A Georgia Senate panel has advanced legislation that would eliminate and scale back various tax breaks totaling roughly $200 million to address the state’s budget crisis caused by the economic fallout of the COVID-19 pandemic.
The Senate Finance Committee on June 18 passed a substitute for H.B. 1035.
The measure would eliminate selected tax credits and exemptions, including the agribusiness and rural job tax credit, a sales tax exemption for insurers that insure only houses of worship, and a sales tax exemption for sales within enterprise zones.
H.B. 1035 would allow 17 sales and use tax exemptions to expire as of January 1, 2021. Those carveouts include sales to the Daughters of the American Revolution, sales to authorities that create a coliseum, sales from coin-operated amusement machines, and sales of food served at no charge on airlines.
The proposal would also scale back a number of tax breaks. Notably, it would reduce a state tax credit for low-income housing by 50 percent, which could save Georgia an estimated $60 million per year.
Georgia is facing a shortfall of approximately $3 billion to $3.8 billion between the remainder of this fiscal year and fiscal 2021, according to estimates from the House Budget and Research Office. In May state agencies were told to submit a budget reduction of 14 percent for fiscal 2021; however, the state is now considering budget cuts of around 11 percent.
A summary of the proposal explains that “it was important to take a look at all areas of tax policy where specific credits or exemptions for particular groups or products also reduce our revenue.”
During the Finance Committee’s June 18 meeting, Vice Chair John Albers (R) said, “This is certainly an unprecedented time, and difficult decisions have to be made.”
Albers said another bill was introduced in the Senate (S.B. 302) for the purpose of measuring tax credits and incentives.
“I’d like to hope that our members and colleagues in the House of Representatives will pass that bill and get it to the governor so we can do this on a regular basis,” Albers said. “I agree with some of the things on this list; I disagree with some of the things on this list. But I also know ultimately this is going to end up in a conference committee where we're going to get down to something that makes the most sense."