STATE OF GEORGIA SELECT COMMITTEE ON CONSTITUTIONAL REVISION Transcripts of Meetings 1977-1981 COMMITTEE MEMBERS GEORGE BUSBEE GOVERNOR CHAIRMAN ZELL MILLER LIEUTENANT GOVERNOR THOMAS B. MURPHY SPEAKER. HOUSE OF REPRESENTATIVES ROBERT H. JORDAN CHIEF JUSTICE. SUPREME COURT J KELLEY QUILLIAN CHIEF JUDGE. COURT OF APPEALS MICHAEL J BOWERS ATTORNEY GENERAL MARCUS B CALHOUN SENIOR JUDGE. SUPERIOR COURTS \ SELECT COMMITTEE ON CONSTITUTIONAL REVISION ROOM 23H 47 TRINITY AVENUE ATLANTA. GEORGIA 30334 404/656-7158 COMMITTEES MEMBERS: AL HOLLOWAY SENATE PRESIDENT PRO TEMPORE JACK CONNELL SPEAKER PRO TEMPORE ROY E. BARNES CHAIRMAN. SENATE JUDICIARY COMMITTEE WAYNE SNOW, JR. CHAIRMAN. HOUSE JUDICIARY COMMITTEE FRANK H. EDWARDS SPECIAL COUNSEL J ROBIN HARRIS EXECUTIVE DIRECTOR MELVIN B. HILL JR. ASSISTANT EXECUTIVE DIRECTOR MEETINGS HELD ON CONSTITUTIONAL REVISION COMMITTEE TO REVISE ARTICLE VII COMMITTEE Full Committee Full Committee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Subcommittee Full Committee Subcommittee Full Committee DATE October 9, 1979 June 26, 1980 June 26, 1980 June 26, 1980 June 26, 1980 July 16, 1980 July 18, 1980 August 1, 1980 August 4, 1980 August 12, 1980 August 15, 1980 September 5, 1980 September 10, 1980 September 11, 1980 September 24, 1980 September 24, 1980 November 13, 1980 # OF PAGES 162 30 65 60 44 73 58 87 54 94 74 III 9 92 145 36 39 \ PAGE 1 2 3 STATE OF GEORGIA 4 COMMITTEE TO REVISE ARTICLE VII 5 OF THE 6 CONSTITUTION OF GEORGIA 7 8 9 10 'z" 11 I..or..r-..: @;I 14 ~ I'" ::c 15 '"rr: ;:) 16 .~.. Q Z ~ 17 : SUBCOMMITTEE ON PURPOSES AND METHODS OF TAXATION 18 19 20 21 Room 402 State Capitol 22 Atlanta, Georgia 23 Tuesday, August 12, 1980 10:00 a.m. 24 25 PRESENT: 2 COMMITTEE MEMBERS: 3 CHAIRMAN JAMES F. MARTIN MRS. CONSTANCE HUNTER 4 MR.. ROBERT NASH MR. W. E. STRICKLAND 5 MR.. LYNDON WADE REPRESENTATIVE GEORGE WILLIAMSON 6 ALSO PRESENT: 7 MICHAEL HENRY 8 DAVID KANE PETE HACKNEY 9 CHARLES TIDWELL STEVE RIECK 10 SAM OTT ROB SUMNER DAVID LOHLA DAVID GODFREY DOROTHY TRACY KEN JONES \ PAGE 2 18 19 20 21 22 23 24 25 PAGE 3 PRO C E E DIN G S 2 CHAIRMAN MARTIN: Let's go ahead and get started. 3 I'm sorry for the delay, I was trying to get something ready 4 for another meeting that's going on right now over at 5 Department of Human Resources. 6 Let's begin by -- what 1 1 11 do is I'll call the roll 7 of the members of the subcommittee so that our court reporter 8 will know who we are, and then we will pause and let everyone 9 else in the room identify themselves so that the reporter can 10 make notes on his pad. CzJ 11 i= Io..X.... @;I I am Jim Martin, the Chairman. Mrs. Constance Hunter, the Vice Chairman. MRS. HUNTER: Here. ! 14 ol-n :r 15 ol) CJ IX ~ 16 .~.. oz 17 ~ CHAIRMAN MARTIN: Represantative George Williamson. REPRESENTATIVE WILLIAMSON: Here. CHAIRMAN MARTIN: Mr. Robert Nash . MR. NASH: Here. 18 CHAIRMAN MARTIN: Mr. Jim Davis is not here. 19 Senator A~ Holloway is not here. 20 Commissioner Strickland. 21 MR. STRICKLAND: Here. 22 CHAIRMAN MARTIN: Mr. Lyndon Wade. 23 MR. WADE: Here. 24 CHAIRMAN MARTIN: And Dr. Charles McDaniel -- he 25 has had a representative here in the past. Is anyone from PAGE 4 the Department of Education here? 2 Okay. Let's begin in this corner, and everyone 3 identify themselves. 4 MR. JONES: I am Ken Jones, Georgia Municipal 5 Association. 6 MR. RIECK: Steve Rieck, Department of Community 7 Affairs. 8 MS. TRACY: Dorothy Tracy, League of Women Voters 9 State Board. 10 MR. GODFREY: David Godfrey, Department of Natural 11 "z j: ..~.... Resources. @ ; j MR. LOHLA: Resources. David Lohla, Department of Natural 14 ~ $ :z: ..15 011 ":) 16 ;~ =z: 17 Office. MR. SUMNER: Rob Sunmer, Georgia Farm Bureau, MR, OTT: Sam Ott, Georgia Farm Bureau. MR. HACKNEY: Pete Hackney with Legislative Budget 18 CHAIRMAN MARTIN: And Charles Tidwell is here. with 19 the Governor's office. 20 Before we get started let me see if we can agree on 21 an agenda. We have Mr. Pete Hackney. the Legislative Budget 22 Analyst from the State of Georgia here who is going to give us 23 some information concenlinv the practical aspects of the 24 provision we're going to be discussing today. 25 We also have a request from the League of Women PAGE 5 ,.--------------------------------------, Voters to be able to make a public statement, and we have 2 of course always the opportunity for other people to make 3 whatever statement they feel appropriate for us to consider. 4 After we get through with that information. those 5 presentations, I guess we need to then get down and consider 6 at least two staff recommendations for language and some 7 alternative language I guess and try to come up with some 8 language for the section that we're considering today which 9 is Article VII, Section II. Paragraph 3, that provides that 10 revenue is to be paid into the general fund. zCJ ... 11 Ioa-: 0- Does anyone have any suggestions about how we ought 12 ~ to proceed? ~@r~" Let me suggest. then. that we will adopt our minutes ! 14 I- then we'll hear from Mr. Hackney. and hear whatever public '" :r 15 ~ comments people want to make. including the League's state- Ca:J ;) 16 .~.. ment. and then discuss as a subcommittee the alternatives we Q Z 17 : might have. 18 Is that acceptable? 19 The first item that we need to do is to adopt the 20 minutes. I guess all of you have received in the mail a copy 21 of the minutes of the last meeting which I was very pleased 22 with. I think it was a very productive meeting. 23 Are there any changes to the minutes? In those 24 minutes was a copy of the Section II. Article VII, Paragraph 1 25 that we adopted as a subcommittee at the last meeting. Are PAGE 6 there any questions or comments about that? 2 Okay. We have already received some information at 3 our first meeting from John Key.s with the Tax Reform 4 Commission about the earmarking, it was a good presentation. 5 I presume those remarks will be part of the Select Committee's 6 records. Is that right, Mike? 7 MR. HENRY: Yes. 8 CHAIRMAN MARTIN: Okay. If you remember, at our 9 first meeting we also adopted a work plan, and we're down 10 "z 11 j: .'o".. @;IIII ! 14 t; " 16 .~.. Q Z 17 : MR. HACKNEY: You go ahead, Mr. Chairman. You read better than I do. CHAIRMAN MARTIN: Do you want to come around here, Mr. Hackney, or do you want to sit there? MR. HACKNEY: I'll speak up, Mr. Chairman. CHAIRMAN MARTIN: Okay. Fine. This is a list of issues that Mike and I talked about the other day to give us some information on which to 18 base our decisions. 19 The first question that we have asked here is: 20 "What are the primary sources of the taxes, fees and 21 assessments, authorized by general revenue measures enacted 22 by the General Assembly which are required to be paid into 23 the general fund?" 24 That essentially is the language from that 25 constitutional provision. PAGE 8 MR. HACKNEY: Yes, sir. Well, as you know 95 to 2 96 percent of it comes from Bill Strickland, and the other 3 four to five percent comes from other sources. 4 The primary other sources are the Comptroller 5 General's office and the interest earnings of the Department 6 of Administrative Services. 7 While we are on this particular question, Mr. 8 Chairman, I would like to point out that even though the 9 constitutional provision says from taxes, fees and assess- 10 ments for state purposes, that's not the only thing that gets "z 11 i= appropriated. .'~".. 12 ~ For example, I just alluded to interest earnings, @ r l and you might call that a fee I suppose, interest fee, and ! 14 certainly this is anticipated in the Governor's revenue l:;z;: 15 .: estimate each year. This year it's over $75 million for the '"" ;;) 16 ~... year just ended, kind of an impressive amount . Q Z 17 : At the time the constitution, this provision of 18 the constitution was adopted the state really didn't receive 19 any interest, this was prior to 1970 as you know, and it 20 was -- excuse me, prior to 1960, and it was as late as 1961 21 as I recall the state still didn't draw any interest on its 22 deposits, but then it started through the State Treasurer -- 23 and not trying to be critical, but anything we got was better 24 than what we had, and we were getting interest on perhaps a 25 fourth of the state's deposits in effect at that time. PAGE 9 At the present time we are actually getting interest 2 on more than the state's deposits in that I think they're 3 utilizing a little bit of float time here and there which is 4 -- we certainly don't endorse, but we sure are glad for the 5 money. 6 There is another source, though, that is appropriate 7 and I'll give you an example of it, and it's a rather 8 impressive amount. The federal government here in late 9 fiscal 1979, perhaps fifteen, sixteen months ago, elected to 10 .., z 11 j: 0.."..".. 12 "" @rl 14 ~ I." :r 15 ...:,I "":) 16 Iz..I.I Q Z "" 17 III repay the state some money for advance interstate construction. We didn't get it all at that time, but we got 105 million which is certainly an impressive amount. This amount was used by the Governor to increase his general fund revenue estimate 105 million. Now, I don't see how you could call that a tax, I don't see how you could call it a fee, I don't think the federal government will let us assess them, but it not only 18 was reflected in the revenue estimate but it was sure 19 appropriated, and for an extremely worthwhile purpose I 20 might mention. It was appropriated to defease some $257 21 million worth of bonds, including interest. 22 So all I'm saying is we may not be in comp1aince 23 with the constitution at the present time insofar as the way 24 it's written. At the time it was written obviously no one 25 contemplated, you know, we would be in this sort of business PAGE 10 with the federal government. 2 So I'm not suggesting any change in particular. but 3 rather indicating to you that we may not be in strict 4 compliance with it anyway. S As you probably are aware. the sources which Mr. 6 Strickland accumulates and remits to the treasury each month. 7 the income tax. sales tax and motor fuel tax account for 8 between 75 and 80 percent of what he takes in. not in equal 9 proportions although income tax and sales tax run pretty close together right now. a little over a third each of the ..!i 11 j: ..o.... @"2~ ..~r~ 14 ! l- ll> x~ ..lS ~ "::> 16 .~.. Q Z ~ 17 ~ total, Your second question. what are other -CHAIRMAN MARTIN: Pete, before you continue let me see if there are any subcommittee members who have questions. I know I've got one or two, just on that point, Does anybody have any questions? The question I have is what's the difference between 18 the money that was paid by the government, federal government 19 for the -- to repay us for money we spent to advance the 20 interstate system, what's the difference between that and 21 federal grants that we receive? 22 MR. HACKNEY: All right, sir. Normally when 23 federal grants are received well, let's use a different 24 department, the Medicaid. The Department of Medical AssistancE, 2S their federal moneys as received are not -- they're appropriatEd PAGE 11 by the General Assembly, but are not included in the revenue 2 estimate and, therefore, of course, as you know that is 3 neither a tax, a fee nor assessment, it is appropriated for 4 budgetary purposes, but it is received directly by the 5 department and is spent directly by them, by letter of credit 6 and this sort of thing. 7 If the state had not elected to embark upon the 8 advanced interstate construction program, then this 105 9 million to which we referred earlier would have gone what we 10 call the agency fund route. In other words, it's not general .11 "z j: fund money but rather goes directly to the Department of 'o.".. ~ 12 ~ Transportation and would have been so regarded for budgetary ~F~ purposes, but the fact that we did get into this advance ! 14 construction thing with a promise by the federal government lll> :r 15 .o.:,l that they would just give us the money back or at least a '";;;) 16 .~.. portion of it, ninety percent in this case, 135 out of 150 Q Z 17 ~ million, it sort of created a new class of critter I suppose 18 you could say that's not really contemplated in the language 19 in the constitution. 20 There are such things -- as you know, there are 21 references in the constitution that all federal funds are 22 hereby continually appropriated and so forth. Did they 23 contemplate this? Apparently not, because if they had been 24 continually appropriated there would have been no need for the 25 General Assembly to reappropriate this money, particularly PAGE 12 since it was not appropriated, the 105 was not for a federal 2 program. Quite the contrary, it was appropriated to payoff 3 a bunch of bonds, not even the same bonds that had been sold 4 for the advance construction. 5 CHAIRMAN MARTIN: I guess the purpose of that 6 question That's very helpful, Mr. Hackney. 7 The purpose of that question is it seems one 8 alternative we might have is to add the word "interest" into 9 this list of things that are paid into the general fund, but 10 I have a little trouble defining what those federal funds 11 ~" 'o.D".o. were, or I guess the first question is should there be, );I @.;.(. should we include in this paragraph some language that deals with those types of federal funds, ensuring that they are paid . ... 'J I 14 >~ into the general fund. ~ 15 ~ MR. WADE: Let me ask you a question. The General ill: f" 16 i Assembly had appropriated those moneys in the first place? 17: CHAIRMAN MARTIN: Let's ask l-fr. Hackney. 18 MR. HACKNEY: Had appropriated which moneys? 19 MR. WADE: This advance expenditure of state money 20 for the interstate system. 21 MR. HACKNEY: The General Assembly did appropriate 22 those moneys through authorization of bonded debt. 23 MR. WADE: Through bonded debt. 24 MR. HACKNEY: The 150 million J yes, sir. 25 MR. WADE: It seems to me that simply should have PAGE 13 gone back to pay that debt. 2 CHAIRMAN MARTIN: I guess there may be -- 3 MR. HACKNEY: It should have. but it didn't. 4 MR. WADE: I'm just saying. you know. it wasn't new 5 money necessarily. 6 CHAIRMAN MARTIN: Maybe to focus on the issue 7 before the subcommittee. and maybe Mr. Strickland has a 8 question. the problem with this section or the point of this 9 section is that this requires that there not be any ear- 10 zCI 11 l- @;i."oe.<". ! 14 I':z": 15 ~ CI '";;;) 16 ~... oz 17 : marking of funds. that they go into the general fund and that the legislature annually appropriates those funds. .There are a few types of funds where when they're collected they automatically go to the department. and in addition to the motor fuel funds and certain workmens compensation funds there are other agency type funds that don't go through that process . This provision ensures that the legislature will 18 have an opportunity on an annual basis to make major 19 decisions about the budget. and I guess the basis of this 20 question is what are the funds that now go into the general 21 fund and what other funds should we add to this provision to 22 ensure that if that~ the policy decision that we go with 23 that th{t's maintained. 24 Mr. Strickland has a question. 25 MR. STRICKLAND: Well. I want to bring up another PAGE 14 point that's slightly related to that. 2 Pete, in reading this paragraph you're talking about 3 all the money collected from taxes, fees and assessments for 4 state purposes. I guess what I'm looking for a clearer 5 definition in here is on fees and state purposes, What I'm 6 getting to is I know in the Revenue Department, and I would 7 suspect in virtually all the state agencies there are moneys, 8 small amounts of moneys that are collected that do not go to 9 the state treasury. 10 MR. HACKNEY; Yes, sir. MR. STRICKLAND: That are debits to certain expenditure type -- MR. HACKNEY; Yes, sir, that is correct. MR. STRICKLAND: Like printing, for example. MR. HACKNEY; Depending on the agency we find that some agencies I can't say how widespread this practice is at present time, but I recall in the Public Service 18 Commission many years ago -- remember Bob Fellows, Bob was 19 running it -- Bob had a Xerox machine and a lot of people 20 came by the PSC and wanted copies of either pieces of 21 legislation or the minutes of meetings, things of this sort, 22 and Bob charged them a nickel a sheet, and then he used that 23 money as a credit to his Xerox expense. 24 Certainly this sort of thing goes on. 25 I'm sure the largest thing that goes on, of course, PAGE 15 is the federal money that comes to agencies which never 2 really gets into the general fund, but rather is spent in 3 compliance with federal and state regulations directly by 4 the agency. 5 TIle most widespread I suppose -- that would be the 6 biggest dollar amount, but the most widespread would be at 7 least prior to the last fiscal year, fiscal 1980 would be 8 moneys which agencies earn such as the parks division of 9 DNR. DNR leases cabins and charges admissions and so forth, 10 or rents cabins and charges admissions, they have little Czl 11 j: ..'o".... grocery stores, they have income from that. These moneys ~ 12 ~ are retained by the department, they never go into the ~r~ general fund unless at the end of the fiscal year they took ! 14 I- in more money than they anticipated and could not obtain '" :r 15 .:J budgetary approval to spend it. Cl '";;;) 16 ~ Q Obviously it is not a question of whether they need z 17 : it or not, they always need more than they have, but they 18 couldn't obtain budgetary approval to spend it from OPB. 19 Consequently this lapses to the general fund, but only in 20 the same way that, you know, your excess state funds lapse 21 to the general fund if you don't spend all your money for 22 whatever reason. 23 MR, STRICKLAND: We have quite a bit of revenue, 24 of course, particularly in tax returns, the income tax filed, 25 making copies for taxpayers. PAGE 16 MR. HACKNEY: Yes, sir. 2 MR. STRICKLAND: It seems to me that from a 3 management standpoint, accounting standpoint it's much more 4 effective to handle it that way. I mean you've got an 5 audit on, you can have 10,000 accounts, you mow, you can 6 have-- 7 MR. HACKNEY: The point you raise is certainly a 8 valid one. I know for many years it has been debated between 9 turkeys like me and some folks in the Attorney General's 10 III 11 Z j: 16 .~.. az 17 : This is also happening now with the market, the farmers market operation in the Agriculture Department. These moneys have to be remitted directly to the state treasury. We have always liked the motivation or the incentive perhaps created by an agency having to hustle to get. its out s ide income, keep it up to this, don I t let it slack off, you know, "If you're going to keep all your folks on the payroll your folks are going to have to work." 18 Now, with this new law where is the incentive for 19 Tommy or Joe Edwards and so forth to do it? 20 Well, the General Assembly has built a device in, 21 and I suggest to you all you shouldn't ever let this be a 22 deterrant or a constraint in how you want to write your 23 constitutional language, the General Assembly can always 24 come up with a device to keep that incentive. 25 At the present time what they're doing is saying PAGE 18 HAll right, we're going to budget this money to you as agency 2 funds just as if you were going to get to use it," then they 3 put a like amount in the back of the bill, a like amount~ and 4 say "Now, for every dollar you collect like you're supposed 5 to we'll give you a dollar out of the back of the bill, but 6 only if you collect it." It's pretty effective so far, now 7 everybody is doing their job. 8 CHAIRMAN MARTIN: The question that Commissioner 9 Strickland asked really got us into the second part of that. 10 Maybe if we discuss that issue we can also fill out some decision or recommendation on that, which is r~at are other revenue sources received by the state which are not paid to the gen.era1 fund?" Essentially that was the Commissioner's -- the fees are a type of -- MRS. HUNTER: The section as it's written says taxes, fees and assessments as authorized by revenue measures 18 enacted by the General Assembly. That would really leave out 19 federal government funds anyway since they're not revenue 20 measures enacted by the General Assembly. 21 CHAIRMAN MARTIN: Maybe to -- 22 MR. HACKNEY: I think she's got a good point. 23 CHAIRMAN MARTIN: To focus on this, maybe one way to 24 do that is to look at this Attorney General's opinion that 25 lists the five different categories. Pete, are you familiar PAGE 19 with that one? 2 MR. HACKNEY: Item 3, yes, sir. I say familiar with 3 it, I'm familiar with the question. I read through it last 4 night. 5 CHAIRMAN MARTIN: All right. That ~ist really is 6 sort of helpful in dealing with agency fund issues, and it 7 lists five different categories as being agency funds, there- 8 fore not paid to the general fund, and one of those is the 9 one Commissioner Strickland just mentioned. 10 Czl 11 ;:: ...o<' lL ~ 12 ~ @ ~r~14!... ':"r 15 .:I Cl <' ::;) 16 .~.. Q Z 17 : It lists gifts and grants, and I presume that's the type of exception to this paragraph that allows federal grants not to be paid to the general fund. MR. HACKNEY: Yes, sir. CHAIRMAN MARTIN: Secondly it lists property sales where an agency sells some property. Third it lists certain types of judicial branch revenues like the funds that go to pay the court reporters, 18 licensing boards and those things. 19 MR. HACKNEY: Yes, sir. 20 CHAIRMAN MARTIN: Fourth it lists transfers between 21 agencies, funds obtained directly or indirectly from another 22 agency of the state government as being an agency type fund. 23 The final one really is what I guess we have just 24 finished talking about, funds that an agency generates without 25 specific statutory premise, and I presume what you were saying PAGE 20 is that once a statute is passed that says these funds will 2 be paid to the general fund then that's a statutory 3 requirement that they be paid to the general fund. Absent 4 that it's the opinion at least of the Attorney General that 5 those are agency funds and not subject to this paragraph. 6 MR. HACKNEY: Yes, sir. 7 CHAIRMAN MARTIN: That helps focus. I don't know 8 where that directs us. 9 Do you have any comments about that, about those 10 .."z 11 f= @);:i..o.... ! 14 I'" =!t .15 ~ "::> 16 .~.. Q Z 16 .~.. Q Z : 16 .~.. raise fees, but -- Q Z 17 ~ REPRESENTATIVE WILLIAMSON: Jim, if I might ask, 18 do we have any state agencies that bring in more money than 19 they spend with the exception I guess of the Revenue 20 Department, the Comptroller General being the only two I can 21 think of? 22 MR. HACKNEY: DOAS does now with 75 million in 23 interest, yes, sir. 24 MR. STRICKLAND: The Comptroller General. 25 MR. HACKNEY; He mentioned that. PAGE 26 There are a couple of others, but they take in such 2 a small amount more, the Banking Department for example. 3 The Banking Department sets its fees or assessments on the 4 basis of their appropriation, then if it looks like they 5 can't spend all of their appropriation try as they will, and 6 Jack is pretty good at it, but when he gets down to March or 7 April then he makes his best guess on what his expenditures 8 will be for the remainder of the year and starts putting his 9 fee schedules together. As a result, he almost always brings 10 in a few thousand dollars more thanhls actual appropriations. Czl 11 j: 'o" Go @;~~ This is also true of the workmens compensation excuse me, workers compensation. They changed the name. Therbring in a little bit more than you all appropriate to ! 14 I- them, but not much. 'x" 15 01) CHAIRMAN MARTIN: Mr. Nash? Cl :'":. 16 ~ 1ozM MR. NASH: I have a question. Now this last year 17 = the Commissioner of Agriculture was collecting, had been 18 collecting some fees at certain markets. In previous years, 19 this last year because the legislature -- I don't know whether 20 it was statutory or otherwise said to him "You've got to 21 collect X more dollars to supplement your budget with," so 22 he automatically put fees on additional markets, and I 23 don't know whether it was by statute or legislative action 24 or what, but he started doing it, and then when they had a 25 hearing they agreed they would not collect them after a while PAGE 27 during the year until next year they appropriated enough 2 money to run those markets with. 3 MR. HACKNEY: Yes, sir. 4 MR. NASH: They are collecting off some markets, and 5 some they are not. 6 MR. HACKNEY: That's correct. 7 MR. NASH; Where are those funds going to? Do those 8 funds go directly to the general fund, or does he use them? 9 MR. HACKNEY; What precipitated that situation was 10 CzJ ~ 11 l- ."ot.<". 12 ~ ~F~ ! 14 I- '" :r 15 .:> CJ t< ;;;) 16 .~.. Q Z 17 : this, not the part about Tommy raising the fees but the fact that this whole area surfaced. As long as we had market authority bonds outstanding, and we've had them for well in excess of twenty years -- as long as we had market authority bonds outstanding the properties of the authority belonged to the authority -- the Atlanta Farmers Market, for example, this was authority property . Authorities by virtue of their characteristics 18 don't have to lapa money at the end of the fiscal year. For 19 many years they weren't even required to budget their funds, 20 they were excluded from all the Governor's recommendations, 21 and so whatever money they got was theirs to spend as they 22 saw fit, and all the state did was spring for the debt 23 service each year on the bonds outstanding, but the bonds 24 had provisions in them that once the indebtedness was 25 satisfied one way or another that the ownership of the PAGE 28 markets would revert to the Departrr~nt of Agriculture. 