Georgia Legislative Update

The 2017 Georgia legislative session is underway. Following is a brief update of key public policy news in the state.

In legislative news, several key committee chairs are now filled. In the House, Kevin Tanner will chair transportation and Jason Shaw will lead the newly created transportation appropriations subcommittee. In the Senate, Burt Jones will chair insurance, Brandon Beach will chair transportation and Chuck Hufstetler will chair finance.

Other than constituting committees, most of the action so far has been from the executive branch, with the State of the State address and release of the Governor’s budget (which forms the underpinning of most of his new proposals). Generally, the budget offers increased flexibility this year, thanks to Georgia’s economic rebound and the Governor’s conservative and careful management of fiscal affairs throughout his term.

The most visible legislative proposal in the State of the State was a pledge by the Governor to work with legislators to introduce a package this year to help turn around failing K-12 schools. A key centerpiece of the Governor’s budget for 2018 is a $360 million pay increase package for teachers, state employees and university system employees. The raise package includes across-the-board increases in the range of 2 to 3 percent, with much higher increases (about 20 percent) going to job categories where the state has a significant competitive pay gap, such as law enforcement and child protective services. Of note, the Governor has departed from his prior practice of letting school systems decide how to use teacher funding, and instead provided for an automatic increase that will go directly to teacher salaries.

Healthcare costs for both active and retired state employees continue to pose a cost-management challenge for the state, with increases in both state and member shares of both plans being proposed in the budget in an effort to maintain a sound program. Additionally, the state is appropriating over $200 million to the benefits plan to shore it up in light of increased utilization and cost trends, which is one of the single largest year-over-year budget increases. About a third of that number has been recovered in savings initiatives, primarily an eligibility audit and pharmacy utilization management. Added to this, the state is putting well over $200 million more into funding for benefits for teachers, healthcare for corrections inmates and other population-based health costs, making rising healthcare costs the single biggest new funding item in the budget this year.

Also of note, the Governor’s budget moves responsibility for healthcare for juvenile inmates from Department of Juvenile Justice to the Department of Corrections contract with Augusta University. The state is also continuing its push to bring Medicaid reimbursement rates for some physicians in line with Medicare rates, which has been strongly supported by the state’s primary care doctors.

On the good news front, transportation infrastructure in Georgia continues to be a big winner as a result of the passage of HB170, with over $200 million in new state funding being added to the large amount of existing annual funding being generated since passage of that legislation two years ago. Additionally, the Governor has proposed $100 million in direct state funding to continue repairs of bridges around the state.

Governor Deal’s budget continues his focus on expanding Georgia’s business recruitment initiative, with $15 million in new discretionary deal-closing funds, an outreach center at Hartsfield-Jackson Atlanta International Airport, and a new push into recruiting Chinese companies.

In higher education, the budget contains some good news for Georgia institutions, with funding for all types of HOPE scholarships seeing increases. Notably, this includes a 10 percent increase in the Tuition Equalization Grant paid to students attending private institutions. Trying to address Georgia’s severe physician shortage is also a large piece of the budget, with funds being included for 126 new residency slots.

In new initiatives, the amended budget proposes spending $50 million in OneGeorgia funds for Georgia Technology Authority to create and operate a state-of-the-art cybersecurity testing and training facility for use by both government and private sector entities. Notably, the National Security Agency issued a statement in support of the proposal, an unusual step that reflects the high level of federal support for Georgia’s leadership role in this industry.

Following are the budget proposal’s significant expenditures on technology and real estate:

Technology

• $8.5 million for the Department of Corrections to expand its electronic medical record system
• $11 million in additional funds for the Integrated Eligibility System project
• $25 million to implement the joint Department of Revenue/Department of Driver Services’ Driver Record and Integrated Vehicle Enterprise System

Real Estate (other than renovation and smaller projects)

• $105 million for construction of a new judicial complex on Capitol Hill
• $22 million to Armstrong University for a new health education building
• $47 million for a library and tower project at the Georgia Institute of Technology
• $18 million for a student learning center at the University of Georgia
• $73 million for a new Hall County campus for Lanier Technical College
• $18 million for a new academic building at Georgia Northwestern Technical College
• $36 million for a Georgia Bureau of Investigation crime lab in Savannah
• $55 million for a new exhibition project at the Georgia World Congress Center

As we continue analyzing the budget and legislative proposals, we will provide additional updates.  

For additional information, please contact Brad Alexander or a member of McGuireWoods Consulting’s Georgia State Government Relations Group.