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Governor Deal at Eggs: No Such Thing as “Free Health Care”

Mike Klein

Mike Klein

Governor Nathan Deal said the state Department of Community Health has been told to reduce its amended current fiscal year budget by 3 percent and then find 5 percent more in new cuts next year to help the state absorb Medicaid costs that continue to escalate.  The state faces a Medicaid deficit that will approach $800 million during the next 18 months of its fiscal cycle.

Deal devoted nearly his entire speech to health care when he addressed the Georgia Chamber of Commerce annual “Eggs and Issues” breakfast Wednesday at the World Congress Center in Atlanta.   The Governor also suggested folks who cannot attend Thursday morning’s State of the State address should monitor his “Tweeter” account.  Deal will announce his budget during the speech, scheduled for 11:00 a.m. at the State Capitol.

“Georgians who have already received a paycheck this January have no doubt noticed that their payroll taxes went up and their take-home salary went down,” Deal said.  “This is the cost of entitlements.  If you think your taxes went up a lot this month, just wait till we hve to pay for ‘free health care.’  Free never cost so much.”

The push is on to quickly approve a Medicaid funding fix bill proposed by the Governor with an initial Senate floor vote perhaps this week.  Lt. Governor Casey Cagle and House Speaker David Ralston echoed their support for the governor’s bill that would give the Community Health board the authority to continue the hospital provider fee that would otherwise sunset in June.

The fee paid by all Georgia hospitals based on annual revenue is used to draw down federal dollars that are redistributed to hospitals that serve Medicaid patients.  The General Assembly enacted the fee three years ago to address a rapidly developing shortage in Medicaid funds caused by increased demand for services.  Deal said 12-to-14 hospitals would face closure if the provider fee is not continued.  DCH imposes a similar nursing home industry fee.

Governor Nathan Deal

Governor Nathan Deal

“In fact, we are one of 47 states that have either a nursing home or hospital provider fee or both,” Deal said.  The governor said “it makes sense to me” that DCH should have authority over both fees “for maximum efficiency and effectiveness.”  The move also means that state lawmakers would be spared having to vote to continue an expiring fee or impose a new one.

Deal said DCH has identified $109 million in cost-savings. “But this hardly covers the additional nearly $500 million in needed funds caused by growth in Medicaid expenses during the same time frame,” Deal said.  “This means we must make necessary cuts in other agencies and core functions of government since raising taxes is not an option I will accept!”

The governor is no fan or friend to the federal health care reform law known as Obamacare.

During the past several months the Deal administration said it will not expand Medicaid eligibility starting in 2014 because the state cannot afford more than $2.5 billion that it currently spends annually on Medicaid.  The federal government pays about $5 billion annually. Georgia anticipates its share of Medicaid costs will increase at least $1.7 billion over the next ten years.

Deal said the federal health care reform law will add $106 million to the cost of state-provided health care benefits for active and retired employees starting in 2014.  He also said Georgia will be assessed a new $35 million insurance tax starting in 2015.  About 13 percent of all state budget dollars currently pay for Medicaid or the state children’s health insurance programs.

“The irony to me is that there are those in the medical community who are urging the expansion of the Medicaid program while at the same time, they are seeing more and more medical providers refusing to accept Medicaid patients,” Deal said.  “If you are losing money now how do you reconcile the number of patients on whom you will lose even more money.”

Georgia also said it will not create a state health insurance exchange, as envisioned in the federal health care reform law.  “I see no benefit to our citizens to have a program bearing the name of the State of Georgia over which our elected or appointed officials have little if any say so,” Deal said.  “While many federal programs come with strings attached, these strings turn states into marionettes to be manipulated by federal bureaucrats.”

As for “Tweeter,” the Governor noted, “My staff tells me that I am really getting into the modern age.   You can go to my Tweeter account!” for updates on the State of the State address.  The address will be carried live on General Assembly and Georgia Public Broadcasting websites. GPTV will broadcast the State of the State address and the Democratic leadership response in their entirety at 7:00 p.m. on the legislative program “Lawmakers.”