2 Well, our present Governor got interested in paying 3 the state out of debt here three or four years ago as you 4 know, and this was one of the ones that paid out. They were 5 getting close, and he was able to sweep together two or three 6 million dollars that was lying around in this fund and that 7 fund and pay them off, so the Agriculture Department suddenly 8 became the owner of all the farmers markets in Georgia. 9 MR. NASH: Including the Atlanta market? MR. HACKNEY: Including the Atlanta market, This being the case, all of the funds that they take in at the market are fees or assessments and, as such, had to b~ budgeted and had to be remitted to the general fund, so we were placed in a position then of having to make estimates as to how much revenue would be generated by the agency and thus remitted to the general fund. It was something the General Assembly had no choice 18 on, it was simply a process of the bonds paying off or being 19 defeased, some of them, so the Agriculture Department had 20 made its -- in the past had made its estimates a little high 21 I think on what they thought their agency income would be to 22 m~ke sure they had flexibility within their budget so as not 23 to require fiscal affairs transfers and so forth. 24 Well, this was fine in the authority itself. We 25 didn't have any objection to the Governor, and the OPB didn't PAGE 29 have any objection, the General Assembly didn't seem to mind, 2 but once it came into the Agriculture Department per se, I 3 think they had had this history of estimating the fees high, 4 OPB made a higher estimate than they did I think, and no one 5 has been critical of them, I'm sure they had good reason for 6 making that estimate, but the General Assembly didn't go with 7 the high estimate, it took the position of moderation, one 8 between Agriculture's and between OPB's, and this is all 9 easily documented from the Governor's budget document itself, 10 .., z 11 i= o.'0.".. 12 ~ ~@r~ ~ 14 .~.. '" :I: 15 .., '";;;) 16 .~.. Q Z 17 ::i and it just so happened that Tommy and his folks realized that they probably were not going to be able to put this kind of money together and sought about for some way to raise the amount of money they thought they needed and, of course, as you know it hasn't all bee quashed, but the new fees I think have been, Now, where the increases were brought about we didn't really receive any objections from individual 18 legislators, but we sure did where they put new fees on 19 where there had been none before, and the Commissioner has 20 agreed to remove those. I say remove them, he agreed not to 21 ever impose them on June 1st as I recall, By legislative 22 suggestion he decided not to do it at this time, I think 23 there was only about 45 or $50,000 in question, really, 24 MR, NASH: Farmers think that's quite a bit of 25 money, PAGE ao MR. HACKNEY: Yes, sir, it is. Out of better than 2 a $2 million agency fee budget for the year, though, I think 3 you will agree that's rather modest. 4 CHAIRMAN MARTIN: Maybe to continue with your 5 explanation, Pete, there is about a one or two-sentence 6 explanation of each of the five categories in this Attorney 7 General's opinion that describes the authority by which 8 they're not -- why they're not subject to this subparagraph 9 or this paragraph. 10 Let me go through those explanations, and then I'm going to ask you the next question on this list which is "Should we add any new revenue to those sources that are required to be paid into the general fund, or how should we change this provision to include or to add other funds to that, or to remove funds?" This may help us to focus on why the agency funds we've been talking about legally are not considered to be the 18 subject of this paragraph. 19 He first points out that gifts and grants are not 20 taxes, fees or assessments, so that is how grants and gifts 21 are excluded from this paragraph. 22 Second he points out that the property sales are not 23 the proceeds of taxes, fees or assessments, but he goes on to 24 point out as a matter of statute those are generally paid 2S into the general fund. PAGE 31 Third he says that funds transferred between agencie 2 or non-agencies may be retained by the department because this 3 paragraph does not speak to internal receipts but really 4 controls receipts trom outside the state government. 5 The judicial branch exception is based on the 6 separation of powers concept that there are certain things 7 inherent in the judicial branch that are within its control 8 and not legislative or executive control. 9 The fifth is those funds that we talked about where 10 there is no statutory premise; for example, the Department of Czl 11 io..c=..o.. Human Resources might have the responsibility of providing ~ 12 ~ health care services, and as part of that they employ people @r~ and require people to live on the premises, and those people ! 14 to- then pay the department some fees, that's all inherent in '" :I: 15 that operation but there's no specific statutory requirement Ccol :> 16 ~ Q that those funds be paid into the general fund. He bases z 17 : that exception on the fact that the agency funds generated 18 without specific statutory premise are not revenue measures 19 enacted by the General Assembly. 20 Do you have any thoughts about those observations, 21 or is that a fairly concise statement of the basis on which 22 agency funds are -- 23 MR. HACKNEY: The only one I was curious about 24 before was the part about the judiciary, but as I say, he's 25 the Attorney General and his opinion counts, and I'm not and PAGE 32 mine doesn't. You know, it~s just a matter of curiosity to 2 me, nothing more. 3 CHAIRMAN MARTIN: The question then is that we have 4 on our outline '~at in your opinion should or should not be 5 added to this provision, what funds that are currently not 6 being paid into the general fund by virtue of this provision 7 in your opinion as the budget officer of the legislature 8 should be subject to this provision, should be paid into the 9 general fund?" 10 MR. HACKNEY: Well, I only have one general thought "z 11 I- '2.".. @;I on that, Mr. Chairman, and that's this. It has been our observation in the past that frequently agencies could if they saw fit, and I believe most do now, but I don't believe ! 14 all -- agencies could if they saw fit draw federal money in I'" :I: 15 ol) advance of utilizing state funds which are appropriated for "'";;) 16 .~.. matching federal money for programs -- Medicaid for example, Q Z 17 : you\e got approximately a two for one match. It occurs to 18 me that the more money, regardless of the ownership of it, 19 the more money that we can get into the general treasury for 20 purposes of earning interest the better off we are. 21 Now, I know in some instances the federal govern- 22 ment says that we have to send them back the interest that we 23 earn. 24 I think if we negotiated with bankers, and I'm 25 certain that Mr. Milsap negotiates with bankers, we would find PAGE 33 some way for the state to get the hog's share of that. Dick 2 is good at this type of thing I know, and so is his 3 predecessor, Gene Copeland, but in others we don't have that 4 to worry about. 5 For example, federal revenue sharing, we're 6 permitted to keep all the interest on federal revenue sharing, 7 so generally I think that all the money we could get to the 8 general fund just for interest earning purposes if nothing 9 else the state would benefit, but I don't know that the 10 monetary benefits of it would necessarily outweigh perhaps Czl 11 I- 'o..".... some operational difficulty. ~ 12 ~ We find, for example, and we don't have this problem ~r~! with the Revenue Department and certain other departments, we 14 I- find in a lot of departments, though, no real concern on the '<"t ::I: 15 part of the people drawing the money for the interest earnings Cl '"::> 16 ~ Q of the state. z 16 ~... Q Z 17 ~ it. assuming I get reelected. I'm not beyond going down the well . CHAIRMAN MARTIN: Mike. you had a point? MR. HENRY: Is there any problem. do you foresee any problem of an extreme instance I guess where say the people in Washington decide they want to, they determine education as a high priority where you have federal funds and state matching funds, and all of a sudden they just determine they want to 18 fund a uroch greater amount of funds to the state which would 19 require commensurate state increases in their funding where it 20 could perhaps upset a very delicately balanced budget, could 21 the agency accept those funds without first coming to the 22 state and saying '~e're going to accept more funds, therefore 23 you've got to provide us with more state funds"? 24 MR. HACKNEY: No. sir, they can't but the do. 25 They can't really do that, but we find that they do, and I i l1 PAGE 36 give you a specific example. 2 The appropriations act as well as the budget act of 3 1962, as amended, it is very clear on the point that state 4 agencies cannot increase the scope of their budget without 5 prior budgetary approval. Of course, if it requires more 6 state money, then you go back to the General Assembly mid 7 year or prior to the coming year or something. 8 We learned in 1976, or we learned in 1977 that in 9 1976 the Department of Human Resources had signed a contract 10 with the federal government promising a state match in that year that was well in excess of the state appropriation for this purpose, and we're not talking about $20 million, the amount is $376,000. Once we learned this had been done, they had signed a contract which enabled them to hire people I won't say beyond what they thought their requirements would be, but certainly far in excess of what the General Assembly had authorized for them -- they just did ft, had no 18 authorization, they did it. They had that same $376,000 19 appropriation, this is the fourth year now. OPB and the 20 Governor apparently felt the same way that we and the General 21 Assembly did, and that was they shouldn't have done this; 22 we know we've got to have this program, someone acted either 23 improperly or in error or something, but we've held them at 24 that precise level of funding ever since. I wouldn't be 25 wanting to try to get them an extra $10. PAGE 37 Even when the pay increases come along, the General 2 Assembly writes in provided, however, these people are not to ,,~ 3 get any of the money from the back of the bill for the pay 4 increase. 5 So yes, it happens from time to time even though 6 budgetarily it's not permitted either by the appropriations 7 act or the general budgetary statute. 8 MR. HENRY: So absent an erroneous conduct or mis- 9 conduct of the type you've pointed out there is a sufficient 10 'z" 11 l- oe....<.. ~ 12 ~ ~r~ ! 14 lo-n :J: 15 ~ 'e"< ;:) 16 ~ iz:i 17 ~ either statutory or constitutional check on an agency just contracting to receive a great amount of funds which would require state matching funds? MR. HACKNEY: I'm not going to say it's sufficient, but there certainly is more than abundant indication of stated legislative intent in the appropriations bill. Now, it's not binding. Some of the language is a little garbled, but I think the intent is abundantly clear. I'm happy to say 18 that most major agencies at the present time and for the past 19 couple of years have been extremely concerned with legislative 20 intent. 21 I can tell you the new Commissioner of Human 22 Resources is certainly concerned with legislative intent, and 23 we're delighted, just delighted. 24 CHAIRMAN MARTIN: Mr. Nash? 25 MR. NASH: I'm a little concerned. We passed over PAGE 38 the thing of these bonds that were sold to raise revenue to 2 do highway construction, and when the federal funds came in 3 they did not retire those bonds. I'm a little disturbed that 4 we would have a system that would allow something like that to 5 happen. 6 MR. HACKNEY: Well, in that particular case the 7 funds were used, at least the first 105 million was used to 8 retire bonds. It's like this 9 MR. NASH: They were used to retire bonds? 10 III Z 11 ~ .."o..".. ~ 12 ~ ~r~14 ! t;; " 16 .~.. Q Z 16 .~.. Q Z 17 ::; in other words the bond validation proceedings. They just sort of threw that in free. I was delighted to see it personally, but they just sort of threw that in that not only were these not obligations of the state but it would be unconstitutional for the General Assembly to attempt to appropriate funds for the discharge of that obligation . MR. NASH: Where do we stand, George? 18 REPRESENTATIVE WILLIAMSON: We've got some of those 19 and Georgia don't stand behind them. 20 MR. NASH: How can they sell them with the Georgia 21 guarantee? 22 MR. TIDWELL: Jim, I think by Bob's question there 23 is perhaps maybe a misconception that state agencies incur 24 debt, and they do not do that. In other words. those were not 25 Department of Transportation bonds, Bob, the Georgia PAGE 42 State Finance Investment Commission is the only agency that 2 incurs debt. The General Assembly has to sign off on it. so 3 you don't have willy-nilly state agencies running around 4 incurring debt; they cannot do that. 5 MR. NASH: I figured there was some restriction. but 6 still the way he was stating it. it sounded like that we had 7 additional obligation in bonds and that money come in and was 8 used elsewhere until he explained it paid off other bonds. 9 MR. HACKNEY: The point I was attempting to make 10 was that regardless of what the General Assembly's intent is 11 0,- at the time that bonds are issued they may feel that if like a f... 12 ~ federal repayment is to be forthcoming, that the intent at the @ r l time the appropriation for debt service is made, the initial 14 ..~.... appropriation for a new bond issue that that isn't binding " 16 ~ Q z 17 ~ this provision mentioned or worried about particularly in the appropriations process. Budgetarily neither we nor OPB apparently, nor the Governor has any problem with it. As I say, the payback from the federal government is neither a fee, a tax nor an assessment, but we appropriate it anyway. Then there are a lot of constitutional provisions th~appear to say one thing and we behave in a different fashion. 18 I think about the one on supplementary appropnations 19 As you know, supplementary appropriation says that they can be 20 paid either from surplus or no supplementary appropriation may 21 unless there are adequate funds in surplus or from a tax laid 22 for the purpose collected and paid into the general fund, 23 general treasury. My first year in state government Carl 24 Sanders was Governor, and Governor Sanders had some new taxes 25 in a supplementary budget -- I know, we helped put it PAGE 44 together, and the taxes had not been paid and collected into 2 the general treasury, but that was all right, we appropriated 3 them and spent them anyway, you know. 4 Is that what the constitution meant? I don't really 5 think so. I know some folks on the AG's staff don't think so 6 either, but it was done. 7 CHAIRMAN MARTIN: I guess the purpose of that 8 question is our task is to see what the current practices are 9 and to see if this provision needs to be changed so that it 10 conforms as well as possible to the actual practice, so that it's not a meaningless provision. MR. HACKNEY: Yes, sir. CHAIRMAN MARTIN: Your comments have been real helpful. I guess the question is should we change this in any way. You have suggested, maybe not suggested but implied that we ought to add interest there for one thing to this list 18 of things that's paid to the general fund. 19 There has been some discussion about the federal 20 funds, there may be some real trouble with that. 21 MR. P..ACKNEY: Maybe earnings and repayments or 22 something. 23 MRS. HUNTER: The language of the statement in no 24 way prohibits other funds being paid to the general fund. it 25 just specifies that these must. PAGE 45 MR. HACKNEY: Yes. ;.: 2 CHAIRMAN MARTIN: Pete, there is one other area 3 I know we're taking a long time, but it would really be 4 helpful to us if you could give us some ideas this is not 5 the ea11marking provision which is in Article III that you 6 mentioned earlier, but it does funds that are earmarked are 7 not subject to this provision. Obviously they're not paid 8 into -- Well, maybe we need your comment on that as to the 9 effect of earmarking or at least as far as the Department of 10 Transportation and the workmens compensation funds and other CzI 11 j: 0.'<".>.. areas where there is earmarking, what the interrelation S@Jr~~12 '" between that and this paragraph is. MR. HAC:Kl-l"EY: I think one of the bes t arguments that ! 14 I- can be used against any earmarking is shown by what has '" :I: 15 .:. happened to the constitutionally earmarked -- I know CI '::"> 16 III Z Q technically they say these are not dedicated funds because z '" 17 III they're funds collected, they are not the funds which are 18 appropriated -- the constitution says an amount equal to the 19 prior year's collections and so forth the lawyers I guess 20 could get in discussions about that, but for all practical 21 purposes they're earmarked. 22 One of the best arguments I think against the ear- 23 marking of funds comes from the fact that as you know once 24 the motor fuel tax became clearly inadequate to support the 25 level of activity of the Department of Transportation, and -------~ -~--~-~ PAGE 46 they sure were inadequate -- we had the fuel crunch, we had 2 a volume oriented tax and still have, seven and a half cents, 3 had a volume oriented tax rather than price oriented which 4 would grow with inflation, the General Assembly came forth 5 with impressive sums of additional general fund appropriations 6 because it was necessary, or they felt it was necessary, I 7 think they were correct. 8 These appropriations ranged up to 70, 80 and more 9 million dollars per year. In regard to DOT's budget at that 10 time this was as much as forty percent in excess of what they were taking in that was earmarked, constitutionally designated for them. So I infer from that that the General Assembly understands better than some provision perhaps in law that was passed ten or fifteen years go, the General Assembly better understands and is in a better pcsition to understand what the current needs of any and all functions and activities of state government are, and that they will provide the funds 18 as near as they can determine necessary to maintain some sort 19 of a balance. 20 I daresay there are a lot of folks in DOT that 21 don't agree with that, and I'm certainly not advocating 22 striking the provision that earmarks funds for DOT. They were 23 able to, as you know, sort of broaden the provision, the 24 interpretation a little bit, get a couple of statutes through 25 which really have got for them now an earmarking of sorts PAGE 47 that as near as we can determine is equal to or less than the 2 General Assembly probably would have been providing to them 3 anyway, so I just don't see that the Department of 4 Transportation has benefitted from the earmarking proviso in 5 the last ten years. 6 Quite the contrary, when this thing first started 7 going down, James Earl Carter, Jr., was Governor at the time, 8 when we could all see that they were hurting and hurting bad, 9 and when this took place there were no general funds coming 10 in because people had lived for a long time in the General "z .11 I- o.'.". Assembly with the belief that "Well, Highways gets their ~ 12 ~ money earmarked, and this is theirs, and that's all they ~r~ need." It wasn't all they needed. ! 14 I- After a few years, 1975 they became aware of the 16 ~ Q z " to private contractors and so forth who is interested in 16 ~ Q looking at the state's code. We charge a fee for those z 17 ::; books, and there is no statutory provision either, number one, 18 that authorizes us to charge for them, we do it anyway, but 19 the charge is to defray the cost of printing those books. 20 However, as Mr. Hackney pointed out, at the end of 21 the fiscal year if we haven't spent all the money that we 22 collect on those books in reprinting either revisions to the 23 code or new code books, then that money reverts back to the 24 treasury at the end of the year, so it ultimately goes 25 unspent and agency funds do end up in the general fund. PAGE 52 MR, STRICKLAND: We do the same thing with copies of 2 income tax returns and things like that. 3 You can look at it another way too. You provide 4 service to a certain taxpayer and don't charge them, and 5 other taxpayers are paying for it; you know, it's being 6 subsidized. 7 MR. HENRY: It may be a gratuity in fact. 8 MR. STRICKLAND: That's right. 9 CHAIRMAN MARTIN: Pete, we're not going to let you 10 !l e . .-I11 .~~..... 12 ~ 14 ~ I:zII: 15 ~ "cr: ;:) 16 ~ % 17: get out of here before you give us some figures. MR. HENRY: Can I ask him one question? CHAIRMAN MARTIN: Go ahead, Mike. MR. HENRY, The motor fuel tax. I think somebody alluded to the fact that the General Assembly passed some statute this last session -- MR. HACKNEY: The 1979 session, effective July 1, 1980. 18 MR. HENRY: -- that did something like say that the 19 three percent statewide sales tax on motor fuel sales would 20 be the motor fuel tax and therefore would come under -- 21 MR. HACKNEY: They call it the second motor fuel 22 tax under the law. 23 MR. HENRY: So the General Assembly really has the 24 discretion to expand and call anything a motor fuel tax? 25 MR. HACKNEY: I'm not sure anything, but certainly PAGE 53 they could have gone further than they did. 2 MR. HENRY: By the same token they could also 3 reduce, they could take -- they could call the motor fuel tax 4 something else. 5 MR. HACKNEY: You've got a motor fuel tax statute on 6 the books. r think the only way ,you could adjust that would 7 be to reduce the rate. 8 REPRESENTATIVE WILLIAMSON: What you're saying, 9 you're saying we could un-earmark it in a real hurry by 10 saying we're not going to charge seven and a half cents per 11 "z j::: gallon and charge it to motor fuel, we're going to charge it .'o"".-. ~ 12 ~ based on price and all of a sudden it is the first sales tax, ~ri! paren, used to be known as the motor fuel tax and therefore 14 it's not earmarked any more. I- UI <:rl:: 15 ~ But I think the broader question is has anybody "'";;;) 16 ~ challenged the second motor fuel tax. Q z r 15 ~ CI "~" 16 .~.. cz 17 ~ a half ago? CHAIRMAN MARTIN: Right, the current one. MR. HACKNEY; Okay. It certainly is going to be less than thirty -- it seems to me it's 19 and nine, that would be $28 million from two sources, the 19 being an interest payback from the federal government, and the eight being the remainder of the advance interstate construction payback. If it's not 28, it's going to be within spitting 18 distance of it. 19 CHAIRMAN MARTIN: Okay. Now, the 360 million is 20 both the motor fuel tax, the original motor fuel tax plus 21 the three percent sales tax or the ~cond level motor fuel 22 tax? 23 MR. HACKNEY: The 360 we mentioned 1s the whole 24 schmear. 25 CHAIRMAN ~~TIN: How much of that is the sales tax PAGE 56 as well? 2 MR. HACKNEY: Let me put it this way. The motor 3 fuel tax collection, the seven and a half cent portion is 4 probably what, 250 -- 5 MR. STRICKLAND: 250. 6 MR. HACKNEY: About a hundred, 110 million on the 7 other. 8 MR. STRICKLAND: You're talking about separating 9 that. We don't separate it at all, it's all motor fuel, 10 you know, all dedicated. MRS. HUNTER: Also those funds can only be used for roads and bridges, and the Department of Transportation does a number of other things which cannot be funded by those funds. MR. HACKNEY: In that amount we're just talking about the dedicated or earmarked. Now, there is as you know a $9 million municipalities grant, 9.317 million, and there 18 is money for airport construction, there's money for the 19 operation of the Division of Air Transportation and those 20 other folks out there, and I guess probably maybe $20 21 million 22 REPRESENTATIVE WILLIAMSON: Have you got any MARTA 23 money in there yet? 24 MR. HACKNEY: No , 25 CHAIRMAN MARTIN: Are there any other questions of PAGE 57 ".------------------------------------------, Mr. Hackney? 2 Pete, you havebeen real helpful. Thank you for 3 coming. 4 MR. HACKNEY: Thank you, Mr. Chairman. 5 CHAIRMAN MARTIN: We had tried to contact the 6 Office of Planning and Budget, and I guess we weren't able 7 to get them to come. 8 Charlie, do you have anything from the Governor's 9 office about this particular provision or concerns that you 10 all might have? Czl 11 t- ..'o".... MR. TIDWELL: Jim, we live with it as Pete has ~ 12 ~ indicated. I know of no general dissatisfaction with the way ~F~ the constitution is structured in this area. ! 14 ot-n Insofar as the function there is concerned, we live :~:z: 15 .:l with it, we sort of know how to handle it. On policy issues Cl '":::> 16 ~ Q of what ought to be or not in there, we have no position. z 16 .~.. czo -c( 17 : We do not oppose, as some people have thought, the Department of Transportation or Mr. Moreland or anything; we oppose the concept of the allocation of taxes, and I will be very brief in precisely why we oppose it. The real question we feel is larger than the tax question. The real question goes, and I can speak with some feeling on this, to the members of the General Assembly and their relationship to the citizens of Georgia. 