a common practice for production groups that conduct part of their movie-making work outside Georgia.

The Georgia Senate passed the measure by a 45-1 vote Thursday, with the state House of Representatives following suit on Friday by a 154-10 vote. The bill now heads to Gov. Brian Kemp’s desk for his signature.

Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, said the measure would help the state keep a closer eye on how lucrative tax credits are doled out.

“This is full auditing of all the film tax credits,” Hufstetler said Thursday. “Nothing more, nothing less.”

The measure’s passage comes after two scathing audits released in January that found the film tax credit program has been poorly managed while its financial impacts on the state economy were exaggerated.

Supporters of the credit point out it still brings huge economic benefits to the state despite the management shortcomings.

Backers include several local economists who have criticized on the audit findings, arguing the analysis ignored the impacts brought by billions of dollars and thousands of jobs that the industry generates in Georgia each year.

Those economic boons were enough to discourage state lawmakers from trying to curb or cap the film tax credit amid the coronavirus pandemic, which has pummeled the state budget.

Many lawmakers who favor closing tax loopholes over spending cuts to fix the budget were met with calls to keep hands off the film credit during the 2020 legislative session.

Still, the measure was pared back from its original version that proposed including more business operations under the credit program, including media coverage and broadcasts of large sporting events like the upcoming FIFA World Cup. That addition was yanked from the bill before final passage.

Tax credit passed for Georgia companies making COVID-19 protective supplies

Georgia businesses making personal protective equipment like gloves, masks, gowns and hand sanitizer will be eligible for a new tax credit under legislation that passed the General Assembly Friday.

The credit was touted by Gov. Brian Kemp as a show of support for businesses that have switched their operations over to producing important protective supplies since March amid the coronavirus pandemic.

House Bill 846 also includes changes to an existing state tax-credit program benefitting job creators that will let companies use their pre-coronavirus employment numbers to qualify for the credit.

Kemp, along with Lt. Gov. Geoff Duncan and Georgia House Speaker David Ralston, R-Blue Ridge, called the two tax-credit measures critical to bolstering businesses that have been hit hard by the virus-prompted economic slowdown.

“This legislative package will shore up those efforts, ensuring that those in the Georgia businesses who have adapted to meet these challenges head on know that we have their back,” Kemp said in a statement.

The Georgia House passed the bill Friday 110-58, a day after it cleared the state Senate 46-3. The bill now needs the governor’s signature, which he has signaled he will give.

Under the bill, businesses manufacturing items in Georgia used to shield people from contracting the virus would be eligible for an additional $1,250 tax credit per job. Those supplies include gloves, masks, hand sanitizer, face shields, helmets, goggles and respirators.

The credit looks to be a boon for more than 250 businesses in Georgia that flipped the switch on their operations to churn out protective gear, including clothing manufacturers and breweries. It would apply to jobs created in those qualified companies through 2024.

Companies that qualify for the state’s Quality Job Tax Credit would also be able to count the number of employees they had in 2019 toward claiming their credit for the 2020 and 2021 tax years.

The change aims to help businesses in underdeveloped areas and for certain industries like manufacturing, warehousing, telecommunications and research that have lost employees amid the pandemic.

“We’re in new times, the COVID era,” Rep. Bert Reeves, R-Marietta, said on the House floor in presenting the bill Friday. “This is something we can do to try to help our businesses rebound.”

Reeves said the tax credits will cost the state an estimated $4.3 million to $13.1 million per year in lost tax revenue.

General Assembly approves raising age to buy cigarettes, passes vaping tax

Georgia lawmakers are mulling a proposed excise tax for vaping products in the 2020 legislative session. (Stock photo by Lindsay Fox)

Vaping will be taxed in Georgia under a measure that passed the General Assembly Friday. Lawmakers also raised the state’s minimum age to vape or smoke cigarettes from 18 to 21.

The measure slaps a 7% excise tax on vaping products sold in Georgia like e-cigarettes, vape pens, refillable cartridges and electric hookahs.

Pushed by Rep. Bonnie Rich, R-Suwanee, the vaping tax was added to a separate bill that raises the minimum age to use tobacco and vape products to 21. The bill was sponsored by Sen. Jeff Mullis, R-Chickamauga.

The bill passed by a 45-8 vote in the Senate Friday after the state House passed it by a 123-33 vote on Thursday. It now heads to Gov. Brian Kemp for his signature.

Vaping manufacturers and store owners had opposed the excise tax and new licensing rules in Rich’s proposal, arguing higher prices on vaping could drive smokers back to cigarettes after using the tobacco-less products to kick the habit.

Nearly 500,000 people die each year in the U.S. from tobacco-caused diseases, according to the federal Centers for Disease Control and Prevention.

But supporters of a tax and tighter rules on vaping have stressed the need to protect children from vaping, particularly in light of the risk that kids who get hooked on nicotine could gravitate to cigarettes.

They point to data from the U.S. Food and Drug Administration showing nearly 4 million middle and high school students used vaping products in 2018, a large increase from the prior year.

Rallying support for her proposal earlier this week, Rich said the charge on vape sales would help promote safety for kids as more and more youth acquire a taste for vaping in Georgia and the U.S.

“We need to get in front of this and start regulating this industry to protect our youth,” Rich said.

The proposed vaping tax almost died in mid-March when House lawmakers sought to slice the 7% tax in half for so-called “modified-risk” tobacco products like smokeless dip. That special consideration was removed from the vape-tax before it passed.

On the House floor Thursday, Rich said the excise tax should drum up between $11 million and $19 million in new revenues for the state. That would be a boon for Georgia’s coffers at a time when lawmakers are cutting the state budget by more than $2 billion amid the coronavirus pandemic, she said.

But the vape bill did not touch the state’s cigarette tax, which stands at 37 cents per pack. Many lawmakers and budget observers have called for increasing the cigarette tax to boost revenues rather than cut spending for state agencies.

A separate bill has proposed upping the cigarette tax to $1.35 per pack. Backers say that could raise hundreds of millions of dollars annually. The cigarette tax hike has backing from influential Republican lawmakers including Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, but has stalled in the legislature.

Mullis, who carried the vape bill in the Senate, insisted Friday the vaping tax would not raise any levies on tobacco products.

“No taxes on tobacco,” he said.