(Mike Klein is Editor at the Georgia Public Policy Foundation)

January 16, 2013 Posted by | Uncategorized | , , , , , , , | Leave a comment

Deal Legislative Agenda Includes Changes to Jobs Tax Credit Programs

Mike Klein

Governor Nathan Deal has unveiled a package of tax reforms and tax credits which he says are essential to make Georgia the number one state in the nation to do business.  One theme was familiar – reducing the energy tax on manufacturing – but other elements were new from the Competiveness Initiative Task Force that the governor announced one year ago.

“Today, in executive offices right here in Georgia, business leaders are making the business decision to  expand manufacturing activity and facilities in neighboring states,” Deal said at the state Chamber of Commerce “Eggs and Issues” breakfast.  “Every time they make that decision, we miss out on new investment in our communities and new opportunities for Georgians.”

Deal’s address to some 2,500 breakfast-goers was the first of two major speeches today that outline his legislative agenda.  Tonight the Governor will deliver his second State of the State address to the General Assembly.  His 7:00pm speech will be carried on GPB-TV and Radio.

The Governor’s tax reform initiative has four primary proposals.  First, Deal called for elimination of sales tax paid on energy used in manufacturing.  “Because the sales tax is intended to be a tax on consumption, it should not be applied to business inputs,” the Governor said.

Second, Deal proposed sales and use tax exemptions for construction materials “used in projects of regional significance.  This is an important business climate issue and we need the ability to authorize this exemption when competing for projects creating large number of jobs.”

Governor Nathan Deal (File Photo)

Third, the Governor called for a re-do on the state’s job tax credits program that Deal said was written “in 1994 when the competitive landscape was far different than the one our businesses operate in today.”  Deal said the target would be assistance for small businesses.

“The present tax credit system is based on the mistaken notion that Atlanta competes with Rome or even Metter for jobs.  It doesn’t,” the Governor said.  “What we need is a tax credit program that embraces the realities on the ground – that Atlanta is competing with Charlotte and Dallas (and) that Floyd County is competing with operators just over the state line…”

Deal also proposed a re-do on the 2009 quality jobs tax credit program that designed to assist companies that bring high-paying positions into the state.  Currently, companies are required to create 50 or more jobs to obtain the credit.  The governor proposed reducing that to 15 jobs.

“Most companies now listed in the S&P 500 began with 50 or fewer employees,” Deal said. “We need to make the changes that will ensure more of these small, promising businesses are choosing to call Georgia home.”

The Governor emphasized his support for the regional transportation referendum that will be on the ballot this July, telling breakfast-goers, “We need new projects to maintain roads and bridges, that left untended, will cost taxpayers far more down the road.”

Deal said his Fiscal 2013 proposed budget will include $46.7 million in bonds to continue work on the Savannah River Harbor project, bring the total state commitment to more than $136 million over three years.  Georgia is awaiting federal decisions on hundreds of millions more.

The Governor sounded a cautiously optimistic tone – without details – in the decades long water dispute between Georgia, Florida and Alabama.  The U.S. Army Corps of Engineers is under a federal court order decision to make new Lake Lanier basin withdrawal recommendations.

“Regarding our long-running battle with our neighbors to the West and South, my team is now negotiating with a more favorable legal backdrop, and we are in a much better position to strike a lasting deal that makes sense for Georgia,” Deal said.

Georgia’s population is predicted to grow by 4.6 million over the next two decades.  “It is imperative that we expand water supply across the state,” Deal said.  “Let me restate my priority. We must create new reservoirs to address Georgia’s long-term water needs!”

Deal said his proposed budget includes $45.7 million for water supply projects.  That is the second-year installment on a $300 million, four-year initiative Deal announced one year ago.  The Governor also said starting today local governments can apply for low-interest state loans for local water projects.

The Governor said this evening’s State of the State address will focus on education.