18 By allocating a tax the legislature is removing a 19 basic ingredient of its own responsibility and its 20 constitutional power, especially because -- I'm proud to see 21 two members of the House here because the revenue bills and 22 the tax bills do originate in the House. 23 Now, there are sound reasons for opposing allocation 24 of a tax. By abdicating a decision in this matter the members 25 of the legislature remove what we feel is inherent in good PAGE 59 government, and this is a flexibility. 2 I know, as Mr. Williamson has also mentioned 3 already, that this is an election year. Every two years you 4 go back to the voters, and I am sure that you know they can 5 be very vocal in what they like and what they don't like, 6 and this is a very precious constitutional function of the 7 legislature, but when you give a tax, the revenue that the 8 citizens pay to a department head the power passes from you 9 to that agency, and we feel very, very deeply that the 10 .., z 11 I- 'o..".... ~ 12 ~ ~Fi ! 14 lV> :r 15 ..:.,. :'"> 16 .~.. Q Z 17 : constitution especially speaks to this point, and by abdicating this decision making ability you are giving to an agency a power which the legislature should have. This agency -- and I think that sometimes I've been down here at the legislature too long, but I have seen that power once accrued to agencies is very difficult to take back, and when you give the power of the purse strings you have indeed given the power of running a great deal of what I 18 feel is certainly the responsibility of the legislature. 19 The power over tax, of course -- just like our 20 constitution is based on the U.S. constitution it is the 21 power given to elected representatives, the allocation of 22 taxes is not only uneconomic because it cannot be as flexible, 23 it is often much more difficult to monitor. but it also 24 creates -- and I was delighted to see that Mr. Hackney 25 played precisely into the next section. and I have right PAGE 60 here -- an insatiable demand for more funds. That is Q.E.D., 2 there is nothing more we can say about that. 3 Therefore, let's return to the sound constitutional 4 basis that we originally had for taxation with representation. 5 It is responsible, it is efficient. We believe in our 6 elected legislature, the tax distribution as well as tax 7 raising should be in their hands, not in a remote agency. 8 This is bureaucracy at its worst. 9 Thank you. ~" : 10 CHAIRMAN MARTIN: Thank you, Mrs. Tracy. "Z 11 j: f'.".. Do any membersof the subcommittee have any @ r12 ;u'": questions of Mrs. Tracy? j: '.Z.. U... MRS. TRACY: If you will excuse me, I'm going to I l4 ..>...-. the meeting that you're not at. ~ 15 CHAIRMAN MARTIN: All right. Cl :'":. 16 .Iz.I.I MRS. TRACY: Thank you. I appreciate it. I:l % 17 '"III CHAIRMAN MARTIN: Are there any other comments from 18 anyone else who is here? :.... 19 Okay. Now we're down to what we do. 20 George? 21 REPRESENTATIVE loTILLIAMSON: Let me make one other 22 comment just for the record, and now that Mrs. Tracy is gone 23 I guess I can make it. 24 I know the League of Women Voters is very strong for 25 a new constitution, but I think we all in this room realize PAGE 61 that when we start messing around with the DOT that they will 2 put the word out, Mr. Moreland will mash the button and these 3 folks will bad-mouth whatever effort we turn out, no matter 4 what else is in the whole document. 5 I think some of us -- I know Mrs. Hunter and I trave 6 the state with the Tax Reform Conmission. we have seen what 7 happened when the Commissioner is on the other side; people 8 just come out of the woodwork like you cannot imagine. They 9 are leaders, they are not just people. they are effective 10 people. "z 11 le-: MRS. HUNTER: I couldntt agree with you more. It o Q. 12 ~ u just reinforces her argument right down the line, when you @ r l give this power you have abdicated your power through the ! 14 constitution -- I'm sure you didn't do it yourself. I- '~" ~ 15 .:I CHAIRMAN MARTIN: I might add that my personal "e: ;;) 16 .~.. feelings are probably the same as the League's. I do see some c Z ~ 17 ::i problem in fighting the general budget with the Department of 18 Transportation. but I think the major area of real trouble is 19 the fact that those earmarked funds were limited to roads and 20 bridges, and that to me is even more important than the 21 problem of whether department gets its funds from allocation 22 of motor fuel tax or by the general appropriations act. 23 There is a theory that I've heard Senator Holloway 24 ascribe before, and I don't know if he still has it. that for 25 other agencies and other type state activities the best thing PAGE 62 possible is for the Department of Transportation to be out of 2 the general budget, of the general funds, which is the other 3 side of that same issue. It's a difficult one. 4 What is the pleasure of the subeommittee on that S particular point? Maybe we can talk about that first and 6 then-- 7 Mike, do you have some language you want to explain 8 to us? 9 MR. HENRY: It has nothing -- as you know, the 10 earmarking of the motor fuel taxes is in Article III, Section X, Paragraph 7(b), and therefore really not included in this draft provision. If you wanted to address that issue first, then I could explain what I have done. MRS. HUNTER: Just to reinforce what George has said, even just a minor change to "all transportation purposes" was vigorously opposed by the Department of 18 Transportation. It is of course a hopeless task at this 19 point. 20 CHAIRMAN MARTIN: I guess we have several options. 21 We can decide not to do anything on that issue, we can 22 decide 23 MR. STRICKLAND: That's several options, isn't it. 24 CHAIRMAN MARTIN: That's right. 2S (Laughter.) PAGE 63 CHAIRMAN MARTIN: We can make a reconunendation to 2 the full committee, we can make a recommendation to the 3 Article III people having studied this provision and the 4 principle behind the earmarking, or we can add something to 5 this section. There may be other options. 6 MR. NASH: I think as long as you leave some of 7 these options open that we'll see other agencies or other 8 people come for earmarking very similar to this. 9 MR, STRICKLAND: Tell them to look at Alabama if 16 they want to see the problems a state can have with Czl 11 j: earmarking. 'o.0"... ~ 12 ~ MR. NASH: I think it's political money, and that's ~ri! where you're getting all your flak from is the political end 14 ..:..r.. of it, the Tax Commissioner, all this type thing; the only 15 ~ way they're going to get their share out of it is to have it Cl '";;;) 16 .~.. earmarked. There will be others come as long as it's Q Z 17 ::; allowed in the constitution, there'll be others come to it. 18 MRS. HUNTER: A position which is clearly 19 unsubstantiated by the funding of the Department of 20 Transportation during the years when they have been having 21 trouble. 22 MR. STRICKLAND: You may be right. The only thing 23 I've heard on these two thoughts, you know, leave it like it 24 is or having nothing earmarked. 25 I have never heard anybody express any thoughts that PAGE 64 you might expand earmarking. Have you all? 2 REPRESENTATIVE WILLIAMSON: I don't think so. I 3 think the only thing we've done is with the motor fuel. 4 MR. STRICKLAND: That's what I'm talking about. 5 REPRESENTATIVE WILLIAMSON: I don't think thereis 6 any other agency in government that's powerful enough to do it. 7 MR. STRICKLAND: To expand it to anything other 8 than transportation. 9 MR. NASH: I think some earmarking within agencies, 10 for example the funds that are put up for the colleges and research work and things like this, much of that is people are saying '~e've got to have it earmarked in order to ever get it put into that particular part of it," otherwise it goes into the hands of the regents, and they don't want it earmarked because they're going to use it any way they want, and we have a big problem in agriculture of getting some of these funds ever down to where they were intended for by 18 the General Assembly, because once they get into those hands 19 there''"; lot of people hollering "We need it earmarked for 20 that particular thing," and I think we'll see the legislature 21 probably earmarking some themselves. 22 REPRESENTATIVE WILLIAMSON: That's not in the 23 constitution, it's in the appropriations bill. 24 MR. NASH: I know it's not in the constitution, but 25 this is one way of appropriating funds. PAGE 65 MR. HENRY: The Board of Regents has a unique 2 position in that their funds are not subject to any type of 3 line item by the General Assembly, they just get a lump sum. 4 That may work 5 MR. NASH: They've been having problems with it. 6 REPRESENTATIVE WILLIAMSON: I think you're seeing 7 part of the political process, groups that don't get their 8 fair share, you know, that will do anything they can do to 9 get more. I think that's just the political process. 10 ., ~ z 11 .... .'oQ"... 12 ~ ~r~ ! 14 .... UI " 16 ~... c Z 16 III % I % '" 17 liO the allocation. Well~ what is the pleasure of the subcommittee on the issue of earmarking? REPRESENTATIVE WILLIAMSON: I would like to see as restrictive language as we could have that would not affect anything that's already earmarked, but would not allow any future earmarking. 18 MR. NASH: You're reelected, I see. '~.... 19 MRS. HUNTER: As a point of inquiry, Mr. Hackney 20 mentioned some other provision with regard to earmarking~ 21 but this paragraph at the beginning of his series of questions 22 is the section that earmarks. It doesn't say earmark. 23 MR. HENRY: It prohibits earmarking. True it covers 24 that subject, and there's no other section that speaks to 25 this. PAGE 67 CHAIRMAN MARTIN: No, that's not quite true. 2 That's not true. 01 3 It's Article III is the provision that says that 4 the proceeds of tax might be allocated for a particular 5 purpose, and then lists motor fuel tax 6 MRS. HUNTER: As an exception? 7 CHAIRMAN MARTIN: Is the workmens compensation 8 provision also in that Article III? 9 MR. HENRY: It's in Article III, yes. 10 Czl 11 ~ 12 o~.'"".". ~~ F~ ~ ! 14 ~ '<"C( :z: 15 .:l Cl '":::> 16 .~.. Q Z 16 ~ Q legislature and, heaven forbid. should it make it all the way z 17 ::i through then I can just see all these county commissioners 18 coming out of the woodwork and saying "Vote against the,! 19 you know. the document that we're trying to perfect. 20 I'm trying to get us, you know, to the logical end 21 of where we're going to end up in the least amount of time. 22 CHAIRMAN MARTIN: If in fact -- yes. I agree with 23 you. George -- if in fact it's unrealistic to assume that 24 we can do anything about the earmarking of mot,:n' f'.lel taxes, 25 is there something less than that that somehow is 'unsistenr: --------- --------------_._----' PAGE 72 with the intent of this provision coupled with the provision 2 of Article III that we can defend, maybe not ultimately win 3 on, but is not a quixotic venture in constitutional drafting? 4 I'm thinking, for example, of the issue that you 5 and Connie have already raised about if funds are earmarked 6 and not then appropriated in the general budgetary process 7 that to the extent that motor fuel taxes are used by the 8 Department of Transportation that the issue that they be used 9 for transportation purposes as opposed to roads and bridges. 10 Is that a position that we can take as a subcommittee or z~ 11 j:: IX MR. STRICKLAND: We're supposed to assume what the 0A.... @-~12 IX winning plan will be and go with that. . I)';!, MR. WADE: Yes . 14 ! I- (Laughter . ) '~" 15 .:I MR. RIECK: Mr. Chairman, I think as a practical ~ IX ::> 16 .0z..) matter the General Assembly -- you know, even though those Q Z :E: 15 ~ MR. TIDWELL: Motor fuel tax? Cl 0< :;) 16 .~.. MR. NASH: I think what we're addressing, George, Q Z 17 ::i is whether or not the constitution should say that it be up to 18 the legislature to earmark that rather than the constitution 19 doing it. 20 REPRESENTATIVE WILLIAMSON: I'm with you all, I'm 21 not against you. I think earmarking is bad. 22 MR. STRICKLAND: You're with us, you're just going 23 to vote against us. 24 REPRESENTATIVE WILLIAMSON: I'll vote with you if 25 you all want to, and away we'll go. You know, we'll come PAGE 74 back here about March and we'll see how it ended up. 2 You know, if you all want to go that way, that's 3 fine with me. I have no problem at all in doing that. I 4 wanted to vote against the earmarking the first time; they 5 came around and said they would tear up the pavement that they 6 had just put down in my district. 7 (Laughter. ) 8 CHAIRMAN MARTIN: Does anyone else on the sub- 9 committee have any observations or thoughts? 10 MR. WADE: Let's just take the high road. CHAIRMAN MARTIN: What we can do is to go ahead and vote on that. and what we can do is either try to draft language after we make the other decision on this provision today. or we can come back and review the language as proposed by staff. We had not scheduled another meeting. MRS. HUNTER: Why don't we press on with these proposed alternatives. What we're discussing now is really 18 not in our~ction and we could come back to that. but it 19 doesn't change what we need to do with regard to the section. 20 CHAIRMAN MARTIN: I think for a point of decision. 21 though, I would hate to -- unless you want to avoid the 22 decision and come back to that after we go through the other. 23 Is there a motion that we act one way or the other? 24 MR. STRICKLAND: I think we need to have another 25 meeting, Jim. PAGE 75 CHAIR}~ MARTIN: Before we act on that provision? 2 ~ffi. STRICKLAND: Yes. 3 MR. NASH: I think itls very important, a very 4 1n~ortant part of the constitution. If we're going to try to 5 get this thing and get a lot of these things out. turn it 6 back to the General Assembly to act on wevre going to have to 7 write the constitution to where it gives them authority that 8 prevents it from having to come through the constitution to 9 get it done. 10 MRS. HUNTER: True, but when we say in this section we'll change Article III, Article III itself has to be changed. MR. KANE: Jim. I think what we draft here -- I think we can make a recommendation to the Article III committee to change the appropriations process. but anything we put here does not affect the earmarking as affected by Article III. effected by Article III, does it? CHAIRMAN MARTIN: ! guess it depends on how we do 18 it. If we adopt language that would affect the earmarking and 19 say that Article III ought to be changed accordingly -- 20 MR. KANE: This provision requires anything collected 21 within those categories be paid to the general fund. and motor 22 fuel taxes is still paid to the general fund. but then by 23 reason of Article III they're specifically appropriated out 24 of that fund so that there is no conflict as was pointed out 25 earlier. PAGE 76 CHAIRMAN MARTIN: Mr. Strickland? 2 MR. STRICKLAND: We're getting dOWll to th2 point 3 here, Mr. Chairman, where we're really talking about DOT, 4 we're talking about dedicated -- that is about the only thing 5 we're talking about, and I'm inclined after seeing what has 6 happened in Alabama, basically I'm inclined to think that, 7 you know, everybody ought to go to the same source to get 8 their appropriations. I'm inclined to think that; however, 9 I have heard, and I can't recall now, some pretty good 10 cz.:I 11 I- 'oQ."... ~ 12 ~ ~r~ 14 ~ lV> < J: 15 ~ c.:I :'>" 16 ~... c Z < 17 ~ arguments for having this dedicated fund for DOT, I think it would be premature to take any action on anything like that without hearing from them. I know I said last time I think we should do it. CHAIRMAN MARTIN: I agree. MR. STRICKLAND: I don't know -- like I say. I really think that we probably -- I think that everybody should as I said before go to the same source for their funds and 18 present the same type arguments, you know -- 19 CHAIRMAN MARTIN: I agree with that. 20 MR, STRICKLAND: -- but there could be other things 21 that I'm not aware of. 22 CHAIRMAN MARTIN: A posture we could be in is to go 23 ahead and instruct our staff to begin working on a draft of 24 language that would accomplish the purpose we decide and to 25 communicate that with the commissioner, Commissioner Moreland, PAGE 77 and invite the department to face this issue straight on. 2 If we're going to raise the issue, then we ought to face it at 3 our next meeting with the Commissioner before we act. 4 It seems to me that we ought to get his side of the 5 argument onto our record, and then we have done our job of 6 focusing the issue and we will have completed our work as a 7 subcommittee. 8 Is that what you're suggesting? 9 MR. STRICKLAND: I would hate to think that if he 10 had to go to the same source that I did, the Revenue Iz-' 11 j: ."'o".". 12 ~ ~@F~' 14 .~... ~ :E: 15 ~ Io-r:' ::> 16 .~.. Q Z "... ~ 12 ~ ~F~14 ! lV> c( :I: 15 ,:, Cl '"::> 16 ~ Q z c( 17 ~ state it as succinctly as possible. You know, I will be more than happy to look at it, but -- CHAIRMAN MARTIN: Any earmarked language that incorporates the decision we seem to be moving toward, at least thin~ing about, is not in your draft; right? The issue of earmarking is not inyour draft? MR. HENRY: No. MRS. HUNTER: I was under the impression the 18 Article III committee was in favor of expanding the uses 19 without taking away the earmarking, and they didn't get any 20 further than we did with that proposal. 21 MR. TIDWELL: They addressed each a nd everyone of 22 those issues. It was resolved to leave it as is. 23 ~ffi. WADE: Let me ask for one point of clarification 24 When the constitution was amended to allow for the earmarking 25 of flmds for highways and bridges, was there a great swell of ----------------- PAGE 80 support through the state for this? I mean what kind of 2 groups came in and -- 3 MR. HENRY: It was a compromise position as I 4 understand. Is someone here who's been in state government 5 MR. STRICKLAND: That was the constitution of '45 1 6 wasn't it? 7 MR. TIDWELL: It was effected in 1960, the ear- 8 marking. The Highway Department 1 s amendment came in 9 MR. STRICKLAND: They had some type of earmarking 10 before that. though. back before, didn't they? That's when .. 11 ";z: .'o".. you were talking about when they had other -- ~ 12 ~ MR. HENRY: I was under the impression they had ~J~ three statutory taxes earmarked for them before '45. Now. ! 14 I- what happened between '45 and '60, I guess they just depended '" :J: 15 ~ on the good will of the legislature. "'="> 16 .~.. MR. TIDWELL: Back in those days there were several Q Z 17 : statutory earmarkings. Game and Fish had' the hunting and 18 fishing license revenues statutorily allocated to the old 19 Game and Fish Commission. and in fact the General Assembly 20 appropriated those fees every year, they observed it although 21 it was constitutionally prohibited by these very same things 22 we're talking about, and I think in fact maybe the legislature 23 was appropriating the motor fuel tax to the Highway Department 24 but they could not do it constitutionally until 1960. 25 MR. WADE: If you could just trade, if you could --------------------------' PAGE 81 just twist it a little bit and make the earmarking for broad 2 transportation purposes, I mean it might give George and 3 others a fighting chance. I think rather than just. being 4 that point, you've got more concerns now than just roads and 5 bridges, the state has just changed. 6 MRS. HUNTER: The department itself has been 7 reconstituted from a Department of Highways to a Department of 8 Transportation that has a lot of functions. 9 CHAIRMAN MARTIN: Mr. Wade, do you want to make that 10 in the form of a motion that that be the action we take? "z 11 I- 'o.a".... MR. WADE: I would be willing to do that, yes. I ~ 12 ~ would so move. ~r~ CHAIRMAN MARTIN: As I understand the motion it is 14 ~ I- that our paragraph be amended to include language which would '<"l: J: 15 .:) say that where the motor fuel tax has been allocated to the ":':"> 16 ~ Department of Transportation that the proceeds of that tax c Z :t: 15 .:. CJ 0< ::> 16 ~ Q z 17 ~ with the rest of the committee. Mike. would you explain to us what you haveklone? f MR. HENRY: This on the front page here. what I have done is I have taken the present provisions and just editoria.lly redrafted them. I want to point out that in the Paragraph 3 CI~IRMAN MARTIN: Excuse me a second. Mike. Does everybody have a copy of this? 18 MR. HENRY: On the next to last line where it says 19 the general fund of the state treasury and shall be appointed 20 therefrom. that should be appropriated therefrom. 21 Then I have taken out the sentence which says for 22 the purposes -- I have taken out the sentence which says for 23 the purposes set out in this section and for these purposes 24 only. since you have deleted the purposes from this section. 25 l~en I have taken the same language from the PAGE 84 exception providing for the training of law enforcement and 2 prosecutorial off~cers and then on (b) I have taken -- I have 3 pulled out of Paragraph 2 the authorization giving the 4 General Assembly the authority to earmark funds collected 5 from -- for agricultural promotion programs, I have just 6 lifted this sentence of earmarking out of there and left the 7 rest of it out. 8 On the second page is a very preliminary draft that 9 I drafted for your consideration. It does change things in 10 substance a little bit, but I think it provides for a little ..zCI 11 j: bit greater flexibility, which from the discretion of the ~... @;i subcommittee you may not want to give the General Assembly more flexibility to provide the specific funds go for specific 14 .~.. purposes . '<"l :I: ..15 .:l CI I also noted that if Paragraph 2 is reduced in size ~ 16 .~.. to only incorporate into the constitution the authority to o Z :J: 15 .:> :"':"> 16 ~ Q z 17 : constitution shall be satisfied by the application of a program upon the affected products. The rest of it I feel could probably be done by statute, although that's certainly open to debate. MRS. HUNTER: Are we generally in agreement we should add interest earned by the state to taxes, fees and assessments? It's being done. Do we want to specify that sizeable amount of money will be considered? 18 CHAIRMAN MARTIN: Do you want to make that in the 19 form of amotion? 20 MRS. HUNTER: This is a draft at this point anyway, 21 Mike is going to have to redraft, aren't you? 22 CHAIRMAN MARTIN: Are you speaking of funds in the 23 general fund? 24 MRS. HUNTER: Yes, included in the funds that should 25 be paid to the general fund would be interest income that is PAGE 86 earned. 2 CHAIRMAN MARTIN: We might be able to go ahead and 3 act on that even though it is a draft, that 'tvould help Mike 4 in deciding. 5 At least my understanding is that's a fairly general 6 consensus. Does anyone have any objection to that? 7 The subcommittee has adopted putting the word 8 MR. NASH: You're speaking on the issue 9 CHAIRMAN MARTIN: Why don't we go ahead and vote on 10 that? .."z 11 I- Mrs. Hunter, would you make that in the form of a ..o.... ~ 12 ~ motion? ~J~ MRS. HUNTER: All right. I move that interest ! 14 l- earned be added to the all money collected from taxes, fees V> :l: .. 15 o!) and assessments for state purposes. ":::I 16 .~.. MR. WADE: Seconded . l:l Z 17 ~ CHAIRMAN MARTIN: All in favor say aye. 18 (Ayes .) 19 MR, HENRY: Would that be interest earned on the 20 general fund? 21 MR. NASH: That's what I was asking. 22 MR. STRICKLAND: You know, of course if we start 23 enumerating all those things, anything that might be out there 24 now that's not enumerated in here -- 2S MRS. HUNTER: They ought to be enumerated. PAGE 87 MR. NASH: For example, on -- 2 MR. STRICKLAND: Of course, interest is -- I 3 don't have any problem with it, it's part of the revenue, 4 it's earned from taxes collected. 5 REPRESENTATIVE WILLIAMSON: I think you might have 6 an administrative problem if you've got say a local tax 7 collector that doesn't have to pay over the money for thirty 8 days and maybe they're earning some interest, and then if you 9 try to get that interest in to the state it might 10 Czl 11 lce-: .oQ... ~ 12 ~ (~ @)r14~~ I'" :r 15 .:> Cce:l ~ 16 ~... cz 17 ::i MRS. HUNTER: Would interest on general funds take care of that problem? REPRESENTATIVE WILLIAMS: I think it would. MR. NASH: I think it would help because you've got " interest on these moneys that sit over there outside of the general fund that are invested in MR, STRICKLAND: As they say, if it's not broke don't fix it. 18 CHAIRMAN MARTIN: Maybe what we could do to be 19 consistent with our other decision would be to direct staff 20 to look into that language and come back with a proposal -- 21 MR. STRICKLAND: I'm a little bit concerned. I 22 think we ought to look into that, 23 MR, TIDWEL~: I think you need, Jim, to do that, to 24 have OPB if you will look at that to see what sort of problems 25 you might create and not really solve anything, PAGE 88 I cannot speak to that because I don't understand 2 all the intricacies of how they shuffle money around, but 3 this is a pretty sensitive area here, and I think most of the 4 agencies as Pete just described to you, it is considered and 5 it is appropriated t but it could create some problems. 6 CHAIRMAN MARTIN: Mrs. Hunter, would you accept an 7 amendment to the motion we just passed that would direct the 8 staff to develop language to include interest on the types of 9 moneys that are paid into the general fund and some appropriatE 10 language, and to consult with OPB and other people about that? MRS. HUNTER: Yes. CHAIRMAN MARTIN: All in favor say aye. (Ayes .) CHAIRMAN MARTIN: Connnissioner, we have seven minutes. Is there anything you want to -- MR. STRICKLAND: You might ought to -- you're talking about the OPB, and you're talking about who to 18 consult with, you might ought to include the DOAS treasury. ..:. 