Plans to cut Georgia’s income tax were already in the works, but lawmakers at the state capitol will be looking at more revisions in light of the tax reform package Congress passed last month.
“We clearly are going to have to make some changes to the Georgia tax code,” said Sen. Chuck Hufstetler, R-Rome, who chairs the Senate Finance Committee.
The standard deduction is one area of conflict that immediately stands out, he said. State law required taxpayers who take the standard federal deduction to do the same with their state taxes. However, many counted on being able to itemize on their 2017 filing.
“That’s going to put some people in a penalty situation,” Hufstetler said.
There are a number of provisions expected to have an impact on state revenue, although it will be some time before definitive calculations are available. Hufstetler said Wednesday he had hoped to have a report from the Senate Budget and Evaluation Office by now but they’ve asked for a delay.
“It’s a complicated issue,” he noted. “But we want to get that done early and into the tax tables. People need to plan.”
The Georgia General Assembly’s 40-day session kicked off last week and resumed Tuesday with a day of joint budget hearings. The Wednesday joint session was canceled due to the weather. Plans are to reconvene at 2 p.m. today for the fifth legislative day.
Gov. Nathan Deal has presented his budget proposals — an amendment to the FY 2018 budget, which runs through June 30, and the 2019 “big budget” that starts July 1. Legislators also heard from State Fiscal Economist Kenneth Heahney and the heads of eight departments ranging from education to community health.
A mandated 4-percent increase in contributions to the Teachers Retirement System accounts for significant spending bumps in several departments. Deal has more than $300 million earmarked for the boost in his FY 2019 budget.
Hufstetler said there’s “a massive amount of money” going into the TRS, but the funding is based on financial statements through June 2017, the latest ones available.
An actuarial review determined extra employer-payments would be needed for at least two years to raise the liability coverage to a stable 80 percent from 73.9 percent. However, Hufstetler pointed out that the fund’s assets increased by $6 billion last year, mainly through investment.
“Personally, I don’t think we’re as bad off on TRS as some people say we are,” he said. “We hope to get better numbers. We’ll be looking into that on Senate side.”