(Mike Klein is Editor at the Georgia Public Policy Foundation)

January 10, 2012 Posted by | Uncategorized | , , , , | Leave a comment

Who Gets to Drink the Water? Tri-State War Gets March Court Date

Mike Klein

Georgia, Alabama and Florida are going back to court to argue about water.  Again.  Book this date onto the calendar:  Wednesday, March 9 at the U.S. Circuit Court of Appeals in Atlanta.

Georgia will ask the three-judge panel to overturn a 2009 ruling that metropolitan Atlanta is not entitled to use the Lake Lanier federal reservoir as its primary water supply.  U.S. District Court Judge Paul Magnuson ruled the Army Corps of Engineers should have obtained Congressional approval decades ago before it allowed withdrawals for the Atlanta metro region.

Magnuson provided a window until July 2012 for Georgia, Alabama and Florida to agree on water allocation.  Consequences, should they fail to agree, could include allocation imposed by Congress and the possibility Lanier water withdrawals for metro Atlanta would be drastically reduced.

Lake Lanier -- North Georgia's Largest Reservoir

North Georgia’s economy will be severely harmed – perhaps crippled is the better word — without sufficient water.  Millions of people and businesses depend on Lanier water.  Lake Allatoona, the region’s other federal reservoir, serves the northwest metro sector.

Georgia saw two other significant water policy developments this week.

On Tuesday, Governor Nathan Deal announced a new water supply task force that brings six agencies together to assist communities.  Deal’s most detailed water policy remarks to date were made during his first address to the Georgia Chamber of Commerce.  Previously Deal said the state will invest $300 million to expand existing supplies and accelerate reservoir planning.

Then on Wednesday the state Department of Natural Resources board approved new interbasin water transfer rules which are a critical part of managing reservoirs.  Restricting transfers would impact current and also future reservoirs. Opponents question how water basin transfers affect the health of rivers, streams and their biological communities.

Georgia has limited natural water beyond the southern aquifer that supports agriculture.  Nearly all water that supports business and populations either falls from the sky or it flows into the state from someplace else.  Lake Lanier is north Georgia’s largest water resource.  Planning began in the late 1940’s. Water storage started in 1956 and filling the 38,000-acre lake took three years.

Georgia, Florida and Alabama began to argue about water more than twenty years ago.

Mike Klein is Editor at the Georgia Public Policy Foundation.

January 27, 2011 Posted by | Uncategorized | , , , , , , , | Leave a comment

Nathan Deal’s Subtle Message May Have Been Most Important at Eggs

Mike Klein

Governor Nathan Deal seemed to be saying something unusual Tuesday: “I want to listen.”

The new Governor used the Georgia Chamber of Commerce Eggs and Issues scramble to announce initiatives that will define how his administration thinks about business opportunities, education and water resources.  But the unspoken subtle message may have been Nathan Deal knows he doesn’t have all the answers by himself and successful governance works best as a team sport.

Time after time, Deal returned to the listen theme and toward the end he said, “I look forward to working with you.  I will have an open door. I will listen to your concerns. I will consider your recommendations and, hopefully together, we can move the great state of Georgia forward.”

The Governor asked for business community help to identify and create job opportunities. He asked teachers, parents, school superintendents and local board members for help with public education. He asked for public-private partnership help to expand the state’s water resources.

Governor Nathan Deal

One thing we have learned is Nathan Deal prefers short speeches. This was his first address as Governor to the state Chamber. He spoke for 11 minutes; 2,000 listened and applauded.

Eight years ago Governor Sonny Perdue received widespread acclaim for his Commission for a New Georgia that would examine government inside and out, leave no stone unturned to ferret out waste and create new best practices.  It was a successful and long overdue model.

Deal’s model is narrower and more targeted: “It doesn’t really serve us in the overall scheme of things to spend our money educating our children K through 12, in college and higher education, and not be able to provide them with jobs that keep them in the state.  So, jobs and education, the two important ingredients for the future of our state, are inextricably linked together.”