19 CHAIRMAN MARTIN: Are we at a stopping point? 20 Is that what you're suggesting? 21 Before time runs out we need to decide on a meeting 22 time. 23 I would like to propose to the subcommittee that we 24 not set a time until I can talk to Senator Holloway and the 25 other members of the subcommittee and try to have a full PAGE 89 subcommittee present if we're going to face Tom Moreland at 2 the next meeting, unless there is a need to go -- 3 When do we have to have our report back tofue full 4 committee? 5 MR. KANE: The 15th of September. 6 CHAIRMAN MARTIN: I guess we could go ahead and 7 tentatively set a meeting and not make it formal until I talk 8 with the other members. 9 Let's try to clear a date for the ones that are here 10 Czl 11 Ia-: o 0.. w 12 ~ ~~ r~ ~ 14 ~ I'" :I: 15 .:> Ca:l :> 16 ~ azw 17 ::i MR. NASH: And maybe we can clear that date for others. MRS. HUNTER: One other question along with this, we've got two other paragraphs in here. Are we going to dispose of them next time also, or are they taken care of, 4 and 57 Are they included in those other purposes? CHAIRMAN MARTIN: We have the author of one of the paragraphs here, the industrial development commission 18 paragraph and, Charlie, you were telling us some information 19 after the meeting last time about that provision. 20 Would you mind sharing that with the subcommittee? 21 MR. TIDWELL: That particular paragraph came about 22 in the early 1960s when Abit Massey was the director of the 23 old Department of Commerce, and at that particular time in 24 history these industrial development authorities that have 25 become so popular in all of the various counties and PAGE 90 municipalities were just beginning to be heard of in other 2 states, and Abit was trying to develop something to take 3 advantage of what other states were doing, and that paragraph 4 that you see now before you reprsented that work product, 5 It never was implemented and didn't prove to be an 6 effective way to do what Abit had in mind, and it has 7 subsequently -- we had individual local constitutional 8 amendments authorizing those types of authorities, and now a 9 general statute that authorizes those entities to be created 10 where they want to, and it's my best judgment that it has 11 C~zt served no purpose and you would do no violence to the o 0. ~~. I 12 ~ constitution if)Ou took it out now. MRS. HUNTER, By the same token. would the grants to 14 ~ '<"l: :I: 15 .:t Ct '";;) 16 .~.. o Z " 16 ~... MR, STRICKLAND: This is tentative? Q Z -< 17 : CHAIRMAN MARTIN: Tentative. right. The purpose is 18 to have as many members of the subcommittee as possible here. 19 MR. HENRY: What was that? 20 CHAIRMAN MARTIN: September the 5th tentatively 21 set. 22 Do I have a motion that we adjourn? 23 REPRESENTATIVE WILLIAMSON: So moved. 24 CHAIRMAN MARTIN: Thank you all. 25 (Whereupon, at l2~20 p.m. the subcommittee meeting was adj ourned . ) 2 3 4 5 6 7 8 9 10 III Z 11 j: 'o" 12 "~" 9r l 14 ~ ~ OIl :r 15 olI III '"::> 16 .~.. oz 17 :l!i 18 19 20 21 22 23 24 25 +++ ++ + PAGE 94 INDEX Committee to Revise Article VII Subcommittee Meeting Held on Aug. 12, 1980 SUBCOMMITTEE MEETING, 8-12-80 Proceedings. pp. 3-7 SECTION III: PURPOSES AND METHOD OF TAXATION Paragraph II: Revenue to be paid into general fund. pp. 7-88 Presentation and Comments on Paragraph ~ Mr. Pete Hackney, Legislative Budget Office. pp. 7-57 Ms. Dorothy Tracey, League of Women Voters, State Board. pp. 57-60 Industrial Development Commission (Deleted). pp. 89-90 Paragraph III: Grants to counties and municipalities. pp. 90-91 ARTICLE III: LEGISLATIVE BRANCH SECTION IX: APPROPRIATIONS Paragraph VI: Appropriations to be for specific sums. pp. 45-84 (Earmarking - DOT) '. '~ PAGE 1 2 STATE OF GEORGIA 3 COMMITTEE TO REVISE ARTICLE VII 4 OF THE 5 CONSTITUTION OF GEORGIA 6 7 8 9 10 1:1 Z 11 j: 'o..".... ~ 12 ~ ~r~ 14 ~ lV> :r 15 .:I 1:1 '"::l 16 .~.. Q Z 17 ::: SUBCOMMITTEE ON POWER OF TAXATION 18 19 20 21 Room 133 State Capitol 22 Atlanta, Georgia 23 Friday, August 15, 1980 9:30 a.m. 24 25 PRESENT: COMMITTEE MEMBERS: VICE CHAIRMAN LARRY BLOUNT JAMES R. DAVIS ABIT MASSEY GEORGE L. 0' KELLEY ALSO PRESENT: I:l Z 11 j::: .'"0".". ~r~ @~12 "" ! 14 lV> 2: 15 .:I I:l :">" 16 .'z.". Q Z 17 '""" 18 MELVIN B. HILL, Jr. MICHAEL HENRY DAVID KANE CANTER BROWN JIM NEWMAN JIM KITTRELL CLINT SWAYZE JAY RICKETTS ED SUMNER ROB SUMNER KEN JONES DAVID GODFREY RICHARD BRAY STEVE VAUGHN BONNIE SELLERS 19 20 21 22 23 24 25 PAGE 2 ,: .... PAGE 3 rr------------------------------------, PRO C E E DIN G S 2 VICE CHAIRMAN BLOUNT: We will spend a few moments 3 talking about procedures for the closure of our work, and 4 then we will turn it over to Canter for some substantive 5 dialogue on the language of the revised draft, and after that 6 Mel will discuss a proposed revision of the freeport language, 7 and we will do whatever pleases the body after that point. 8 Does everyone have a copy of -- I guess it would be 9 the two working tools we'll have today are computer coded 10 LC 5 4144 with a note of 7/28/80 at the top of it, and the stricken through and underlined version is LC 5 4145. Is that correct? MR. BROWN: Yes, sir, and I do have extra copies of both of them on the way down here. VICE CHAIRMAN BLOUNT: I was about to ask, how many people do not have those two documents? (A show of hands.) 18 VICE CHAIRMAN BLOUNT: Okay. We will hold up with 19 our work until we get those, and I guess they're on the way. 20 Let me propose something in the area of process 21 regarding the remainder of our work. 22 It seems to me if we have a productive session 23 today we can possibly work our way through the revision and 24 provide the staff with some concluding assignments, the hope 25 being that if we can get through with our work today we PAGE 4 won't need another meeting, we can rely upon them to pull 2 together the final proposed document and circulate it to all 3 of us for review and comment, and if at that point there is no 4 need for reconvening we will just forward the work product 5 to the chairman of the full committee where it must go for 6 final action in any case, and just await further instructions 7 from the full committee regarding any additional work of our 8 committee. 9 Is there any reaction to that, or any need to 10 modify that at all? I guess we should accommodate my good friend and ask that first the committee members sitting around the table -- well, those sitting around this table first identify themselves, starting with Dr. o'Kelley , and then those around the outside. DR. o'KELLEY: George O'Kelley. MR. KANE: David Kane. 18 MR. DAVIS: Jim Davis. 19 MR. HENRY: Mike Henry. 20 MR. HILL: Melvin Hill. 21 VICE CHAIRMAN BLOUNT: I'm Larry Blount, and Canter 22 is right here. 23 MR. KANE: Abit Massey is sitting right here. 24 MR. NEWMAN: Jim Newman. 25 MR. KITTRELL: Jim Kittrell. PAGE 5 MR. SWAYZE: Clint Swayze. 2 MR. RICKETTS: Jay Ricketts. 3 MR. SUMNER: Ed Smnner. 4 MR. JONES: Ken Jones. 5 MR. SUMNER: Rob Sumner. 6 MR. GODFREY: David Godfrey. 7 MR. BRAY: Richard Bray. 8 MR. VAUGHN: Steve Vaughn. 9 MS. SELLERS: Bonnie Sellers. 10 ~ z~ 11 l- l..ol..<.. 12 ~ ~F~14 ! I- '" :r 15 ~ ~ ll< ::> 16 ~... az 17 : VICE CHAIRMAN BLOUNT: Any other procedural or detail matters that we need to take up while we're waiting on those copies, or did they arrive? MR. BROWN: They haven't yet. They should be here any moment, VICE CHAIRMAN BLOUNT: Any other announcements or suggestions regarding our work this morning that we can take care of while those are coming? 18 I hate to get you all geared up then put you on 19 hold, but if we could go off record until those documents get 20 here I think that would be the best thing to do. 21 (A brief recess,) 22 VICE CHAIRMAN BLOUNT: I guess we are about ready to 23 get started. 24 I'll turn it over to Canter at this time. 25 MR. BROWN: Thank you, Mr, Chairman, I appreciate PAGE 6 that. 2 I just have had a chance to talk with Chairman 3 Castleberry on the phone, and he asked me to please extend 4 to you his apologies for not being here; he had some surgery 5 on Tuesday and he's still in the hospital although he's doing 6 very well, and he did ask me as we go through this to 7 mention some of his feelings on various issues to you, and 8 just as Chairman Blount said a little while ago he feels like 9 with any luck the subcommittee ought to be able to tentatively 10 wrap up its recommendations today, although he certainly would leave it to the subcommittee as to whether they felt another meeting was in order. If I could, the first thing I would like to do -- does everybody now have a copy of this LC 5 41457 This is the same draft that we discussed at the last meeting, and we do have some changes that we want to recommend to you for your consideration, and there are a number of issues which 18 were raised at the last meeting to which I think you'll want 19 to address yourselves today. 20 The first thing I'd like to do, if you would turn 21 to page 2, lines 19 through 25 -- this is as we discussed at 22 the last meeting only one sentence of five lines, this has got to be the most complicated and confusing provision in the 24 whole constitution. 25 Myself, looking at the language, I recommended to PAGE 7 you last time -- I have decided quite honestly I'm not sure 2 what my language recommends any more than I know what the old 3 language meant. and I would like to recommend for your 4 consideration today that that one sefttence which is from 5 lines 20 through 25 be put in your draft exactly as they now 6 appear in the constitution. 7 Believe me, it hurts me to make that recommendation, 8 but I'm afraid that because of the complexity of interpreta- 9 tion of this provision that any language you could recommend 10 after only a short amount of time you've had to look into it Czl 11 ...Ioa-: Go may just contain. may be the precursor of just tremendous ~ 12 ~ amounts of litigation in the future, and there is some case ~F~ law now on the meaning of this, and I think that you would ! 14 I- just be well advised not to take my first recommendation, but ':r":: 15 ~ just leave that language, that one sentence exactly as it now Ca:l ;;;) 16 .~.. appears in the constitution . Q Z 17 ~ If you did that, the language would be the same is 18 it is at present, except for one change that I'll explain to 19 you. 20 What I would recommend is that the new language read 21 all taxes shall be levied and collected under general laws, 22 and all taxation shall be uniform upon the same class of 23 subjects within the territorial limits of the authority 24 levying the tax. 25 The only change that would make from the existing PAGE 8 law would be to delete the words "and for public purposes 2 only." 3 I don't feel you need the language "for public 4 purposes because Section II of this same article provides that 5 taxes have to be levied for public purposes. 6 The subcommittee that is considering Section II has 7 tentatively decided however to change that somewhat to specify 8 that taxes are to be levied for the purposes provided for by 9 law, and I think that by leaving this language in you would be 10 expressly limiting theoretically the recommendation that the @;;11 "z ~ ..'o".... other subcommittee has made, and I think its appearance here is only redundant of what's already in Section II, and I don't feel like you would be harming the provision to delete that. 14 .~.. Mr. Chairman, that would be the first thing that I ':"c 15 ol) would like for the subcommittee to consider if they would, "'";;;) 16 ~... and I would be delighted to answer any questions on that . Q Z 17 :: VICE CHAIRMAN BLOUNT: Dr. O'Kelley? 18 DR. o'KELLEY: Canter, in simple lay language that 19 I may understand, this Pandora's box of litigation that you 20 referred to and is continually referred to, what is it? 21 MR. BROWN: The problem stems from the qu.stion of 22 -- well, the most confusing problem is on line 21 the words 23 llunder general laws," what that means. 24 Nobody really knows, to be honest with you, what that 25 means. The court, the Supreme Court on at leasttwo occasions PAGE 9 in the late 1800's interpreted that language to mean not a 2 general law as we normally speak of it which is a law of 3 statewide effect, but to mean a law that is applicable 4 generally within the jurisdiction levying the tax. 5 Now, it was upon that basis that municipalities were 6 authorized to grant, to levy taxes pursuant to their charters, 7 which was a very important thing particularly for munici- 8 pa]ties as you might suspect. 9 On other occasions, however, the court has 10 interpreted that to mean that unless the tax itself was cz.:l 11 ;: oa.Q.:.:. ~ 12 ~ ~ri ! 14 lo:nr 15 .:I ac.:::l :;) 16 .~.. o Z 16 ~... intersted in looking at that problem and the possibility of Q Z 16 ~ system. lz:l 17 ~ VICE CHAIRMAN BLOUNT: I think the essence of Dr. 18 O'Kelley's concern is, not to speak for him, might be that 19 the only way to get a separate classification of tangible 20 property is by constitutional amendment. 21 MR. BROWN: That's correct. 22 VICE CHAIRMAN BLOUNT: And he may be suggesting a 23 case, or at least some consideration of creating in the 24 language that we presently are considering the constitutional 25 authority for General Assembly classification. PAGE 15 DR. O'KELLEY: That's all I want. 2 VICE CHAIRMAN BLOUNT: And I gues s what I need to 3 get is some guidance from the subcommittee members or others 4 in the house as to where we go from here. 5 It seems to me we might have some dialogue on it 6 today or make it part of our report that this is a serious 7 concern and it's something that may want the full committee's 8 attention, but I'll be guided by the body. 9 First, Dr. O'Kelley. 10 ~ CzI 11 I- o.'l".L. 12 ~ ~r~ ! 14 I- ':z": 15 .:I CI '":::> 16 .~.. Q Z 17 : DR. O'KELLEY: Larry, some states have approached it by classifying the kinds of property, residential, business, whatnot. Others approach it by land use or property use valuation, use values as to how you arrive at the value to make your assessment, but in Georgia you can do neither. Farm property, residential property, business property, whatnot, except utilities are governed by the same procedures . VICE CHAIRMAN BLOUNT: Mr. Massey? 18 MR. MASSEY: I think we might pursue this point with 19 Jim. Canter spoke to it, it apparently says one class of 20 tangible property and one or more classes of intangible, 21 and then the mobile homes and utilities are exceptions to 22 the one class, so maybe that language could be eliminated. 23 In other words, saying one or more classes of tangible 24 property. 25 I think we ought to follow that down the line a PAGE 16 little bit. 2 MR. BROWN: In terms of permitting what it's my 3 understanding Dr. O'Kelley would like to permit, what you 4 would want to do is simply delete paragraphs (b)(l) and 5 (b)(2). I think that would authorize everything you want 6 authorized. 7 VICE CHAIRMAN BLOUNT: I think that is the essence 8 of it. Is the subcommittee prepared or even inclined to -- 9 I think we ought to have some dialogue on it. I think this 10 CzI 11 i= ...oQ: a. Gl"~~i ~J~ 14 !... V:rI 15 ..:.,l Q: :) 16 ~.oz.. 17 ~ day we ought to do something to at least attempt or begin resolution of this, even if it takes the form of nothing more than a recommendation to the full committee. Other thoughts or comments regarding this? MR. BROWN: Mr. Chairman, I would point out to you, and I hesitate to appear to enter this in a partisan way, but this is not by any means a new issue; it's an issue that's been debated in the General Assembly every year since I've 18 been in the state of Georgia. It is an issue which was 19 debated for two and a half years by the Tax Reform Commission, 20 and in every instance a classification scheme has been 21 defeated. 22 It was defeated most recently in the House Ways and 23 Means Committee this past year. It is an extremely 24 controversial subject and, as I say, it's one that has been 25 considered and defeated time and again in the General Assembly 1 ! PAGE 17 and the Tax Reform Commission. 2 I think you want to be extremely cautious in 3 proceeding as a subcommittee to make a change of that nature. 4 VICE CHAIRMAN BLOUNT: I have referred to my notes 5 of our July 18 meeting where we had a good deal of discussion 6 on this subject and several questions and answers regarding 7 it, and the note was made then at that point that although 8 intended ultimately the Tax Reform Commission did not 9 recommend classification and the matter is before us again 10 this morning, and I don't know that rehashing the issue here Czl .. 11 ... will get us much further, but if there is some need for 'o.".. ~ 12 ~ further discussion from members of the committee at this time (@!)r~ we of course will be guided by the pleasure of the body on it. ! 14 I think the report should note that this was a 1:z;:; 15 01) matter that commanded a good deal of the subcommittee's Cl '"::> 16 .~.. attention, and I think it is one of those notes that we should Czl 17 : make to the full committee to provide it guidance regarding 18 the resolution of all of the Article VII work. 19 I'm at a loss for any feel of what we can do further 20 this morning other than be guided by Dr. O'Kelley's suggestion 21 that we give the matter some thought. 22 MR. DAVIS: I want to go on record and state without 23 question really why I brought this up. My interest in talking 24 about revision that deals with one class of tangible property 25 was strictly in reference to the difference in my opinion PAGE 18 between real property and tangible personal property. I was 2 not interested in pursuing a preferential assessment system, 3 i.e., classification system. 4 The difference in what I'm talking about and 5 classification is that classification deals with breaking 6 down real property within different classes for different 7 assessment percentages. I'm not proposing that at all, but 8 I do think from an administrative and a practical standpoint 9 at the county level or the city level there is a difference 10 in the method of assessment of real and personal property. IzII 11 I- Now, continually I see court cases where we're '0.."... 12 '" running into problems because of the different methods of @ r l assessment of real and personal, and year after year I'm 14 ~ involved in litigation in my county right now, going to be, IIII :I: 15 .:l and that's going to be one of the issues, but the method of III .'":) 16 zCD assessment is not the same, it's not the same because you az 17 '"CD cannot in my opinion treat real estate and personal property 18 exactly the same because they're not the same type of - 19 property. 20 Therefore, what I was simply trying to bring before 21 the subcommittee and possibly propose was to show personal 22 property not necessarily as a separate class of property, but 23 \ treat it just as if we have treated motor vehicles, mobile 24 homes, et cetera. In other words, don't open up the thing 2S about the uniformity of taxation. I think it's a tremendous PAGE 19 responsibility to throw on the General Assembly every year to 2 allow them to have the authority reclassify or classify 3 property depending on their particular feelings that particula' 4 year. I just don't think personally they ought to have that 5 authority with no limitations, but I would like to see some 6 effort given towards looking at personal property if not as 7 a separate class as an exception, because it's just like motor 8 vehicles and mobile homes, the other exceptions listed. 9 VICE CHAIRMAN BLOUNT: Okay. Duly noted. 10 MR. KANE: Are you proposing then that the committee 11 CzI I- consider the issue of separate classification of personal ~ .''o"".. 12 ~ property and act on the issue? ~r~ MR. DAVIS: I don't know. I think the way this is ! 14 worded -- obviously grammatics makes a lot of difference -- to l:;z;: 15 ~ say a separate class of property -- "'"::> 16 .~.. MR. KANE: What 1 1m talking about, do you want the Q Z 17 : subcommittee to consider the issue and make a recommendation 18 on it? 19 MR. DAVIS: Of course I can't speak for the whole 20 committee, but I did bring it up. 21 MR. KANE: You had that notion to do that? 22 MR. DAVIS: It had to be considered; I throw it out n for discussion. 24 VICE CHAIRMAN BLOUNT: I think now is the time, and 25 if I can attempt to restate your proposal for consideration PAGE 20 you would like constitutional, express constitutional 2 language regarding personal property -- 3 MR. DAVIS: Tangible personal. 4 VICE CHAIRMAN BLOUNT: Tangible personal property 5 as a permissible class of property. 6 MR. DAVIS: In other words, the present language. 7 Paragraph II says. subject to conditions and limitations 8 specified by law each of the following types of property may 9 be classified as a separate class for ad valorem and property 10 CzI 11 I- o0....<.. @;I 14 ~ IVI " 16 ~... III Z 16 .~.. is tangible . Q Z 17 : VICE CHAIRMAN BLOUNT: Yes, we could save a word 18 there, real property and then tangible personal property. and 19 then one or more classes of intangible property, and I guess 20 you're suggesting another little bit of language in saying 21 unless otherwise provided the rates for the two will be the 22 same. 23 MR. BROWN: What I had suggested was, I don't belieVE 24 Jim had been intending at all to get into different rates of 25 taxation, and what I'm suggesting is a sentence just added PAGE 27 - to the same subparagraph I which would read tangible personal 2 property shall be taxed at the same basis of value and rate 3 as is real property. 4 DR. O'KELLEY: What is that now? 5 MR. BROWN: Tangible personal property shall be taxed 6 at the same basis of value -- that would be the same assess- 7 ment level -- and rate as is real property, which is presently 8 the case. 9 DR. O'KELLEY: That's what is says now, isn't it? 10 MR. BROWN: Now he is required by the administrative 11 "z j::: '0."".". procedures in reviewing, assessing and reviewing the assess- 12 '" ments for tangible property is mandated to be the same as for real property, this would permit different approaches to 9 r l! 14 ... assessment and review, particularly review of assessments, ':z": 15 ~ discrimination between real property and personal property, ":'>" 16 lZ.D.. but it wouldn't permit it to be taxed at a different basis Q Z 17 '"lD of value or rate, but it would still be taxed at forty percent 18 and it would still be taxed at the same mill rate as would be 19 real property. 20 MR. HENRY: You would then be able to submit under 21 this two separate digests to the commissioner if that was 22 MR. BROWN: It would be according to how it was 23 established by law. 24 MR. DAVIS: You can call it a separate digest, 25 they're currently printed out separately right now. You could PAGE 28 have one stacked up physically. and as a rule at least from 2 my county there's a separate book of personal property. Now 3 whether or not this provides for a separate digest I don't 4 know. 5 MR. HENRY: It would seem to me when you sent your 6 digest to the Commissioner you would have to send it as one 7 digest of intangible property. 8 MR. BROWN: Under present law as Jim is pointing 9 out. under present law you are required to have one digest. 10 and as a physical matter you've got two different things already. MR. HENRY: Right . MR. BROWN: If the law was amended to allow you to call one a separate digest. you could I think except it's going to be taxed the same way. If it wasn't amended it would still all be called one even though it continued to be two. It would just be according to however the law would read. 18 MR. DAVIS: The way it's set up it has to be a 19 differentiation between the two because you have R codes and 20 P codes; R codes would be real estate and P codes for your 21 P-l, 2 and 3 for your personal codes on the way it's listed 22 by law now or by regulation of the Revenue Commissioner it 23 has to be separate to identify them for freeport purposes 24 and things like that. 25 I certainly wouldn't want this to require, youknow, PAGE 29 a bureaucratic thing where people would begin to have to bring 2 two separate digests up here. That's not my intent at all. 3 Do you think this would require that? 4 MR. BROWN: No. it would be however it was provided 5 for by law. 6 MR. HENRY: My thought was that it would codify what 7 is presently going on. In other words, it's a fiction to say 8 that you have -- that the Revenue Commissioner considers only 9 one digest, isn't it? 10 MR. BROWN: Well, it's not all intermingled in the CzI 11 i= 'o.Q"... same book, and increasingly you're not even talking about @;I books, you're talking about computer tapes, so you know, you really have to get beyond the old terminology in terms of ! 14 ~ already '<"l % 15 ~ MR. DAVIS: What it really comes down to, what they CI '":;) 16 ~... consider the digest for approval purposes is purely the real Q Z ..16 'z" Q trying to address. z ~ 17 '" MR. KANE: The base upon which the rate is applied, 18 how is that determined? By applying the factor; is that 19 right? 20 MR. BROWN: It's determined through the use of what'l 21 called a sales ratio study. What I'm saying is -- 22 MR. KANE: You've got certain elements which go into 23 the equation that finally comes up with your tax due, and 24 MR. BROWN: The total value of the digest. You 25 don'tuse the forty percent valuation necessarily to determine PAGE 32 the mill rate, you use the total dollar amount of the digest. 