Deal said the Georgia Chamber “is going to be a very vital partner working with us” on a new Georgia Competitiveness Initiative that will also bring together two state agencies – Economic Development and Transportation – whose work is critical to Georgia’s recovery now and future growth.

On education, the Governor made it clear he will listen to the downtown professionals, but he also announced creation of new statewide advisory groups that will have membership from all 13 current congressional districts (soon to be 14 after census redistricting later this year).

“I want to meet quarterly with teachers, local superintendents and school board members and parents,” Deal said. “If we are to make good policy it is imperative that we tap into the information and the opinions and the points of view of those who are involved in the process.”

Finally, the governor suggested public – private partnerships are essential to solving the water war with Alabama and Florida that looms overhead like a black storm cloud. “We believe it is important for the state of Georgia to show good faith,” said Deal. “We can’t sit back and wait on Washington to solve the problem for us, nor can we simply expect the courts to do that.”

Deal said the Georgia Environmental Facilities Authority will coordinate a new multiple state agencies approach to expand existing water resources and plan new reservoirs.  Deal said the state will invest $300 million over four years to assist local communities with their water resources planning.

The Governor was speaking about the new competitiveness initiative when he said, “If we are going to achieve success, we must know how we are going about it and do it in the most appropriate fashion.”

Apparently, he means to listen.  At least that was the message Tuesday.

Mike Klein is Editor at the Georgia Public Policy Foundation.

January 26, 2011 Posted by | Uncategorized | , , , , | Leave a comment

Can We Stop K-12 Education from Becoming General Motors?

Frederick Hess looks at American public education and he sees General Motors.  Not the nifty, new Chevrolet Camaro convertible version rescued by the federal government but the previous model when the world’s once premier automaker became so bloated that it virtually killed itself.

Hess is director of education policy studies at the American Enterprise Institute. His several books include newly released “The Same Thing Over and Over,” a passionate conversation about why American education will not improve by doing the same thing over and over again.

Hess delivered the keynote address at this year’s second annual education conference hosted by the Georgia Public Policy Foundation and the Georgia Chamber of Commerce.  About 150 educators and policy analysts met this past Friday in Macon.  They were treated to Hess’s rapid fire delivery and his strong suggestion American public education is outdated for its needs.

“General Motors had been hearing from consultants for three decades (about) what the problems were,” Hess said. “Before people bought cars online, it was useful to have tons of dealers (but) the world changed.  The way people bought cars changed.  The way people used technology changed.  GM did not change.  It still had the enormous dealer network, enormous compensation agreements, enormous health care costs and enormous pension obligations.

“GM’s successes had gotten baked into its DNA.  This is the problem with school reform,” Hess said.  “We live our whole lives in the world of K-12 and we think the whole world works that way.  I’ve got to tell you, if we try to fix K-12 the way we’ve always tried to fix K-12 we will be having this same boring conversation decades from now.”

Frederick Hess

Hess made the point that 50 years is the average lifespan for a Fortune 500 company but nearly every school district in the United States already existed 50 years ago, all 14,000 of them.  Most education still uses the model that students in a classroom will be taught the same content at the same pace for the same number of days before moving as a group to the next classroom.

This worked when most Americans received little beyond the education required for a lifetime of manual labor.  This worked when most Americans grew up on farms.  This worked when literacy was defined by the ability to write your own name.  This worked when classrooms were training assembly line students for jobs that did not require deductive reasoning and decision making.

“What we want kids to do and what we want schools to do is profoundly different than 50 years ago,” Hess said.  “The way we can organize and deliver schooling is profoundly different today from what it once was.”  This includes online learning, blended instruction and learning without borders in which students collaborate with instructors and other students located anywhere.

“We are holding onto a one size fits all notion,” Hess said.  “Public schooling is about educating our children both in their interests and in the interests of the nation.  Any idea which advances that strikes me as entirely consistent with public education.  Getting excited about steps on pay scales or the geography of school districts strikes me as profoundly missing the point.”