2 MR. KANE: You use the same rate, the millage rate. 3 The forty percent was 4 MR. BROWN: The question is in equalization of terms 5 of assessment between identifiable classes which you cannot do 6 now, it is required to that any factor -- say you've got, oh, 7 homes assessed at forty percent, you've got commercial 8 property assessed at 35, farms at thirty, and say it's roughly 9 divided a third, a third, a third in the county. At that point 10 a five percent factor is going to be placed on the digest CzI 11 j: 'o..".... because the overall level of assessment is thirty-five percent ~~\ri~ to bring it up to forty. Obviously your homeowners at that 12 point are being penalized because they're going to pay a 45 ! 14 percent level of assessment, the property that was assessed ~ '" :I: 15 o!) at thirty is still getting the advantage because they're at Cl '";;;) 16 ~... 35, and you've really only equalized one class and that was Q 17 gZ; the commercial property, they're the only ones at forty. 18 What he's saying is that as a practical matter you 19 can already identify the fact that real property and personal 20 property discriminate against each other in the factoring 21 process, and they should be handled separately, but they ought 22 to be handled so that both are brought to the forty percent 23 level rather than it being just a combination of the two being 24 brought up to forty percent. 25 VICE CHAIRMAN BLOUNT: So in your hypothetical you PAGE 33 factor the farm at ten, factor the commercial and personal at 2 five, and you leave the real where it was originally? 3 MR. BROWN: Under the constitutional amendment that' 4 on the ballot this year you would be able to do that, that's 5 right. 6 Under his proposal all you would be able to do is 7 identify personal property and real property separately, and 8 then factor them separately to both be arrived, or bring both 9 to forty percent. That's what his proposal is. 10 MR. HENRY: To perhaps take care of Dr. O'Kelley's 11 "~z problem, if it does at all, you may want to incorporate that e -~.o... . 12 ~amendment that is on the ballot in here which will allow the COIIIlIIis sioner to do what you just said as far as the three 14 ~classes of real property, where you would factor a farm up ten '" :r 15 oll and residential up five and something else five. That would "Ill: :;) 16 ~ probably be the least intrusive way to get at this problem Q 17 z : rather than allowing the General Assemly to come up here every 18 year and determine that farm property needs to be reassessed 19 or something like that. 20 MR. BROWN: I think probably that had been brought 21 up at one of the earlier meetings, I think Mr. Castleberry was 22 talking about it, I think his idea was to wait andsee if 23 that's approved, and if it is he'd just as soon that it be 24 incorporated in the draft, but I don't think he really wanted 25 to presuppose what the voters wanted to do about that. PAGE 34 VICE CHAIRMAN BLOUNT: I think that's a burden that 2 we have labored under throughout our work here, the reality 3 being that whatever we do here is going to have pass a good 4 deal of political scrutiny. If we want to be successful. the 5 Chairman of the committee has suggested that we kind of play 6 a wait and see game on this one. That doesn't please as least 7 two members of the subcommittee that I can identify, but it's 8 probably not necessary. 9 I invite some guidance from the body. My sugges- 10 tion might be to note the vote and let's proceed. If there is 11 "~ further real need for dialogue .'o.".... ~ 12 ~ MR. MASSEY: I think that's the thing to do . ~ __ ~ Something you s aid earlier ab out trying to finish today. but ! 14 in view of both of these comments and the situation on the ... . ! 14 I'" :I: 15 ~ "IX ;;;) 16 .~.. az 17 : from the language in the draft I passed out. VICE CHAIRMAN BLOUNT: Any reaction? I think Canter's recollection is correct, and if that is the will of the body by consensus we will say so be it. Okay. MR. BROWN: Mr. Chairman, I think the next general matter, and there are several sub-issues involved with this, 18 relates to the method of handling exemptions from property 19 taxation, ad valorem taxation. 20 Your subcommittee decided they wanted to have a 21 period between the last meeting and this meeting to assure 22 themselves as to the general approach, which as you recall 23 was to take the granting of property tax exemptions out of 24 the constitution but subject to limitations contained in the 25 constitution require that it be approved by referendum, which PAGE 38 essentially was writing in the statute the same process as is 2 now required, it just simply wouldn't be in the constitution. 3 I had suggested to you that that procedure would as 4 a practical matter in drafting the constitutional limits save 5 the constitution from being inundated with great deals of 6 administrative and procedural details which would be better 7 handled by statute, and that although theoretically you could 8 keep them in the constitution and not do that, as a practical 9 matter the members of the General Assembly just don't like 10 that, they like it all in there and they want to grant it. Czl 11 j:: Mr. Castleberry has asked me to tell you two things 'o..".... ~ 12 ~ in that regard. The first is that he personally approves of ~~r~~ handling the granting of exemptions in the manner that has 14 been suggested to you in this draft. He does feel as a ~ ':<"rl 15 oll practical matter it will facilitate the consideration and Cl '";;;) 16 ~ handling of property tax ~xemptions and will particularly ~ Z 16 .lzD.. MR. HENRY: Do you think Chairman Castleberry would 0z 17 'lD" think that the Governor should not have the right to veto 18 even the local homestead exemptions? In other words, he feels 19 by policy neither one would be subject, but there would be the 20 option. the committee would have the option of saying as to a 21 general law. exemption the Governor could not veto, but as to a 22 local law option he could? 23 MR. BROWN: That would certainly be within the 24 prerogative of the subcommittee. 25 I do believe, although I didn't ask him that PAGE 43 question specifically, I do believe his comment to me about 2 the veto related to any law proposing a property tax exemption 3 but certainly you could discriminate if the subcommittee so 4 desires. That would not change the current method of doing 5 this; constitutional amendments, local or general, are not now 6 subject to the Governor's veto, so it would not be taking any 7 power away from the Governor that he presently has. 8 MR. DAVIS: Don prefers it that way? Is that what 9 you're saying? The veto would not be permissible on this? 10 MR. BROWN: Yes. CzI 11 j: ..'o".... MR. KANE: Canter, I believe we probably discussed ~ 12 ~ it, I want you to confirm it, that your feeling is that a ~F~ legislator who wanted to have an exemption added would most ! 14 ... likely go through the statutory route rather thaIl the '" :I: 15 ~ constitutional amendment route because he -- CI '";;;) 16 .~.. MR. BROWN: I believe they would . zQ 17 ~ MR. KANE: Because the process is exac~ly the same? 18 MR. BROWN: As we discussed before, you know, you 19 cannot tell what any individual member of the General Assembly 20 is doing, and I do not believe there's any way you can 21 prohibit or limit him in the constitution from proposing 22 another amendment. 23 I do think that at least as long as the present 24 leadership of the Senate and House is there that certainly if 25 this language was adopted they wo~ encourage as strongly as PAGE 44 they could that this procedure be followed. 2 I think once it had been tried and proved workable 3 that the tendency would be just to utilize this. 4 MR. MASSEY: The referendum I assume would be in 5 the-- 6 MR. BROWN: That is a change that this does not 7 require that the referendum be held at the general election 8 held every two years. Most states don't even require their 9 constitutional amendments be voted on that way. This would 10 permit a special referendum. I had suggested to you that I personally felt that would make it more difficult to get an amendment approved by the voters because it would tend to isolate that amendment and draw more attention to it. MR. MASSEY: Each act would specify when the referendum would be? Is that the way it would be? MR. BROWN: It's the process as I know you know, 18 and most of the other members of the subcommittee when we 19 already handle numerous matters by local law subject to 20 referendum there's stock language that has already been used 21 and it's been tested for years to establish the mechanism for 22 the referendum. 23 MR. DAVIS: When you specify in 2 about the local 24 amendments, jurisdictions may be granted by local law, you're 25 not requiring a two-thirds vote? PAGE 45 MR. BROWN: Right. I'll explain. 2 VICE CHAIRMAN BLOUNT: Let's hold that one, Jim, 3 if you will, until we 4 MR. DAVIS: Somebody was talking about local. I 5 thought we were on that. 6 VICE CHAIRMAN BLOUNT: Okay, Let's see if we can't 7 get beyond (a) (1). Is there any problem with that? 8 All right. Let's assume that one is all right and 9 go on. 10 ;' MR, BROWN: If we could, you might want to consider 1:1 11 Z ...~ooc: Q. at that point the question of the veto, ~ 12 ~ VICE CHAIRMAN BLOUNT: I guess we would have to to ~Fi ! 14 I'<"l :J: 15 ~ 1o:c1: :;) 16 .~.. get beyond it. Is there any problem with leaving it like theway it is regarding the Governor's veto? I won't ask if there's anybody present opposed to Cl Z 17 :<:li giving the Governor more power, we won't phrase it that way, 18 We'll just say is there any need to consider a modification 19 of the present situation? 20 Okay. 21 MR, HENRY: Professor Blount, did this committee want 22 to go ahead and approve as you go along the recommendations? 23 VICE CHAIRMAN BLOUNT: I guess this is all very 24 tentative. We may get to something below there that requires 25 us to undo all this, but I'did want to kind of keep it step by PAGE 46 step as we go. 2 MR. HILL: Larry. the present way we operate pro- 3 hibits the Governor from vetoing. That's that you intend to 4 incorporate in here? That's what you meant? 5 VICE CHAIRMAN BLOUNT: That's right. 6 Jim. you had some question? 7 MR. BROWN: The question of the two-thirds vote. 8 MR. DAVIS: Was that required for a local -- 9 MR. BROWN: I didn't do that in this draft for two 10 reasons. 1.7 Z 11 ;: a: .oa... @;i One, by permitting it to be all done by local law you're adding a requirement, and that is that the proposed amendment be advertised prior to its introduction in the ! 14 General Assembly. That is a requirement generally applicable I:'"r 15 ,l) to local legislation. The requirement is that it be published 1a.7: ::J 16 ~... once a week for three consecutive weeks within sixty days Q Z 17 : prior to the date of introduction. That's just done with all 18 local legislation now other than local constitutional 19 amendments. 20 I believe that unless you change the language that I 21 suggested that that advertising requirement would be applicabll 22 to this. 23 On the other hand. local constitutional amendments 24 and local laws are handled in the General Assembly different 25 from other types of legislation; it's handled by a rule known PAGE 47 as the local courtesy rule, that is that if a local delegation 2 agrees to a bill affecting that local delegation almost 3 without exception the General Assembly just simply approveS 4 it; it's handled on a special calendar at special times, and 5 it just goes through. 6 Now, there tends to be two exceptions to that rule 7 at times. One is the question of annexation at times, 8 particularly if related to the City of Atlanta; the other is 9 alcoholic beverage legislation. But as far as I know-all, or 10 almost all other forms of legislation on a local basis are 11 "z ~ handled by local courtesy. '..o".... @;I I'm not aware of any delegation rule that requires a two-thirds approval of the delegation be -- Now, if the ! 14 majority plus one of the local delegation approves it, it's 1;; :z: 15 01) going to pass, and I just felt like the two-thirds vote ":':"> 16 ~... requirement was really superfluous because of that, but as I a Z 17 :; say, even though you're eliminating that you are adding one 18 relatively minor additional requirement which is the require- 19 ment of advertising. 20 VICE CHAIRMAN BLOUNT: Any other - -? 21 MR. HENRY: I would like to bring up one thing, 22 it's just a concern I've beard expressed in my work on local 23 constitutional amendments, and especially with respect to 24 the property tax exemptions, it's that if you make the 25 procedure easier which I think you're doing that it's easy PAGE 48 for the local delegation to grant the homestead exemption, 2 and I certainly don't want to speak for the county 3 commissioners, but then the county commissioners have to live 4 with that erosion of their tax base and have to raise taxes 5 in other ways to get the same amotmt of money, and you're 6 really putting the burden at the local level, and the 7 legislators look good because they have granted this exemption 8 and then the local government people have to come back and 9 raise taxes in order to take ~- to make up the loss of 10 revenue that they have realized from that exemption, CzJ 11 I- .'o" 16 .'z".. educational funding formula. zCl 17 ''"" If you tend to have local exemptions since we key 18 the participation to the mill rate and certain other factors ,. 19 you tend to be rewarded for giving yourself exemptions. " 20 I honestly don't know how you can handle that as part of this. 21 VICE CHAIRMAN BLOUNT: Anything else? 22 MR. DAVIS: I really wonder why Mike considers this 23 language to make it easier than currently. You know, just 24 personally it seems to me the same procedure is really to be 25 carried out as is currently, it's just it would be a law PAGE 50 you would be voting on as opposed to a constitutional 2 amendment. Is that difference alone why you think it's 3 easier? 4 MR. HENRY: It does go through by local couresty, 5 t understand you still require two-thirds vote on it. 6 MR. BROWN: That vote is automatic. 7 VICE CHAIRMAN BLOUNT: But it is required. 8 MR. BlOWN: Yes, it is, as with any constitutional 9 amendment. 10 MR. DAVIS: What I said, as long as they're going to practice the focal courtesy rule it's going to be easy any way you do it unless the Governor can veto it, or the only other option I can see is to increase the approval requirement from a majority of the electorate to something else. You know, fifty-point-one-percent of the peo~le or forty-nine-point- nine percent of the electorate can not want it but they get it anyway when you talk about a majority of the people. 18 MR. HENRY: Who is going to object to having their 19 taxes lowered, though? 20 MR. DAVIS: The people they're going to be shifted 21 to, like you said earlier. An exemption is not a reduction, 22 it's a shift. All of them are. 23 DR, o'KELLEY: And the governing bodies would have 24 to raise it, the money to support the budget, and that means 25 it's put on someone else. -~--------------- PAGE 51 MR. DAVIS: Like I said, it~ a shift. 2 He asked who would vote against it. Depending on 3 how it's worded, most peop!e would vote against it if you 4 were talking about an exemption, but somewhere along the line 5 this requires education which doesn't happen very often to 4n 6 adequate level locally, and you're voting on exemptions, and 7 really the majority of the populace that are voting on it are 8 probably going to be the ones that's getting the shift 9 because most exemptions are through a minority of the 10 population unless it's a general homestead. "z 11 ~ 'o..".... MR. BROWN: Again I think you have to look at the @;I context in which you discussed it. Is there anything you can do in the constitution to prohibit it from being done in ! 14 .... exactly the way it's done now, and there isnlt. There is no ':"r 15 .:l ":'") way. 16 .~.. az VICE CHAIRMAN BLOUNT: I guess the only thing -- 17 ::i Go ahead. 18 MR. RICKETTS: We appreciate your concern, Mike. 19 It's true local governments aren't wild about exemptions, but 20 comparing what is being dlscussed to what we have now in terms 21 of practical considerations there really is no difference. 22 I mean it's the same process. 23 VICE CHAIRMAN BLOUNT: It would be your opinion that 24 the presence or absence of a General Assembly requirement 25 doesn't make much difference because if it's required it's PAGE 52 going to be automatic? 2 MR. RICKETTS: I'm saying as Ed Sumner pointed out 3 you could have a requirement for a unanimous vote under local 4 courtesy rules and, you know, if you have ever watched that 5 proces. up there the vote is made up -- you know, it's 123 6 to 14. 7 MR. BROWN: I think there is a small advantage to you 8 local officials, county officials in the new process in that 9 by requiring it to be advertised they're at least on notice 10 that it's the intention of the local delegation to do that. 11 'z" l- There is no requirement now. ...oe< 0- @ ; j In fact, I have known of instances wh~re legislators for one reason or another preferred the local officials not ! 14 to know until it already happened. I'm sure all of those. I- '" :J: 15 people are not now in the General Assembly, but -- 'e"< :> 16 ~... VICE CHAIRMAN BLOUNT: Yes? Q z 17 ~ MR. DAVIS: I would like to havesome reaction to 18 what I mentioned about changing it from just a majority of 19 the qualified voters. 20 MR. HILL: The only problem with imposing a higher 21 standard here than we already have, and that would be raising 22 the approval rate to say two-thirds of the people voting or 23 to allow the Governor to veto these is that if the General 24 Assembly has a harder time on this way they go back to local 25 amendments, and they're more or less locked in to what's here PAGE 53 to prevent them from -- you know. they may anyway even though 2 it's the same process. there's nothing to prevent them unless 3 we can in some way tackle that local amendment problem some 4 other way. but at least for now we have to assume that local 5 amendments are going to be allowed. so to impose any higher 6 standard here would just take you back to the local amendment 7 route. 8 MR. DAVIS: Even though the General Assembly members 9 would still have the authority at their level to provide their 10 voters this opportunity to grant themselves exemptions you 11 "z j: think they would balk at requiring the electorate themselves 'o.G".o. ( ~ 12 ~ a higher standard? ~ri14 ! I'" VICE CHAIRMAN BLOUNT: That's a good point. MR. HILL: They've still got the right to provide 15 :J: ~ for their people, you know, we're going to raise them from "'"::;) 16 ~... 2,000 to 12.000 for Bibb County. oz 17 : MR. DAVIS: Do you think they would balk in saying 18 but two-thirds of Bibb County voters have to want it. not 19 just 50.1 percent? 20 MR. BROWN: Very seldom in Georgia would you get a 21 turnout of fifty percent of the registered voters anyway, 22 and I think I can guarantee you that if the legislator is 23 faced with the almost near certainty that he's going to 24 propose something or a majority of those voting are going to 25 approve it, that only 49.8 percent turn out. he's going to PAGE 54 propose a local constitutional amendment, he just doesn't 2 need to go through the hassle. 3 We've already had the requirement of him having to 4 advertise to do this anyway, he's just going to say '~ell, 5 hell, it doesn't matter to me, I'm going to take the easy 6 way, I'm going to take the credit for that exemption, I'm 7 not going to let my opponent come back and say 'Well, you 8 got' to choose which way you did it,' II he's just going to take 9 advantage of it, so we'll have all this stuff put right back 10 Czl 11 i= @;;'o" 16 ~ Generally people who propose these amendments Qz 17 : consider themselves to be in line for a great deal of 18 popularity at home, and they're not going to make it any 19 tougher on themselves, I can promise you that. .1 20 Again, I defer to Jay Ricketts and Ed Sumner who 21 have had a lot of experience with this, but I think they 22 would agree with me. 23 MR. DAVIS; I agree with you too, but that was 24 one -- I just thought maybe there should be something that 25 makes it a little tougher. PAGE 55 MR.. BROWN: Again I think the way to handle it, I 2 think there's a lot of sentiment in the General Assembly for 3 a more coordinated approach to granting these exemptions, 4 but that is better addressed as a procedural matter of how 5 they are handled in the General Assembly and, you know, 6 you've always got this alternative in Georgia of local 7 amendment, and as long as you've got that any other process 8 you create in the constitution needs to be as streamlined as 9 possible while still providing the same safeguards. 10 VICE CHAIRMAN BLOUNT: Dave, did you --? CzI 11 j: ...oa: 0.. MR.. KANE: I have a fundamental question I hope is ~ 12 ~ not too fundamental, realizing we're drafting a ! constitution and not a binding indenture where we have to define terms @ ~r~14! precisely, but I know there has been some difficulty in ~ '" J: 15 ~ understanding or at least interpreting what a general law is Ca:I :::> 16 .~.. under Paragraph III of the present constitution. Is there oz 17 ::: any similar, or will there be any similar difficulty in 18 interpreting the term local law? 19 MR. BROWN: The constitution specifically addresses 20 itself to 21 MR.. KANE: Where is that, Canter? 22 MR. HILL: In Article XII establishing the heir- 23 archy. 24 MR.. KANE: Okay. 25 VICE CHAIRMAN BLOUNT: Anything else on this PAGE 56 subparagraph? 2 MR. BROWN: One of the practical effects of this 3 would be that the cost of the referendum would be shifted to 4 the local government rather than the state. 5 MR. HENRY: Because you're not having a local 6 constitutional amendment? 7 MR. BROWN: Not necessarily. I think that generally, 8 you know, there are a bunch of provisions like this all 9 through the constitution now changing the method of selection 10 of the school board, the number of people on the school board, changing a lot of things to do with the county commission. As a practical matter what they're trying to do now is to schedule it with another election that's already going to be held. MR. HENRY: I see. MR. BROWN: And, you know, they don't like to go home and be bawled out for causing a special election. This 18 would just permit some flexibility, if they want to handle it 19 in the primary they can; if they want to face the criticism 20 of having the expense of a special election they can, but it 21 gives them that flexibility rather than just requiring it 22 every two years in a general election, but there are a lot 23 of provisions already in the constitution that are the same 24 as that. 25 VICE CHAIRMAN BLOUNT: I think from our perspective PAGE 57 we're working with a trade-off. We're trying to do what we 2 can to buy our way out of this local amendment process, 3 youknow, and I think we can keep that in mind as we go. 4 Anything else on Subparagraph (2)? 5 All right. 6 MR. BROWN: Mr. Chairman, again on that (2), just 7 very briefly, you have the question of the Governor's veto. 8 Now, as I mentioned earlier it's my understanding that 9 Chairman Castleberry would prefer for the status of the 10 Governor's veto to remain the same as it presently is, which 11 "z l- would be that these laws so long as they're subject to the .oe...<.. ~ 12 ~ referendum requirement not be subject to the Governor's veto. ~F~! VICE CHAIRMAN BLOUNT: Any reaction to that? Is 14 there any need to change the present practice regarding it? l- on < J: 15 I think by consensus we will proceed. "e< ::> 16 .~.. MR. BROWN: Thank you, Mr. Chairman . Q Z < 17 ::; In Paragraph III here you will note that I have 18 specified that bills that are subject to referendum proposing 19 exemptions may originate in either the House or the Senate. 20 The reason for that again is to maintain the same posture as 21 is presently the case. 22 The constitution in Article III prohibits the 23 origination of bills relating to the raising of revenue or 24 making appropriations in the Senate, bills may not be 25 introduced there; however, proposed amendments to the PAGE 58 constitution may, so this language would just maintain the 2 present posture which is that these particular types of bills 3 could originate in either house. I think it's a safeguard in 4 terms of getting the proposal through the Senate and it's very 5 important. 6 VICE CHAIRMAN BLOUNT: Any reaction? 7 Let's go on. 8 MR. BROWN: Okay. We have a problem -- Georgia has 9 traditionally not done a very good job of codifying its laws. '.,' 10 For the last 27 years, for instance, we haven't had a re- zCl 11 I- .'l0>"... ~r~ @~ 12 '" 14 ! lV> : Cl :':"> 16 zlD Q z : 15 ~ with that addition? Cl :':"> 16 .~.. Okay . Q Z 17 ::i MR. BROWN: Okay. All of this language that you see 18 struck now on pages 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 are 19 all exemptions that will be grandfathered in on our last 20 paragraph and they will no longer be necessary in the 21 constitution. 