Hess pointed out that whereas 75% of parents might say attending the neighborhood school is a best first local option those same parents might also say they want more education choices, especially courses that are not offered by the local school because there is no teacher.

“The way to think about educational choice is to say, hey, if you would rather have your child learn online, or if you would rather have your child learn (a language course by) Rosetta Stone, we’re going to allow you to take a portion of the money we would have spent and you can use that money to purchase a service,” Hess said.  “We’re starting to say parents (should) have an option to how they spend the dollars.”

Hess has been a research associate at his alma mater Harvard University since 1998 but his teaching career began in a Baton Rouge, Louisiana public high school, years that he describes as “frustrating, mind-numbing tedium” under the “Kafkaesque theories” of education bureaucrats.

Hess is not a big fan of the word “innovation” as applied to education because he suggests that often means doing nearly the same thing but giving it a different name.  The world according to Hess preaches radical change to address new challenges that require new solutions.

“If the problem is that we need stronger role models and mentors for inner-city African-American and Latino children who are disaffected by grade seven then let’s talk about how do we get those people?  Let’s stop calling them teachers. Let’s say, what is the job that we want them to do?  What does that mentoring look like?

“If our funding arrangements and our job definitions don’t fit that role, let’s not try to retrofit the role to the mission,” Hess said.  “Let’s change what we expect people to do to fit what we need them to do.  It comes down to, what problem are we solving?  The key is not thinking about one-size-fits all solutions to multi-faceted problems, but think about how do we create opportunities, tools and resources so people can solve problems in ways that fit those students?”

The option, of course, is American public education could become General Motors.  Bad option.

Mike Klein is Editor at the Georgia Public Policy Foundation.

December 8, 2010 Posted by | Uncategorized | , , , , | Leave a comment

Trauma Care, Five Other Ballot Questions Go Before Voters on Tuesday

This article was written for the Georgia Public Policy Foundation.

Next week Georgia voters will decide whether to enact five proposed constitutional amendments and one referendum question.  This article contains short summaries of all six ballot measures.   Additional information is available on the Georgia Secretary of State’s website. You are invited to discuss the proposed amendments by clicking on “Leave A Comment” at the bottom of this article.

Proposed Amendment #1: “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?”

What It Does: As a practical matter, passage would enable Georgia corporations and companies to enforce non-compete agreements with senior executives and others in lower job classifications when the company decides the employee holds confidential information.

Last year the Georgia business community supported passage of House Bill 173 which says post – employment non-compete agreements of two years or less are reasonable. Governor Sonny Perdue signed the bill but enactment requires a constitutional amendment.

House Bill 173 would give Georgia courts authority to revise non-compete agreements entered into by employers and employees without overturning the entire agreement.  Amendment approval means HB 173 would become law on Wednesday, November 3.  Rejection of the amendment means the statute would be automatically repealed.

The proposed amendment could limit options for some persons to work in the same field after an employee leaves previous employment.  Language within the amendment does not make clear how this would pertain to persons who work in firms that do business across state lines or internationally, which often is the case with senior and other key executives.

Proposed Amendment #2: “Shall the Constitution of Georgia be amended so as to impose an annual $10.00 trauma charge on certain passenger motor vehicles in this state for the purpose of funding trauma care?”

What It Does: Advocates have done a good job explaining why Georgia should upgrade trauma care center resources, especially outside metropolitan areas where trauma care is not readily available.  Some $80 million in estimated annual revenue would assist Georgia’s 17 designated trauma hospitals and provide funds to upgrade other hospitals from acute care to trauma center status.

The Georgia Chamber of Commerce, Georgia Hospital Association and several other statewide medical associations have made passage of this amendment a full-blown statewide initiative. They point out that the state has just four trauma care centers south of Macon.

Virtually all private vehicles including motorcycles and pick-up trucks would be subject to the annual $10 trauma charge.  But Senate Resolution 277, the legislation that proposed the constitutional amendment, made clear that state government vehicles would be exempt.