22 Now, on page 16 the new Paragraph III there attemptec 23 to deal 24 VICE CHAIRMAN BLOUNT: Canter, let me stop you for a 25 moment. There may have been a couple of people as I recall PAGE 60 who might have had some special interest with respect to some 2 of these in there -- maybe not. I might be thinking about 3 Massey's concern about farm products and -- 4 MR. MASSEY: This may be a good point to mention 5 that. You may have some idea my concern was about the type 6 of-- 7 MR. BROWN: It would be handled the same. 8 MR. MASSEY: I want to be sure that this Paragraph 9 V, you know, doesn't lock it in the '76 way. One way might be 10 since you're going to mention homestead exemptions might be to 11 Czl i= say and farm products in that provision or something, but I .'oQ"... @;I want to be sure we get some language in that will relate back to the '45 constitution and not the '76 constitution, which I ! 14 think is very important. I- UI 16 .~.. of that provision, and the official version I think does not cz 17 ::i have that comma in it in the Georgia laws. 18 MR. MASSEY: The laws don't, the '45 constitution 19 don't, but the '76 constitution does, and I want to be sure 20 MR. BROWN: I think if you'll adopt this the way 21 the revenue code is written now, if that's a problem that 22 can be technically revised. I think you're taken care of in 23 the revenue code. We're automatically -- 24 MR. MASSEY: If that could be done -- it may never 25 arise, but if that could be done and the records of the PAGE 62 commission or something would show that that was the intent 2 I think that's 3 VICE CHAIRMAN BLOUNT: If that pleases you, Abit, 4 we will go ahead. 5 MR. BROWN: As I say, Mr. Chairman, Chairman 6 Castleberry would like to recommend to you that Paragraph III 7 be deleted with the understanding that all of these exemptions 8 would be covered in the grandfather clause, and that there 9 simply would be no section on mandated exemptions, state 10 taxation. CzI 11 j: .'o.."... e);~j VICE CHAIRMAN BLOUNT: Reaction to that? All right. So be it. MR. BROWN: Thank you, Mr, Chairman. 14 .~.. We're down now -- we're getting very close, we're '" :I: 15 .:I down to freeport. CI '":::l 16 .~.. Earlier Mel distributed to you a one-page legal Q Z 17 : size draft, a proposed revision of the freeport law. At your 18 last meeting you had instructed your staff and I to get 19 together with representatives of the Georgia Municipal 20 Association and the Association of County Commissioners of 21 Georgia to study the possibility of eliminating language which 22 could responsibly be handled by statute while maintaining the 23 important guarantees that are now in the freeport law. 24 We did hold a meeting and we did review the 25 provision. I think it was the general consensus at that PAGE 63 meeting that there were three fundamental things contained in 2 the present freeport amendment which for one reason or another 3 should be maintained. 4 One was the general grant of authority to local 5 governments to grant these exemptions rather than permitting 6 them to be granted by law. That is very important to the 7 local governments. 8 The second important principle was that the 9 exemptions be granted by the local officials, but only subject 10 to a referendum. 1.7 Z 11 l- The third was the present protection for those ol..l..<.. ~ 12 ~ industries who are granted exemptions, being that after an ~ri! exemption is approved a referendum cannot be held for five 14 years to repeal that exemption, and if it is repealed that l- ll> :z: 15 oll the repeal itself cannot take effect for an additional five 1.7 ll< ::l 16 .~.. years . Q Z 17 ::i What we have done in the draft which is here listed 18 as Paragraph IV is to write those three principles into the 19 constitution and permit the General Assembly to handle every- 20 thing else by statute. 21 You notice that here again we have added a provision 22 automatically writing into statute everything that's in the 23 constitution, we have done that with this language, and this 24 is found at (a)(3) there right in the middle of the page, 25 the second sentence, "Until otherwise provided by law, the PAGE 64 grant of the exemption shall be subject to the same conditions, limitations, definitions, and procedures provided for the grant of such exemption in the constitution of 1976 on June 30, 1983." As we previously discussed, that date is the date immediately preceding the effective date of the new constitution, and we feel that if the subcommittee is amenable that this will protect the fundamentals upon which the granting of freeport is based. It will also permit a great deal of flexibility by law to provide for implementation and administration. VICE CHAIRMAN BLOUNT: Mel, did you have any additional thoughts? MR. HILL: No. ~m. BROWN: Mr. Chairman, one additional thing I would like to point out. I had not meant to say that either the Association of County Commissioners or the Municipal Association had committed themselves to this language. Their representatives I bhink were initially satisfied with the language. It certainly was their right at length to review it and make comments. VICE CHAIm-1AN BLOUNT: Jim? MR. DAVIS: Canter. do you think Subparagraph (3) that you just read wholly contains and will put into law the current mechanics as the constitution now outlines? PAGE 65 MR. BROWN: I do, and it would be my intent if it 2 appears as though this is going to be approved prior to the 3 effective date of the constitution to have already written it 4 into law in a general proviso to the revenue code to implement 5 all this new article in the revenue code, so as I say I think 6 the understanding was that this would already be in place in 7 the law pnor to the effective date of the constitution. 8 There is at present nothing in the general law 9 dealing with freeport, it's completely handled in the 10 constitution. CzI 11 I- MR. DAVIS: My main concern goes back to the fact .'o.".... ~ 12 ~ the constitution, all you refer to is inventories, goods in ~Fi! process and inventory of finished goods, and it doesn't really 14 delineate like the current constitution does what you're I- '-" :r 15 ~ talking about. CI :':"> 16 .~.. MR. BROWN: As you know, those terms are specificall~ Q -Z 17 ::; defined in the constitution. We had intended by the inclusion 18 of the word definitions in that grandfather provision to make 19 clear that every term that's defined in the present freeport 20 amendment would continue to be defined in that way until it 21 was otherwise provided by law. 22 VICE CHAIRMAN BLOUNT: Anything further? 23 Does it please the subcommittee that we would 24 substitute this language for that which was originally 25 proposed to us for consideration? PAGE 66 So be it. 2 MR. BROWN: Mr. Chairman, there is one other 3 paragraph in this proposed Paragraph IV. We have a provision 4 authorizing local exemptions for solar energy heat and 5 cooling systems and equipment used in the manufacture of them. 6 That exemption is presently scheduled to expire July 1st, 7 1986, which unless changed would mean it would only be in the 8 constitution for three years, and consequently I suggested 9 in Paragraph (b) there that we just simply grandfather it in 10 and then automatically repeal it as of the same date. I zCI .11 i= .'o".. think it saves a little space in the constitution and will e;~ serve the purpose just the same. VICE CHAIRMAN BLOu~T: Is there any need to ! 14 ... consider an alternative approach regarding that? '" :I: 15 .:> MR. HENRY: What was that again. Canter? You're CI '"::> 16 .~.. going to put it in, then repeal it the day it's approved? 13 Z 17 : MR. BROWN: As you will note in Subparagraph (b) 18 there. the last sentence itself automatically repeals it. 19 VICE CHAIRMAN BLOUNT: It requires no affirmative 20 action. 21 MR. BROWN: Just in terms of organization. that's 22 why I put it at the end so we can add a new (b) if we ever 23 need to. It will just be gone after that date. 24 VICE CHAIRMAN BLOUNT: Any further questions? 25 All right. So be it on that one. PAGE 67 MR. BROWN: Hr. Chairman, we are down to the final 2 paragraph in the draft, and I think it's one that you had 3 indicated you wanted to possibly suggest some changes to, 4 and one that I did as well. This is our grandfather provision. 5 It was my intent in proposing this langpage to make 6 clear that every single e~mption from ad valorem taxation 7 that is presently contained in Article VII of the constitution 8 of 1976 be continued until otherwise provided by law. It 9 would be continued under the same conditions, limitations, 10 procedures or whatever until otherwise provided by law. "z 11 i= VICE CHAIRMAN BLOUNT: I think I wanted to jus t o..'".... @;I assure you and caution the committee that if for some reason Paragraph V comes unglued in the minds of people who have to ! 14 ... react to this, then everything we have done prior to this is ':~"r 15 ~ effectively unglued as well. 1:1 '"::;) 16 .~.. }~. BROWN: That's true . Q Z ~ 17 : VICE CHAIRMAN BLOUNT: I wanted to make sure that 18 we had full appreciation for that fact. I don't personally 19 have a problem with the utility or the effectiveness of this 20 paragraph, I just wanted everyone to understand full well that 21 if for some reason there was a problem with it, it would 22 undermine critically everything we've done to this point. 23 MR. BROWN: The one change I had wanted to suggest 24 to you, in looking at this language as it's presently written 25 it says property which is wholly or partially exempt from PAGE 68 / ad valorem taxation on the effective date of this constitution 2 including but not limited to homestead property, shall continuE 3 to be so exempted until otherwise provided for by law. 4 It appeared to me that you might could argue on that 5 language that it addresses not only types of propertYt but 6 also specific parcels. For instance, something that's used as 7 a home right now is exempt partially. Say it was converted 8 into a business, it would cease to be exempted and should be 9 taxed. It appeared to me you could argue here that that 10 property related to that specific piece of property, and I would like to suggest to you that the language be changed to read types of property, and that the singular "is" on the second line there be changed to "are." I think that will clear up any question that you're not referring to specific parcels of property. you're referring to types of;1property which qualify for exemption. MR.. MASSEY: I think that's a good change. Let me 18 ask you this. since you're covering fifteen or twenty pages 19 or whatever in here, why single out homestead property? 20 Could that be dropped? Is there some reason that needs to be 21 in there? 22 MR. BROWN: I think it could. I'll tell you why I 23 included that. I was just afraid somebody was going to 24 misunderstand what this article was doing and tell voters 25 that you can take away their homestead exemption. and I put PAGE 69 it in solely for the purpose of pointing out that that wasn't 2 the case. That's the only reason. 3 MR. MASSEY: I would hate to see us list one when 4 you're referring to whatever large number, mention one and not 5 others. I would rather see it come out. 6 MR. BROWN: The only reason I put it in was the one 7 I mentioned to you, just to have something in there to make 8 clear to voters you're not takingaway their homestead 9 exemption, and it serves no purpose other than that. 10 VICE CHAIRMAN BLOUNT: Further reaction on Abit's "z @;;11 ~ ..'o".... point? It does kind of stick out there with the prominence that might suggest more than actually is the case, On the other side there is the reality that some- 14 .~.. body who wants to run against this thing could raise that red '<"I( :I: 15 ~ herring. ":'>" 16 ~ ~z MR. MASSEY: I think it also lends a tendency "z 11 j: .'o.".... 9;1 MR. BROWN: In effect on the MR. HILL: On July 1, 1983. MR. BROWN: In effect on July 1 -- ! 14 MR. HENRY: Didn't you want to use the date prior to !;; 16 III .Z.. Q Z " 16 .~.. Q Z -0( 17 ::i SUBCOMMITTEE ON PURPOSES AND METHODS OF TAXATION 18 19 20 21 Room 402 State Capitol 22 Atlanta. Georgia 23 Friday. September 5. 1980 10:00 a.m. 24 25 PRESENT; 2 COMMITTEE MEMBERS: 3 CHAIRMAN JAMES F. MARTIN SENATOR AL HOLLOWAY 4 MR. ROBERT NASH MR. W. E. STRICKLAND 5 MR. LYHDON WADE REPRESENTATIVE GEORGE WILLIAMSON 6 7 8 9 10 Czl 11 j: .'o0"... ~ 12 ~ ~r~ 14 ~ IUI :~z: 15 .:J Cl '"::l 16 .~.. Q Z ~ 17 : ALSO PRESENT: MELVIN B. HILL, Jr. MICHAEL HENRY VICKIE GREENBERG EMORY PARRISH JERRY GRIFFIN SAM OTT ROB SUMNER HOWARD N. VICTRY KEN JONES JOHN KEYES 18 19 20 21 22 23 24 25 PAGE 2 .~ . PAGE 3 PRO C E E DIN G S 2 CHAIRMAN MARTIN: We will come to order. 3 I am Jim Martin, and I am the Chairman of this 4 subcommittee. 5 We have present today other members of the sub- 6 committee: Representative George Williamson, Mr. Robert 7 Nash, Senator Al Holloway whom we're glad to see with us 8 at this very difficult meeting, Commissioner Strickland, 9 Mr. Lyndon Wade is not here, and is there a representative of 10 "z 11 i= .'o".. 12 ~ ~(~r) ~14 !~ l':z": 15 .:l "'::"> 16 .~.. cz 17 : the Department of Education? Dr. McDaniel is not here either. If it is all right with the committee, I would like to propose an agenda for us to follow today, and we can change it if the need arises. First to approve our minutes from our last meeting, and then to discuss where we are at this meeting, what we are going to be doing at this meeting. 18 Mike has put together a draft of some language that 19 focuses on the issues that were identified at the last 20 meetingj he will explain that, and then Mr. Parrish, the 21 Deputy Commissioner of Transportation, will make a presenta- 22 tion concerning some of the questions that were raised at 23 the last meeting and we felt like we needed the department's 24 input on before we took any action. 25 Then any public comments from anyone in the room PAGE 4 who would like to speak to anything, any of the things we are 2 considering today, and then to take whatever action we are 3 going to take, if any, after that. 4 Is there any change in that, or suggestions about 5 ways to proceed other than that? 6 Okay. Do all of you have copies of the minutes 7 that Mike sent out after the last meeting? They were dated 8 August the 19th, 1980. 9 Do I have a motion that we approve them as they 10 "z 11 ~ .'oQ"... e);~1 14 ~ I'" :I: 15 ~ ":':"> 16 .~.. Q Z 17 : were sent out as our minutes? REPRESENTATIVE WILLIAMS: I move they be approved, MR. NASH: Second. CHAIRMAN MARTIN: All in favor say aye. (Ayes. ) CHAIRMAN MARTIN: Okay. The minutes are approved. For the purposes of getting started this morning, the minutes are a pretty good outline of where we are today. 18 We have under consideration Article VII, Section II, 19 Paragraph III of the constitution of 1976, and that reads 20 all money collected from taxes, fees and assessments for the 21 state purposes as authorized by general -- as authorized by 22 revenue measures enacted by the General Assembly shall be 23 paid into the general fund of the State Treasury and shall 24 be appropriated therefrom as required by this constitution 25 for the purposes set out in this section, and for these PAGE 5 purposes only. 2 At our earlier meetings we have dealt with the 0- 3 provision in our section that deals with the public purposes 4 of taxation, and we have made a suggestion, approved a 5 suggestion to the full committee that we greatly reduce the 6 length of that provision by allowing the legislature by law 7 to define what a public purpose for taxation is, and then 8 we turned to this section, and at the last meeting we 9 discussed it, heardmme public comment from the League of 10 Women voters and others about some concerns about the ear- Czl 11 I- '0."".". 12 '" @rl 14 ! Ilit :r 15 0:1 Cl '":::> 16 .z'.". Q Z 17 ''"" marking of revenues, and decided to consider that provision today. At our last meeting we instructed the staff to look into several areas, and to also contact the Department of Transportation. Those questions are listed in our minutes from the last meeting. We requested the staff to prepare a draft proposal 18 that would require that interest earned on the general fund 19 be paid into the general fund. That apparently is a 20 development that occurred after the constitution was drafted 21 of 1945, and something that at he last meeting we discussed 22 as maybe needing to be added to our provision; 23 To draft language to prohibit the earmarking of 24 funds or the dedication of specific revenues to particular 25 purposes. PAGE 6 And then we also decided or acted to request the 2 Department of Transportation send someone -- I am glad that 3 Mr. Parrish is here because I know he's very able in 4 describing these issues -- to talk to us about the situation 5 of the Department of Transportation in terms of their 6 special constitutional status in terms of the funds that they 7 receive and the earmarking of those funds. 8 We also instructed the staff to draft language that 9 would say that those earmarked funds may be used for any 10 transportation purpose and would not be earmarked solely for the purpose of roads and bridges. That is sort of where we are. Does anyone have any questions about that? Okay. Mike, do you want to explain to us the research you've done in this proposed draft? MR. HENRY: First I would like to state that I attempted to draft what you asked me to draft. and this is 18 the result. 19 The first sentence basically tracks the present 20 provision which says that all money collected from. except 21 that I changed it to revenue so as to make it easier to 22 include interest. but I did include interest earned on such revenue shall be paid into the general fund of the state 24 treasury. That basically tracks the language there. 25 In trying to prohibit earmarking in a self- PAGE 7 contained provision without taking into account Article III 2 which prohibits the earmarking and then provides for an 3 exception to it, I kind of nailed the -- it could be 4 considered an overkill -- I drafted two sentences which do 5 that, although I retained staff prerogative to question the 6 effectiveness of attempting to bind or attempting to negate 7 consitutional provisions from bearing on the operation of 8 this conltituti.onal provision since all constitutional 9 provisiomhave equal status, but basically the second 10 sentence is the prohibition against earmarking which says: z~ 11 j: No revenue-raising measure shall mandate the .'o<.">.. ~ 12 ~ allocation or appropriation to any object the proceeds of ~Fi the revenues collected thereunder or a part thereof, nor ! 14 shall any law or constitutional provision -- that's a I- '" :E: 15 0: question there -- bind future legislatures to the allocation ~ '"::> 16 ~... or appropriation of any particular revenue or any part Q Z 17 : thereof to a particular purpose, but the General Assembly 18 shall be authorized to appropriate revenues in the general 19 fund of the state treasury from year to year for purposes 20 consistent with with the wellbeing of the state and pursuant 21 to this constitution. 22 I spoke with Pete Hackney of the Offi~e of 23 Legislative Budget, Clark Stevens of the Office of Planning 24 and Budget, Dick Milsaps of the Department of Administrative 25 Servic~s, and asked them whether there would be any problem PAGE 8 with including interest earned on the general fund to be 2 paid into the general fund. They said that not only would 3 there be no problem, but that is what's currently done and 4 we would be simply codifying the situation as it exists 5 today. 6 I did find that in the 1979 legislature there was 7 a provision passed which provided that interest earned on 8 the investment of motor fuel tax revenues shall be defined 9 as motor fuel tax and shall be appropriated in conformity .','- 10 with or pursuant to Article III, Section X, Paragraph VII, .. 11 "z t- Subsection (b) which does mandate that motor fuel taxes ..o.... @;i collected in the immediately preceding year -SENATOR HOLLOWAY: I have a question. 14 ~ t:'z": ".15 ,l) ;;) 16 ~... Q Z 17 : Emory? MR. HENRY: Yes, sir. SENATOR HOLLOWAY: Who invests those funds now, MR. PARRISH: The Finance and Investment Commission. 18 SENATOR HOLLOWAY: They handle the investment of 19 the funds? 20 MR. PARRISH: Yes, sir. They invest it; we simply 21 draw the interest. 22 MR. HENRY: So it may have an affect on that. I am 23 not certain that it would. It would appear to me it would 24 still be in compliance as long as it was paid into the 25 general fund. PAGE 9 Are there any questions on that initial provision 2 before I move on? 3 CHAIRMAN MARTIN: Go ahead, Mike. 4 MR. HENRY: Okay. I drafted, redrafted the excep- 5 tions to the general fund requirement in the alternative and 6 for the committee to consider on there merit as to whether 7 there shou~d be an exception to the general fund requirement. 8 I contacted the administrators of the various funds 9 and spoke with them. I researched the statutes to find out 10 Czl 11 j: 'o.Q"... e;~ 14 ~ I':"r 15 01) Cl '"::l 16 ~... Czl 17 :li the statutory authority and the procedures by which the funds are raised and spent. The first one appears at Article VII, Section II, Paragraph II, which is under consideration by this subcommittee specifically, and that is for the promotion of agriculture and other products. I felt that in this entire paragraph there were two concepts that needed to be retained, and that was that 18 the assessments on the certain agricultural products need not 19 be paid into the general fund, and then the last sentence 20 says that the uniformity requirement of this constitution 21 shall be satisfied by the application of the program upon 22 the affected product, so that violation of the uniformity 23 provision would also have to be retained somewhere, and I 24 have put that at the bottom of the proposal under Need to 25 Transfer. PAGE 10 It needs to be transferred if you are -- to the 2 subcommittee considering the uniformity requirement. 3 CHAIRMAN MARTIN: Mike, could you maybe just stop 4 just a second so we'll all be clear about what's involved 5 with that. 6 That is Paragraph II of our section that deals 7 with the agricultural commodity commissions, and in our 8 section those commissions are allowed to pass or levy a 9 special tax which is then earmarked and not paid into the 10 general fund which is used for zCI 11 l- oe.".<". MR: HENRY: It's not so much earmarked as it is not @:I paid into the general fund, and if you will recall on July 3rd a memo of July 3rd that I sent out giving you the background ! 14 I- of Article VII, Section II, Paragraph II, it was in direct ': 16 ~... So it is only on a few of these, which would be Q Z :r 15 oll "'"::J 16 ~... Q Z 17 : funds are collected, why they're uniformly collected from everyone and, as I pointed out, the processor and all is merely required by law to make these collections and turn them in to the commissioner because this is the point of sale on them. I think this is the reason why it was rewritten in the constitution in order to designate these points that in generality you could not do without pinpointing it into the 18 marketing orders, and every person knows the marketing order 19 when they vote on it. 20 CHAIRMAN MARTIN: Mike, one of the things we asked 21 you to do in addition to the research was to contact the 22 Commissioner of Agriculture to find out what his position 23 was about this language. Can you report to the subcommittee 24 on that? 25 MR. HENRY: I contacted Lanny Williams who PAGE 15 administers I think the agricultural commodities commission, 2 and after talking with him the Con~issioner contacted me 3 and was very concerned about any change we may make in this. 4 I told him that Mr. Nash -- He informed me that 5 Mr. Nash was an ex officio member of every committee on the, 6 of every commission and a voting member I assume, and I told 7 him that Mr. Nash would be here and would be present, and 8 his fears were -- he no longer had any fear of what we may do. 9 CHAIRMAN MARTIN: So it's the position of the 10 commissioner that that ~anguage is important, and he said 11 "z j: in a capsule form it's a difference between a voluntary trade .'oa".... ~ 12 ~ association assessment and an actual tax levied, that it ~F~ becomes a personal debt of the individual producers as a way ! 14 ... to market them and other types of activities for commodities . '."c :r 15 ~ Is that a fair statement? "'"::l 16 ~... MR. HENRY: Basically for promotion, advertising, Q Z.c 17 : research and education. 18 In any event, I have taken this provision like I 19 said earlier and reduced it down to what I felt was the 20 meat of the cocoanut, this is what has to be retained if you 21 are going to continue to allow this. 22 You have to retain the exception to the general fund 23 requirement. I dm't think that all of this other language is 24 needed because it doesn't appear that anything else in there 25 other than the general fund requirement and the uniformity PAGE 16 requirement is excepted from, and I would think that the 2 majority of this could be covered by statute, and if you 3 choose after deciding on the merits whether this is a good 4 program, then you would need to retain these two concepts. 5 CHAIRMAN MARTIN: Mike, would this be a subparagraph 6 of the general paragraph dealing with payment of the funds 7 into the general fund? 8 MR. HENRY: Yes. These were drafted in the 9 alternative for you to consider on their metit, each one. 10 Czl 11 ... ..oc..o..: ~ 12 ~ ~r~! 14 ... ':z": 15 .:J Cl co: ::> 16 .~.. Q Z 17 : I'll move on to the -CHAIRMAN MARTIN: Let me recognize the fact that Mr. Lyndon Wade is here now, and Vickie Greenberg with the staff of the Constitutional Revision Commission. Okay. Mike. Are there any questions from the members of the subcommittee about that? Okay. Mike, go ahead, please . MR. HENRY: Okay. The second one on the list is 18 the subsequent injury workmen's compensation trust fund, and 19 it's found in Article III, Section IX, Paragraph VI, and it is 20 an exception to the requirement that all moneys be paid into 21 the general fund. 22 If you will notice, there was handed out a paper 23 entitled Nonlapsing Status of the Subsequent Injury Trust 24 Fund that was drafted by the administrator of that fund and 25 forwarded to me for my better understanding. PAGE 17 Basically this is a The General Assembly has 2 implemented the provisions of Article III, Section IX, 3 Paragraph VI at Georgia Code Annotated 114-9. They ,provide 4 for the creation of a perpetual non1apsing fund for the 5 purpose of making payments where -- 6 Well, first let me tell you how the fund is created. 7 The fund is an assessment against insurers doing workmen's, 8 writing workmen's compensation insurance and self-insurers, 9 and it is based on a formula tied to the assets in the fund. 10 In the first year that the fund was made effective, Czl 11 i= ...ofZ Go which was JU~y 1, 1977 -- I think it was 1977 there was a ~ 12 ~ five percent assessment against all, against the premiums ~Fi collected by -- a half percent, I'm sorry, .5 percent against ! 14 ~ all these insurers and self-insurers. ':"r 15 .:I The fund is there to provide The fund is Cl fZ ::J 16 ~... there, the legislative intent of the fund is to encourage the Q Z 17 : employment of handicapped by protecting employers from excess 18 liability for compensation where a subsequent injury -- in 19 other words, where a person is hired by an employer who has 20 a pre-existing permanent impairment or some type of handicap 21 and while on the job that handicapped person becomes reinjured 22 and under the terms of the workmen's compensation act the 23 payments would be much greater, so this is to encourage the 24 employment of handicapped persons by assuring the employers 25 that if they do hire handicapped employees that in the event PAGE 18 that that employee is injured on the job his payments will 2 not be so excessive that it would prohibit him from otherwise 3 hiring that employee. 4 The basic feature of this fund is that it has a 5 nonlapsing status. I believe it is written into the statutes 6 that the fund shall not lapse, and if at the end of the year 7 the assets in the fund are sufficient by an actuarily defined 8 report that they have enough funds to ~eet their liabilities 9 then there will be no assessment against those insurance 10 companies in the year to come, so to the extent they retain CzJ 11 i= these assets the insurers would not be assessed. 'o."".-. ~ 12 ~ The nonlapsing feature is what allows that, the ~r~ funds not being required to be paid into the general fund ! 14 ... and necessarily would have no place to lapse, so they are ':"r 15 .:. retained in the fund. CJ :':"> 16 ~ I'm referring to this report now. The nonlapsing a Z 17 ::i feature of the fund is imperative for the following reasons 18 CHAIRMAN MARTIN: That is on page 2 of the document 19 that has been submitted by the subsequent injury trust fund. 20 Mike, do you have another copy of that for Mr, Wade? 21 ~m. HENRY: I will read these reasons into the 22 record, and then I will let Mr. Victry supplement my report 23 if that's okay. 24 CHAIRMAN MARTIN: This document will be part of the 25 records of the constitutional revision committee? I.L- ~ ~ PAGE 19 MR. HENRY: Yes. 2 The fund is extremely broad in nature in that it 3 covers any preexisting permanent impairment; 4 The fund receives claims from insurers and self- 5 insurers that generate an ongoing liability which extends in 6 80me instances years into the future; 7 This feature enables the fund to meet ongoing 8 liabilities generated as a result of long-term disability 9 claims filed against the fund; 10 The net assets remaining in the fund at the end of CzI 11 i= o.'"".-. @;I each fiscal year are used as credits against assessments, thus reducing the assessments or potentially eliminating assessments for a particular year; ! 14 lo- By not lapsing funds and with the statutory U> :r 15 ~ requirement that the trustees apply the remaining net assets Cl '="' 16 .~.. against the next assessment, industry is assured that the fund Q Z 17 : will not build up any unnecessary or large reserves of funds 18 inconsistent with the fund's needs. This is a legal safe- 19 guard that prevents unwarranted or unnecessary assessments 20 by the fund; 21 By not lapsing funds at the end of the fiscal year, 22 any funds in investments are not disturbed, thus the fund is 23 not deprived of maximum interest income; 24 Industry in Georgia has supported the development 25 of the fund and was willing to finance the fund provided PAGE 20 moneys generated through the assessment are used solely for 2 the purposes of the fund. 3 I hope I have explained adequately the statutory 4 procedures, and if there is any question I can't answer, ~rr. 5 Victry can. 6 CHAIRMAN MARTIN: Senator Holloway, do you have a 7 question? 8 SENATOR HOLLOWAY: I don't understand this number 9 one feature. It's extremely broad in nature in that it covers 10 .., any preexisting permanent impairment . z 11 i= .'oQ"... What does that mean? ~ 12 ~ ~~. VICTRY: The statute defines permanent condition ~r~ that would be considered covered under this provision or this 14 ~ 1;; section of the workers' comp law as any condition that pre- x 15 ..:.J, exists a subsequent injury . ~ '" 16 ~ Q z 17 : it? SENATOR HOLLOWAY: You mean they're paying him for 18 MR. VICTRY: No. 19 SENATOR HOLLOWAY: That's the reason I don't under- 20 stand what you're saying. 21 MR. VICTRY: Let me give you an example of \hat 22 we're talking about. I think 1_ can best explain it 23 Let me define it first and then I'll give a couple 24 of examples. 25 A preexisting impairment under this law is any __________ ~ ____J PAGE 21 condition or impairment or handicap that is permanent in 2 nature and a hindrance or obstacle to employment. 3 For examp1e t we have an employee that is diabetic t 4 or we would have an employee that has a degenerative back 5 disease t we would have an employee with a cardio-vascular 6 disease. These conditions and many, many other conditions t 7 permanent impairments t permanent disabilities when kno~~ to a 8 potential employer who may potentially hire an individual t 9 these conditions would interfere or would in effect prejudice 10 Czl 11 j: .o'0."-. ~ 12 ~ ~r~ ! 14 I':<"r 15 .:> Cl '::"> 16 .~.. Q Z :l: 15 .:l to pay benefits in accordance with that aggravation. Cl '";:) 16 ~ Q SENATOR HOLLOWAY: If a man is fifty percent z 17 ~ disabled and you hire him, another injury would have to 18 increase his disability beyond fifty percent for him to have a 19 claim. Is that what you're saying? 20 MR. VICTRY: In effect, yes. If the employer -- 21 SENATOR HOLLOWAY: I still don't know what that has 22 to do with the nonlapsing feature of the fund, but that's all 23 right. 24 CHAIRMAN MARTIN: Does anyone else have any 25 questions? PAGE 23 Representative Williamson? 2 REPRESENTATIVE WILLIAMSON: I have a question about 3 how much money is taken in by the ftmd and how much is paid 4 out, how many people you've got drawing on the fund right 5 now, and whether we've got a surplus, how big the surplus is. 6 MR. VICTRY: The subaequent injury fund was created 7 in 1977. There are provisions in the law to require the 8 employer or insurer pay the first 104 weeks of benefits 9 before the fund ever gets involved in the case in terms of 10 making payments. Czl 11 I- 'o0.".... @;I In addition, in terms of medical reimbursement by the fund, the employer or insurer must assume in effect the first 7,500 dollars in medical costs before any relief to the 14 ~ I- employer from the fund would start, so you've got in effect '" :I: 15 ~ approximately $18,000 worth of overall liability that the Cl '":::J 16 .~.. employeror insurer must incur before the fund becomes involved Q Z 17 ::i in paying out benefits or reimbursing benefits to the insurer. 18 Now, secondly, the fund does not pay directly to the 19 injured worker. That is a responsibility retained in all 20 instances by the employer or the employer's insurer. The 21 fund is a reimbursement concept, it reimburses the employer 22 or insurer. 23 REPRESE~ATIVE WILLIAMSON: So John Smith, injured 24 worker, he doesn't have any idea that you all even exist, 25 you all are just irrelevant to him; right? PAGE 24 MR. VICTRY: That's correct. In other words, we're 2 getting away from your question -- I want to come back into 3 that. but you brought this point out. 4 It was set up this way to prevent the employee from 5 having to make two separate claims for workers' comp benefits. 6 The employee continues with one claim. one source. 7 It's the employer's or the insurer's responsibility 8 to come back to the fund for any relief if the case meets the 9 standards set forth in the statute. 10 Czl 11 i= e ; i'o.0".... 14 ~ I'<"I % 15 ~ Cl '":;) 16 ~ Q z 10 other states that it takes several years from the first "z 11 i= '0Q."... 12 '" @rl assessment, the initial seed assessment, it takes several year for the caseload and case activity to develop before the next assessment will go out to replenish the fund, and it's been 14 ~ I- also my experience in working with and starting a fund and :( :r 15 .:l CI working with a fund like this in South Carolina from the very :':"> 16 lEI .Z.. beginning that, true, there was an initial assessment and Q Z <[ '" 17 lEI during three, four, five years before the next assessment 18 went out the fund did actually increase, but once it matures 19 and once you get a constant flow of activity against the fund 20 then you're going to see the assessment will generaTIf go out 21 each and every year. This is just an anomoly that's peculiar 22 to the system during these fo~~tive years. 23 If you have any further questions on that -- 24 REPRESENTATIVE WILLIAMSON: Let me ask you one other 25 question, then I'll let some other folks ask. PAGE 29 Who makes the investment decisions on where your 2 fund goes? Is that handled like all other investment 3 decisions? 4 MR. VICTRY: The board of trustees of the fund has 5 the responsibility to do that, the board of trustees as we 6 have defined the board of trustees and their origin in ,the 7 paper that I presented to Mike and he of course presented to 8 you today; the trustees have appointed an investment 9 committee that oversees the investments of the fund. 10 CzI 11 I- "0...... @ ~r~ ~12 " 14 ! I':"z: 15 .: ..I.'l ";:) 16 .z.. Q ..Z 17 " REPRESENTATIVE WILLIAMSON: I just wondered, you know. Maybe I ought to ask -- It seems ridiculous, you've got one fund, you've got $1 million and I don't know how much you can have invested at anyone time, then we've got the state treasury with I guess probably a coup1ebundred million at anyone time, maybe more than that. Just on its face it would seem to me we would be better off if we just had the DOAS or whoever makes those investment decisions making them . 18 MR. VICTRY: The option is in this statute that 19 the board of trustees can appoint the state's financial 20 officer to administer the investments of the fund; it wouldn't 21 change the status of the fund as an independent fund. 22 REPRESENTATIVE WILLIAMSON: I understand that. 23 MR. VICTRY: The options are there. You would have 24 to address that question to the trustees, and I was not part 25 of that. 1 can only explain to you the decision they made, PAGE 30 and I think if you wanted more information as to their 2 rationale, you know, I could get the trustees to address that 3 question. 4 CHAIRMAN MARTIN: Senator Holloway. 5 SENATOR HOLLOWAY: Who sets your budget and who 6 approves it? 7 MR. VICTRY: The board of trustees, with the advice 8 and consent of the -- 9 SENATOR HOLLOWAY: Does it ever come before the 10 General Assembly? "z 11 i= ..'o".... MR. VICTRY: No, it does not. This is provided for @;~ in the statute. MR. HENRY: It says the board of trustees shall ! 14 submit to the Office of Planning and Budget the proposed I- '-"e( :I: 15 .:l budget for comment prior to approval. "'":::> 16 .~.. MR. VICTRY: Now, the operating budget is paid out zQ 17 : of the fund itself. 18 SENATOR HOLLOWAY: That's what concerns me, the 19 fox guarding the henhouse. 20 CHAIRMAN MARTIN: Mr. Nash? 21 MR. NASH: I would like to ask a question. Who 22 determines whether these people come under this fund or whether 23 they're just covered under workmen's compensation? 24 You mentioned diabetes. You know, there are a lot 25 of people who have diabetes and on a job you could say it PAGE 31 aggravated it or didn't aggravate it, but you mentioned that 2 particular one. That's the one that -- Who is going to make 3 these determinations whether -- who is going to cover the 4 legal aspects of this thing and determine whether or not who's 5 going to pay those costs? 6 MR. VICTRY: Procedurally speaking, a claim is 7 filed to the fund or against the fund by the employer or 8 insurer. It is reviewed, investigated as to whether or not 9 the claim meets the standards or the requirements set forth , 10 in the code section. z~ 11 j: Once that is done, then I make a recormnendation to ..'0".... 12 '" the board of trustees as to whether the case should be @ r l accepted or not. The board of trustees reviews the case, .14 ! reviews the statutes, and determines whether or not the case VI :I: 15 o:J qualifies for reimbursement by the fund. ~ '":::l 16 .Iz.I.I If the fund denies the claim made by an employer or Q Z '" 17 III an insurer, then the employer or insurer would then file a 18 claim against the fund through the workers' compensation 19 board. 20 They would have an individual hearing before the 21 single administrative law judge to determine whether or not 22 the fund should be liable for reimbursement in the case. 23 And,cf course, the same standards in all litigation procedures 24 apply to the relationship between the insurance industry or 25 the claiming insurer and the fund as do those rules and PAGE 32 regulations pertaining to litigation between the injured 2 worker and the employer. 3 MR. NASH: If you deny it, then does it just go 4 back against workers' compensation and that's the end of it? 5 MR. VICTRY: That depends upon the course of action 6 that the employer or insurer wishes to take. 7 Furthermore, something else I think should be 8 clarified here. 9 The existence of the fund within the workers' 10 compensation setting does not increase the overall cost of the workers' compensation program. If the fund were not in existence, the cost would essentially be the same. t~at this is doing is protecting individual employers against catastrophic losses for individual cases. The same cost, the same liability would be a burden on the workers' compensation system without the fund, but this is an approach that is practiced in every 18 workers' compensation law in this country, it is designed to 19 encourage employers to hire the handicapped or to retain 20 workers that are injured on the job who then have a disability 21 who the employer would otherwise be reluctant to retain 22 because they would be fearful of the employee's sustaining a 23 new injury further complicating the disability and further 24 increasing the employer's cost for that worker and for that 25 injury. PAGE 33 CHAIRMAN MARTIN: Senator Holloway? 2 SENATOR HOLLOWAY: I think most of the questi6ns 3 we're asking now are addressing themselves to the statutory 4 cure. 5 I'm still concerned about this number one statement 6 here which indicates that this fund has to set up a reserve 7 for preexisting injuries. I mean that's what it says whether 8 you mean to say it or not, 9 I think number two should cover one without any 10 reference to preexisting claims, because the only thing that 11 5CzI this reserve is for would be aggravation of the existing -- o... 9-112 ~ MR. VICTRY: I think you're correct. SENATOR HOLLOWAY: I think this implies something ..14 ~ that might be a little <:z: 15 ~ MR. VICTRY: What I simply was :trying to do was to CrrI: ::> 16 ~ say to the committee that the fund covers a very broad array Qz < 17 : of situations involving aggravations of preexisting conditions 18 that generate increased liability against the industry in 19 Georgia and against employers in those individual cases. 20 Does that clarify that, sir? 21 SENATOR HOLLOWAY: I think if you left one out and 22 just stood on two it would clarify the whole situation. 23 CHAIRMAN MARTIN: Mr, Victry, do all other states 24 -- you say every state in the union now, and Georgia I guess ; 25 was the last; is that correct? PAGE 34 MR. VICTRY: Yes. 2 CHAIRMAN MARTIN: Do allother states provide for the 3 nonlapsing feature and the non provide for the nonlapsing 4 feature like we have in Georgia? 5 MR. VICTRY: Yes and no, to be quite frank with you. 6 There is a perfect explanation for that. 7 All states have a fund of this nature; however, all 8 states do not have a fund of this scope. Approximately fifty 9 percent of the states have what we call broad coverage funds, 10 Czl 11 i= Io..X.... ~ 12 ~ @F~ 14 ~ ~ '" :I: 15 .:I Cl IX ::> 16 ~... az 17 g such as what we're talking about here today. Many of those states such as New York, South Carolina, Louisiana generate special funds or create special funds of this nature that are not deposited into their general fund, and they have set up special committees or special boards of trustees to oversee and to administer those funds. Now, of course, the operation of all of these funds is subject to audit by state government, audit reports are 18 reported to the legislature, so there are checks and balances 19 and controls and opportunities to see what's going on, to 20 examine what's going on in terms of how the fund is handled, 21 how it's administered,how the moneys are spent out. 22 REPRESENTATIVE WILLAIMSON : Let me ask you this. 23 On a year to year basis, though, what check does the General 24 Assembly have other than coming in and substantially changing 25 either the statutory law or the constitutional amendment? ,.---------------_ _---_._._ PAGE 35 --- _ -~-----_._-_.. - - - - - - - - - - - - - - - , From what you say I got the impression that you 2 jus t send OPB a copy of your budget and that's it. I mean 3 once you've done that, then your trustees are free to approve 4 any budget you want, and the trustees decide on the assessment 5 MR. VICTRY: No, the trustees don't decide on the 6 amount. Well, this thing is all governed, it's all automatic. 7 You look at the disbursements of the fund at the 8 end of each fiscal year, you look atthe net assets of the 9 fund at the end of the fiscal year, 10 CzJ 11 i= 'o0."... @r:j ' g 14! I'<"l :I: 15 .:I CJ '":::> 16 .~.. o Z 17 g. 9;1 MR. NASH: Not in the general fund? 'MR. VICTRY: That's correct. MR. NASH: Mike, does this stay within the authority ! 14 of taxation? IU> 15 ~ III ";;;) 16 .~.. Q Z 17 ~ MR. HENRY: Loans to counties? MR. STRICKLAND: For tax reevaluation. You're familiar with that. They were paid in and didn't lapse, the moneys were appropriated for that purpose. It seems to me that would be in violation of -SENATOR HOLLOWAY: It's under contract, though, isn't it? MR. HENRY: I would have to look at the law to find 18 out. 19 MR. STRICKLAND: They would have to contract for it, 20 that's right. 21 SENATOR HOLLOWAY: Once it's contracted for, that 22 would take care of it. 23 CHAIRMAN MARTIN: We're going to need to go on. 24 We've got a few other items were going to need to discuss. 25 Mr. Victry, are you going to be here when we talk PAGE 42 about what we're going to do about the provision? Can you 2 stay for the rest of the meeting? 3 MR. VICTRY: Yes. 4 CHAIRMAN MARTIN: Is it all right we go ahead with 5 the rest of the meeting and we can hear from Mr. Parrish who 6 has been very nice to wait. 7 Mike, would you complete your report to us on these 8 other provisions quickly and -- 9 MR. HENRY: Do you want me to speed read through it? 10 "z 11 j: ..'0..".. 12 '" @rl ! 14 ~ ':<"rl: 15 olI CI '":::l ... 16 zIII Q Z " 16 ~... c Z 16 .~.. zo into the general fund-, but they're earmarked for training 17 : peace officers and lew enforcment personnel, so they don't 18 have any implementing lfgislation, but it is an earmark, and 19 then 20 CHAIRMAN MARTIN: As far as that's concerned that 21 is not currently in operation? 22 MR. HENRY: Right. That's just a -- it's been 23 introduced, it was introduced in the '76 I think, then again 24 in '78, and it's failed to be passed in both sessions. 25 CHAIRMAN MARTIN: Okay. PAGE 50 MR. HENRY: And then another exception to the 2 prohibition against earmarking is the motor fuel tax which 3 is contained in Article III, Section X, Paragraph 7(b), 4 Pursuant to the request of the committee that I 5 substantially broaden the exception. I attempted to do that 6 and I made it permissive on the General assembly to provide th~t 7 any amount equal to any money derived from motor fuel taxes 8 in the immediately preceding physical year be appropriated. 9 and I've dropped it from roads and bridges to transportation 10 purposes. CP~IRMAN MARTIN: In all fairness to Mr. Parrish, let me just state why this. subcommittee is considering this issue, and that may help Mr. Parrish in his camnents. The original provision dealing with earmarking was in fact in the taxation article, and in the constituti.onal revision of 1976 it was moved to Article III. It seemed in our discussion in the committee in our 18 last couple of meetings that the obligation to pay the funds. 19 taxes, assessments and other revenues into the general fund 20 and the prohibition against earmarking were related. 21 You know, from a conceptual basis before exceptions were 22 added to the constitution you could say that first to pay the 23 funds into the general fund, and then the General Assembly 24 appropriates those funds. 25 Since we have uneer our consideration that first PAGE 51 step, the provision that says that the funds will be paid 2 into the general fund, and since we had some public comment 3 at our last meeting urging us to take into consideration the 4 Department of Transportation's financial earmarking provisions 5 in the constitution, the committee decided to do that, at 6 least to have the staff draw up language which Mike has drawn 7 up, and also ask you all to appear and, frankly, what we have 8 done through our course of our deliberations is to try to put 9 into the record the reasons for and against these different 10 ~ "z 11 I- 'o."".". 12 ~ (~@r1~4 ~ I- '.."a; :I: 15 .:I "'::"> 16 ~... Q Z ..a; 17 ~ constitutional provisions so that as part of our work this will be a record of the pros and cons and the policy decisions that go into our new constitution, and it's important that we have that information in the record as is what action this subcommittee takes since it's going to be a long way between this subcommittee's action and the final passing of any constitution in the legislature . Mr. Parrish. 18 MR. PARRISH: Mr. Chairman, I appreciate the 19 opportunity to appear before the subcommittee. Of course, 20 the item that you are going to be discussing today does 21 change the constitutional allocation of motor fuel taxes from 22 roads and bridges to allowing a statute for the appropriation 23 of motor fuel for that purpose. This puts it back the way it 24 was prior to 1960. 25 Of course, during Governor Vanderver's term the PAGE 52 department agreed with the governor that they would forego the 2 motor vehicle license fees, provided the motor fuel tax was 3 constitutionally allocated to the department. 4 This was really done while I was here in Atlanta 5 during the time, I was simply interested in it and was not 6 involved in it, but it was done for two purposes; for the 7 purpose of really trying to get the department a more standard 8 appropriation so that they could plan a long-term program 9 within the department,. 10 We currently operate on a five-year construction 11 "z i= ""o..'"". program. The way it was prior to 1960 you operated with an ~ 12 ~ annual construction program, that's all we had. (@))r~ We have the opportunity now to look really at the 14 ; ~ overall needs of the department, because we know from year to '" :I: 15 olI year how much money we're going to receive. """:;) 16 ~... Now, the General Assembly may sweeten the amount of Q Z 17 : money that we get, but we know what the bottom dollar is going 18 to be. 19 Of oourse, also it's allowed the department -- this 20 kept us out of a lot of politics -- it's allowed us to become 21 more professional. 22 Then really two things in the constitution, the 23 constitutional allocation of motor fuel taxes and the 24 constitutional state transportation board elected by the 25 members of the General Assembly has probably done more in my PAGE 53 thirty years of working life in the department to make it more 2 professional than anything else I know of, and certainly you 3 can tell that the department is not in favor of changing the 4 constitutional allocation of motor fuel. 5 This proposal would also broaden the use of motor 6 fuel to other forms of transportation. Motor fuel taxes are 7 a user tax, it's the fairest tax that I know of. 8 You pay an income tax, you know, it's used for 9 whatever purpose, but from a motor fuel tax you only pay that 10 ~ "z 11 ~ a: ."o.". 12 ~ ~ri 14 ~ ~ ':"r 15 .:) "a: ::> 16 .