There is near universal consensus that Georgia should improve its trauma care capabilities.  Critics fall into two camps:  Those who believe that amending the state constitution is not an appropriate course of action, and those who believe trauma care needs should be addressed through conventional General Assembly funding.  The state also tried to address trauma care funding through a so-called super speeders law that went into effect January 1, 2010.

Proposed Amendment #3 : “Shall the Constitution of Georgia be amended so as to allow the Georgia Department of Transportation to enter into multiyear construction agreements without requiring appropriations in the current fiscal year for the total amount of payments that would be due under the entire agreement so as to reduce long-term construction costs paid by the state?”

Proposed Amendment #4: “Shall the Constitution of Georgia be amended so as to provide for guaranteed cost savings for the state by authorizing a state entity to enter into multiyear contracts which obligate state funds for energy efficiency or conservation improvement projects?”

What These Do: The Georgia constitution says state government agencies may not enter into contracts with vendors that obligate the state to make payments beyond funds available within the current fiscal year.  These proposed amendments would create exemptions for transportation and for projects to improve energy efficiency and conservation.

Under Proposed Amendment #3, the General Assembly could authorize transportation contracts with private sector vendors for periods not greater than ten years.  Transportation contracts would terminate in the event of insufficient project funds.  Legislation drafted for the 2011 General Assembly is expected to address how to safeguard against overextending obligations.

The energy bill purpose is similar with slightly different implementation.  Energy vendor contracts could be written for periods up to twenty-five years.  Vendors would be required to guarantee specified savings or revenue gains solely attributable to energy improvements.  The guarantee would be satisfied by placement of funds into escrow accounts.

Supporters and critics line up in essentially two camps:  Supporters believe both amendments are good business practices that make projects more manageable and fiscally responsible.  The second camp is those who are concerned about the state incurring long-term unfunded debt.

Proposed Amendment #5: “Shall the Constitution of Georgia be amended so as to allow the owners of real property located in industrial areas to remove the property from the industrial area?”

What It Does: This amendment would enable owners of industrial area properties in Chatham and Jeff Davis Counties to have their land annexed by cities that already provide water or fire services.  These properties are the state’s last industrial areas created more than 50 years ago under “local constitutional amendments” that stipulated the property could never be annexed to a city.

“Local constitutional amendments” were eliminated by the state constitution that went into effect in 1983, but existing properties were grandfathered.  In 1996 Georgia amended its constitution so owners whose industrial area property was located on an island could annex to a city.  This amendment updates the idea to include property not included on an island.

Statewide Referendum Question: “Shall the Act be approved which grants an exemption from state ad valorem taxation for inventory of a business?”

What It Does: Georgia voters could impose an early kill date on the state portion of the business inventory ad valorem tax.   Most business inventory ad valorem revenue goes directly to local jurisdictions and the fiscal impact would be small on the state budget. There are several arguments in favor of the amendment and against continuation of the tax.  Georgia law allows several exemptions; just 14 other states impose a similar tax; and, this year the General Assembly passed legislation to eliminate the state business inventory ad valorem tax in 2016.  Amendment passage would eliminate the state tax on January 1, 2011, and for all subsequent years.

Mike Klein is Editor at the Georgia Public Policy Foundation.

October 27, 2010 Posted by | Uncategorized | , , , , , , , , , , | Leave a comment

Will Supreme Court Decide Georgia Virtual School Funding?

Georgia education headlines are too often made for wrong reasons.  National test scores that disappoint, high schools that under perform and the Atlanta public schools cheating scandal do nothing to recommend Georgia as forward thinking and a place to create a business and raise a family.  Embracing an aggressive plan to fast forward online education would seem like a no-brainer.

Last week two major online education companies said they will cancel plans to operate Georgia online high schools.  Provost Academy and Kaplan Academy believe they cannot operate on $3,500 per pupil funding from the Georgia Charter School Commission.  Those funds would have been state dollars; no local education dollars would follow the student. Continue reading

July 20, 2010 Posted by | Uncategorized | , , , , , , , , , , , , , , , , | Leave a comment