~.. Q Z 17 ::: tax if you use the roads. If you use motor fuel to propel your car on the road you're going to pay motor fuel taxes. If you use it, however, on the farm you do not pay, it is only on public road usage, so it's the fairest tax that I know of. It's also, however, decreasing in pppularity. The number of gallons of motor fuel that are sold each year is on the decline rather than increase. The more fuel efficient 18 automobiles and really some decrease in travel is causing the 19 motor fuel tax gallonage to decrease. 20 As a matter of fact, last year the number of gallons 21 of motor fuel decreased by 4.4 percent that was sold in the 22 state. The high for one month was 11.7 comparing one m9nth 23 to another, and I don't know that one month and one year to thE 24 same mauch in the previous year 25 Now, I don't know how much the state's total budget PAGE 54 increased, but what, Mr. Strickland, probably 16 percent 2 MR. STRICKLAND~ 18 or 19. 3 MR. PARRISH: 18 or 19 percent. Motor fuel usage 4 went down 4.4.percent, so this even though the three 5 percent motor fuel tax applied at the pump on the retail 6 price has helped some, of course, as inflation gets the price 7 of gasoline and the Arabs get it, the price of motor fuel goes 8 up, but it has not even approached meeting the inflation 9 that's happened to us in our construction pro~ram, so in effect 10 if this proposal were enacted you simply divide a decreasing III Z 11 j: .'o.".... f\md that there's not sufficient money there now to meet the @;i needs of transportation in the state, highway transportation in the state, and divide it between roads, trains, airports ! 14 I- and water. ' 16 .~.. funds to all the other state departments, including the line o Z 16 .z.. MR. PARRISH: It's stated in detail in the law, and Q ..Z 17 '" I'm not sure that I can explain it to you, but it's based on-- 18 MR. NASH: What I'm getting at, this is going to be 19 a pretty good sized- income which will be used to administer 20 the sign program. 21 MR. PARRISH: Yes, sir. 22 MR. NASH: This is an additional tax, I guess you 23 would call it a tax, or is it just a legislative 24 REPRESENTATIVE WILLIAMSON: User fee. 25 CHAIRMAN MARTIN: It falls under the category of PAGE 62 agency funds we were talking about last meeting which really 2 wouldn't come tmder our general ftmd requirement. 3 MR. NASH: So these ftmds would never go to the 4 general fund; right? 5 MR. HENRY: If they had a statutory premise, they 6 would. 7 CHAIRMAN MARTIN: Based on a statutory premise, 8 that's correct. 9 MR. HENRY: I think they are based on a statutory 10 premise. 11 u~z MR. NASH: Are these funds going to be earmarked for e -io 012 ~ these purposes if it goes into the general fund is what I'm getting at? 14 ~ MR. PARRISH: It is included that way in the statute. '" :I: .. 15 ~ The General Assembly passed the statute, I'm sure they can u ;;;) 16 ~ modify it. Q 17 Z~ MR. NASH: If they earmark it, that's what I'm 18 getting at. 19 MR. PARRISH: That presently is in the statute. but 20 I might -- the cost of issuing a permit for an outdoor 21 advertising sign, whether we agree or disagree with the 22 program doesn't have anything to do with it because the 23 federal government has got a pretty good sized billy club in 24 that area, about 150 million a year. 25 Whether we agree or not, the cost of processing a PAGE 63 permit for an outdoor advertising sign for which in the past 2 we received $10 was costing us nearly $13. apiece. 3 Now, the taxpayer in this state, the general tax- 4 payer, whether he agreed an outdoor advertising sign ought to 5 be up, was supplementing just a little bit the fee for those 6 signs, nearly seven times, so we feel that while the $50 7 doesn't even come -- approach what it costs us, it's still 8 better than what we had before. 9 MR. NASH: I would suggest the legislature go back 10 and look at the program. If it's costing that much money III Z 11 I- o..'".... ~ 12 ~ ~r~ ! 14 I':"z: 15 .:l III '":::l 16 .~.. Q Z 17 :li and you're not even going to fund the thing, you stop and think of who's going to pay the bill. REPRESENTATIVE WILLIAMSON: I'm not sure I -- I really sort of have If you've got 5,000 signs and you've got to permit them, that's one number, but if you get some of these 16,000 that are going to be permitted, then, you know, the $73 number may not be valid. 18 MR. PARRISH: We think it will go down. As a 19 matter of fact, year after year -- our < estimate was it would 20 go as low as $38. Well, we're going to be getting 25. 21 MR. NASH: You're not really going to derive any 22 more funds for transportation, all you're going to do is go 23 into this sign program. 24 MR. PARRISH: Yes. 25 MR. NASH: Transportation gets nothing out of it, PAGE 64 yet it's earmarked to their program, 2 MR, PARRISH: We have been talking with our 3 congressmen and senators at the delegation trying to get 4 changes made in federal legislation on outdoor advertising, 5 but there hasn't been much success nationally in changing 6 that program. 7 CHAIRMAN MARTIN: One of the things we have under 8 consideration, Mr. Parrish, is to add to the requirement that 9 funds be paid to the general fund, that interest be paid 10 into the general fund. Does the department have any trouble with that? MR. PARRISH: Without doubt. Of course, the statute now says -- the constitution currently says motor fuel taxes shall be allocated to roads and bridges, CHAIRMAN MARTIN: Right. MR. PARRISH: The statutes say what the taxes shall be, they shall be 7 1/2 cents per gallon of gasoline sold. 18 they shall be the interest derived from the investment of 19 motor fuel tax funds, and they shall be three percent of the 20 retail price at pump, so currently the statute says that 21 interest derived from motor fuel tax funds are motor fuel 22 taxes and therefore constitutionally appropriated to the 23 department. 24 So yes we would, if the constitution were to change 25 that we would certainly have a little problem with it. PAGE 65 MR. HENRY: But it really -- the way I see it, it 2 still wouldn't affect You know, you're saying interest 3 is motor fuel, and we're saying all interest shall be paid 4 into the general fund and appropriated pursuant to this 5 constitution, aBd this constitution just happens to 6 appropriate all motor fuel taxes for roads and bridges, so 7 that, you know, you're in complete compliance with that 8 provision with respect to your interest. 9 MR. PARRISH: I agree with you. I'm not sure it 10 would chan~e. MR. HENRY: 'My question is, and I'd like to ask the commissioner, how can you say that interest on a tax is a tax? How can you define it as a tax? MR. STRICKLAND: I didn't know that I did. SENATOR HOLLOWAY: You leave that to the Lieutenant Governor. CHAIRMAN MARTIN: Is that the only -- does anyone 18 know if that's the only case where interest is earmarked to 19 go back to --7 20 MR. HENRY: That was brought to my attention when 21 I started talking with Pete Hackney and them about it; they 22 didn't tell me of any other instance where interest has been 23 found to be -- 24 MR. PARRISH: That's the only case I know of. 25 CHAIRMAN MARTIN: Does anyone else have any PAGE 66 questions? 2 MR. HENRY: On your outdoor advertising fees, that's 3 earmarked? 4 MR. PARRISH: By statute. 5 MR. HENRY: Then you have to define it as a motor 6 fuel tax in order to implement 7 MR. PARRISH: No, the statute simply says that the 8 funds derived from the permitting of these signs shall be used 9 to administer the program, so it's not earmarked in the 10 constitution, it's not defined as motor fuel tax, but only in the statute says what it shallbe used for. MR. HENRY: The General Assembly could transfer the funds to administer the program to another department and it would not MR. t-JADE: When you say these funds administer the program, does that include salaries of personnel? MR. PARRISH: Yes, for those who are handling those 18 permits. 19 MR. WADE: All right. Does this mean those people 20 are not paid for out of the general fund, are not any way -- 21 Are those employees in any way receiving any moneys from the 22 general fund, or do you have a special category of employees 23 who do that and this is a self-contained situation? 24 MR. PARRISH: Okay. Up tmtil we receive these funds 25 you know, from the new permit, these employees have been paid PAGE 67 by motor fuel taxes. you know, out of our regular budget. 2 To answer your question. we operate two funds in 3 our department, one Being the motor fuel tax fund, and the 4 other being the general fund. 5 The motor fuel taxes do not lapse at the end of 1he 6 year; the general funds do lapse on June 30th. and no 7 employee that is to be doing a job on waterways, you can't 8 use motor fuel tax funds for waterways or airports. Any 9 employee working in those fields a~designated as general 10 I!I Z 11 l- o..ll..<.. ~ 12 ~ ~r~ ! 14 IUI :- ~ % 15 .:l Those were very helpful. Ca:l :) 16 .~.. Are there any public comments or any statements Q Z ~ 17 ::; anybody who is here wants to make before we start talking 18 about this paragraph? 19 Mike, you did a real good job with that report. 20 There were some difficult issues to look into. 21 What is the pleasure of the subcommittee? 22 MR. STRICKLAND: Mr. Chairman, you made a comment 23 about it, it's just not clear to me whether we should be 24 addressing this. It's not clear in my mind. 25 MR. NASH I guess the only issue we're really PAGE 69 addressing is whether or not to earmark funds. 2 MR. STRICKLAND: A personal observation. I would 3 hate to compete with DOT for funds. 4 SENATOR HOLLOWAY: Let me say this. It deals with 5 this problem of fuedism. First, we cannot write the 6 constitution thinking that the present personnel involved 7 will be there always. 8 I think the record of the Highway Department since 9 , 74 has been by far the mos t outs tanding record of any agency 10 in the government, barring none. They've cut employees. they \:l Z 11 ... .'o"".". went from 17,000 down to eight. If you check their yearly e;~ allocations whether constitutionally or a part of the general fund, they have increased less than any agency in government ! 14 ... I know of. including yours . '-"< ::J: 15 ~ MR. STRICKLAND: Yes. \:l '":;) 16 ~... SENATOR HOLLOWAY: I don't know how many of you Q Z -< 17 : ride Alabama and South Carolina highways, our neighbors, but 18 I don't apologize for our highways, and I think they're doing 19 a good job. I think they're doing an excellent job. 20 The main concern I would have about disturbing the 21 allocation would be competition with welfare. education, you 22 name it, and we have taken a lot of politics out of the 23 Highway Department in the last eight or ten years, no 24 question about that. They're allocating funds by regions. 25 they've got formulas that are fairly equitable, but if you PAGE 70 get this highway department out really fighting for their 2 fair share of the total state dollar and they start talking 3 to a representative or a senator about a bypass around a city 4 or something. you have all the welfare workers, all the 5 educators you want to knocking on the door. they've got a lot 6 of clout. I hate to see them get involved in the limited way 7 they are in general funds for that reason. 8 I think the money is well spent. and I think it's 9 justifiable to a great degree. We've got an investment of 10 what, $50 billion in our highways, and you have got to up a 11 "z j: certain amount of money to maintain that investment before '.lo".l..' @;I maintenance gets out of pocket. I for one would like to allocate sufficient moneys ! 14 to the highway department, and I thought we had done that when IOIl <:rl 15 .:I we passed this bill. With the 55 mile,an hour speed limit "'"';;) 16 .~.. plus the elimination of the gas guzzlers -- I've been two zQ 17 ~ years just studying that trend of what we can expect in 18 highway funds. and it's that way (indicating), it's not going 19 to take care of the situation. This much allocation isn't. 20 I don't know what the answer is, but I for one would 21 be opposed to increasing the broadness of what the moneys can 22 be used for, because certainly the major need we have now is 23 highways and bridges. and it's inadequate for that. and I 24 would also be opposed to discontinuing the allocation. 25 CHAIRMAN MARTIN: Are there any other conunents? PAGE 71 REPRESENTATIVE WILLIAMSON: I'll make one comment 2 just for the record. 3 I would like to see the -- you know, I would like to 4 see the language broadened. I don't feel terribly strong that 5 we don't have a way to do that in the General Assembly. 6 It's obvious I think everyone here that the Depart- 7 ment of Transportation is going to continue to come back for 8 additional general revenue funds. Now. if they want to take 9 the gas tax and put that with roads and bridges, the General 10 Assembly is going to have ample opportunity with every Czl 11 j: appropriathns bill to say "In your general funds we want this 'o" ~r~ ~\ 12 "~" ~ spent on broader defined transportation purposes." I think the General Assembly is going to have that authority really 14 ~ in the years ahead, and I think we can handle it that way !;; :J: 15 .:l instead of, you know, proceeding through language changes. Cl '~" 16 ~ It isn't going to make a lot of difference, but it's sure Q z " 16 ~ any action which would result in increasing the usages of WI 13 Z 17 : the money to other than highways and bridges, and that would 18 in any way negate the allocation of motor fuel tax. 19 CHAIRMAN MARTIN: Mr. Nash. 20 MR. NASH: At some time are we going to be asked to 21 vote on whether or not under the constitution it gives 22 authority for earmarking? 23 If we vote for this, then automatically we -- I 24 guess we all cast a vote -- I mean if this carries that we 25 do include in the constitution the authority for the General __ ~~_~ ~ --l PAGE 73 Assembly to earmark funds. 2 CHAIRMAN MARTIN: Senator Holloway can correct me 3 if I'm wrong. You could make that in the form of a 4 substitute motion to Senator Holloway's motion. 5 SENATOR HOLLOWAY: That's the intent of my motion. 6 MR.. NASH: In other words, this would give authority 7 for it in the constitution of earmarking certain funds? 8 CHAIRMAN MARTIN: That's right, for transportation. 9 You could change that motion to say do we want to change any 10 of the earmarking provisions in the state constitution as a subcommittee if that was MR.. NASH: Let me ask this question before we go any further on it. This firemen's fund and all, is that earmark:l.ng1 MR.. HENRY: No. No, that's the Well, it has MR.. NASH: This would be the only earmarking provision? 18 MR.. HENRY: When you don't require something to be 19 paid into the general fund, it has the effect of an earmark. 20 MR.. NASH: That's what I'm trying to get clear in 21 my mind. If the pass the motion, the substitute motion as 22 I'm saying here, that allows the General Assembly the 23 authority to make earmarking of funds, then it would cover 24 the firemen's fund and so forth like that as to earmarking? 25 CHAIRMAN MARTIN: Let me see if I can state that. PAGE 74 If you want to make a motion that we not change any 2 of the consdtutional provisions that deal with earmarking, 3 then Mike's report this morning dealing with all the 4 additional earmarking situations, plus the Department of S Transpprtation earmarking issue would be resolved, and that 6 resolution would be that we would not consider those -- we 7 would not take action on that as a subcommittee. 8 MR. NASH: All right. Now one other question. 9 I'm willing to make that motion. 10 One other question. The agriculture commission thing, since those are not coming -- those are not general taxation on all people, in other words, specific. Would they come under this same thing or not? In other words, they're separate, they not collected from -- CHAIRMAN MARTIN: Mr. Strickland? MR. STRICKLAND: All taxes are general taxes on all 18 people as far as I'm concerned, highway too. 19 MR. NASH: Those are, yes, but on this particular 20 item only those people that are producing are taxed. 21 MR. WADE: They're going to pass them on to the 22 people. 23 MR. STRICKLAND: That's what I'm saying, it passes 24 along. 2S MR. NASH: Us people that buy them peanuts -- PAGE 75 MR. STRICKLAND: You can never get on the highway 2 and be a highway user, too. 3 CHAIRMAN MARTIN: Actually there are several issues. 4 Mr. Nash, you're correct in pointing out only one of the issue~ 5 is the earmarking; we can dispose of that. 6 MR. NASH: I just wanted to know whether that was 7 under earmarking or not. That's what I'm asking. 8 CHAIRMAN MARTIN: Senator Holloway. 9 SENATOR HOLLOWAY: I believe the law reads now, or 10 the constitution does on the allocation of motor fuel tax .. 11 CzI I- that they shall be allocated. I notice the word "may," the o'.".. ~ 12 ~ General Assembly may. ~F~ ! 14 What is the current law in these other areas? CHAIRMAN MARTIN: Mike? I- '<"l :I: 15 otI MR. HENRY: Let me try and explain my proposal CI '";;;) 16 .~.. again . Q Z : 15 ~ needs of the state? "~ ::> 16 ~... I'm just an uninformed citizen who is beginning to Q Z 17 : look at how government operates. I just somehow find this 18 a little bit more than I can just comfortably digest, and I 19 am going to vote to oppose earmarking, I'm going to vote if 20 we have it to eliminate the secondary pension fund; I'm 21 going to ask my senator and my representative to do the same. 22 This is bad, very bad. I think it needs to be opened up. 23 CHAIRMAN MARTIN: Senator Holbway? 24 SENATOR HOLLOWAY: Let me add that I have seen 25 task forces that have nonpolitical people on it with an PAGE 78 earnest desire to write a good constitution for Georgia, and 2 to do one of the finest jobs, and then it gets up before the 3 committee and politics gets into it. 4 Now, my vote on this -- say.for instance the 5 firemen's pension will be for the same reason it was when we 6 rewrote Article X which passed the General Assembly and got 7 a two-thirds vote, but I think we need to come out with 8 something we can pass in the legislature, and I believe for 9 those reasons these exceptions are necessary. 10 I agree with your statement completely, but I don't I!l Z 11 i= know whether I can get elected on it. @;;o0..0..=.. MR. WADE: Sure. I guess maybe that is what the system is all about, different interests, and somehow I just ! 14 don't see that these exceptions are in the best interest of t'<:z"l: 15 ~ the people of the state, and certainly I don't see -- because I!l 00= ::l 16 .~.. the insurance carriers as an example are going to pass Cl Z ' 16 .~.. CHAIRMAN MARTIN: Mike, let me ask you a question az 16 .~.. oz 17 ::i MR. HENRY: got right now. This will put you back to what you've 18 SENATOR HOLLOWAY: If we removed "transportatbn 19 purposes." not the whole paragraph. 20 MR. HENRY: Well. if you strike the whole paragraph 21 you would still be 22 CHAIRMAN MARTIN: Is there a second? 23 MR. NASH: I'll second that because I can see you 24 start earmarking for transportation you earmark for a million 25 and one things. PAGE 88 MR. HILL: Wait. If you are -- 2 MR. NASH: His motion is to take this out. 3 SENATOR HOLLOWAY: To leave the law like it is. 4 MR. HILL: To leave earmarking alone. 5 MR. WADE: He's striking the whole thing. 6 MR. HENRY: He's striking (a) under the category 7 redrafted exceptions to the prohibition against earmarking. 8 This will have the effect of putting -- of leaving Article III 9 alone, and in Article III there is right now in place a 10 prohibition against the earmarking of taxes, and right under 11 "z i= that statement there is an exception to it -- e ; i'o..".... MR. HILL: For the motor fuel tax. MR. HENRY: for the motor fuel tax. That's the ! 14 ... '<"C( :I: 15 ol) "'";;;) 16 ~... Q Z " 16 .Iz.I.I (Two hands were raised.) REPRESENTATIVE WILLIAMSON: strong constitution on that one. You all have got a Q Z " ... 16 z1Il CHAIRMAN MARTIN: Okay. That is three. Q -Zc '" 17 1Il All opposed raise your hand. 18 (A show of hands.} 19 CHAIRMAN MARTIN: That's two. Okay. That language 20 is accepted. 21 SENATOR HOLLOWAY: I move now we place it in the 22 aforementioned provision. 23 CHAIRMAN MARTIN: Okay. Second to that motion? 24 A MEMBER: Seconded. 25 CHAIRMAN MARTIN: All in favor of that motion raise PAGE 94 your hand. 2 (A show of hands.) 3 CHAIRMAN MARTIN: That's six, 4 All opposed. 5 SENATOR HOLLOWAY: Let me ask Mike -- now, I didn't 6 include the removal of that second sentence in my motion on 7 (a} . Is that necessary you think? 8 MR. HENRY: Oh, up here? 9 SENATOR HOLLOWAY: Yeah, 10 MR. HENRY: Well, really "z .. 11 i= SENATOR HOLLOWAY: I don't think it is. .o... MR. HENRY: That is already provided for in a much @;; shorter and simpler statement which says that you can't ! 14 earmark, and the effect of this is -- I- U:z:I ".. 15 ol) ::> SENATOR HOLLOWAY: I just wanted a yes or no, Mike. 16 .~.. I didn't want a lecture . Q Z 17 :i:i (Laughter,) 18 MR. HENRY: Yes, You should have moved that that be 19 deleted, or you should have moved in the future that that be 20 deleted. 21 SENATOR HOLLOWAY: In light of the vote on (a), I 22 move that it be deleted. 23 CHAIRMAN MARTIN: Senator, what we can do is once 24 we finish this process we will restate for the record the 25 language that we have passed, and then pass that. That may PAGE 95 be the best way to do it. 2 SENATOR HOLLOWAY: Jim, I'm going to have to leave 3 in five minutes. I've got five people waiting in my office 4 that have been up there for thirty minutes. I thought we were 5 going to get off for lunch. 6 MR. HILL: You're approving this ..language, but the 7 Office of Legislative Counsel has not yet had an opportunity 8 to review this, and I would ask that the committee permit us 9 to make any technical changes after consultation with them 10 that may be necessary. "z .11 lot.>..: CHAIRMAN MARTIN: I guess the full committee also @ ; j can make those changes. MR. HILL: Of course, yes, at any time. ! 14 I- CHAIRMAN MARTIN: Okay. That may be a better way to '<"l :I: 15 Q proceed, just make our recommendation and let the full committe "t>: ::> 16 .~.. get the benefit of the technical remarks . Q Z 16 .~.. MR. NASH: It's not spelled out in the exception, Q Z 17 ::; they're all statutory? Is this all that's in there? 18 MR. HENRY: No, theres a lot of stuff that could be 19 done by statute. 20 As I said, what I have tried to do is pullout the 21 constitutional 22 MR. NASH: This is all constitutional? 23 MR. HENRY: Yeah. This is the only ones that are 24 constitutional. 25 REPRESENTATIVE WILLIAMSON: I've got no problem with PAGE 99 what the program is doing, but I really wonder whether it 2 needs to be in the consititution. That's the problem I've 3 got .. 4 MR. HENRY: You're questioning whether the lapsing 5 feature of the fund needs to be retained, then. 6 REPRESENTATIVE WILLIAMSON: That's right. To me, if 7 it's a legitimate program the General Assembly ought to fund 8 it and 9 MR. VICTRY: Can I address that comment, please, 10 sir? \:l Z 11 j: The point is the General Assembly is not funding it. @;;.'oQ"... This probably would never have gotten off the ground if it had to come out of general tax funds back in 1976 and 1977. 14 ~ Its like many other programs, they're all well intended, but 1;; :r 15 ~ it's a question of funding, so the source was the individual \:l 16 .=~'.".' industry that theoretically benefits from it, and they were Q 17 Z ::: willing to allow themselves to be assessed, and it's this 18 concept that was presented to the legislature and adopted. 19 REPRESENTATIVE WILLIAMSON: Why couldn't we pass 20 exactly the same statutory language and do the same thing, 21 then? 22 MR. VICTRY: Because there's a lapsing feature. 23 You're going to -- What you will do, and getting back to a 24 question that was raised earlier, do we have any contractual 25 arrangements here in these funds; the answer I think is yes PAGE 100 in that respect because in reaching legal agreements in paid 2 cases to reimburse we then enter into a contractual -- we are 3 obligating moneys to be paid back, you see. 4 SENATOR HOLLOWAY: Excuse me, gentlemen. I've got 5 something I need to get to. Do you anticipate meeting this 6 afternoon? 7 CHAIRMAN MARTIN: No, sir. 8 SENATOR HOLLOWAY: Good to see you all. 9 (Senator Holloway withdrew from 10 I:l Z 11 ~ ...oIX 0.. ~ 12 ~ ~r~ ! 14 ~ II> : 16 ~... Q Z "... @;I MR. HENRY: I know what you're talking about. Now you all had specific ! 14 ... MR. STRICKLAND: It was statutory type . '<"l: J: 15 .:l MR. WADE: I would sort of like to move us along ":'>" 16 .~.. because I'm going to have to leave too . Q Z 16 .~.. CHAIRMAN MARTIN: Okay. I was hoping we would get Q Z 17 : through with this today, but I am afraid we're probably going 18 to need to see what Mike does with this, with what we did 19 today before we finally adjourn and make our report to the 20 full committee. 21 MR. HENRY: Did you want to delete the second 22 sentence in the body of the main paragraph there? Have you 23 all done that? 24 CHAIRMAN MARTIN: I think that was already covered 25 ~y the motion that Senator Holloway made. Does anyone PAGE III disagree with that? 2 That was my understanding that was included. 3 Can we meet before the 24th? 4 MR. HILL: We can't meet before the 17th, the staff 5 cannot meet before the 17th. 6 CHAIRMAN MARTIN: Why don't we do this, why don It 7 we, ask Mike to get in contact with the members of the sub- 8 committee and try to set up another meeting before the 24th 9 and not try to do that today. 10 Is there any more business? ':: Cl Z 11 ~ 0~ ...... Mike, do you understand where we are? 12 ~ @)r l MR. HENRY: Yes. CHAIRMAN MARTIN: Any other business? ! 14 MR. HENRY: let me make sure, though. I redraft -- l- oll :r 15 .:I No, I don't. Okay. Yeah. Cl ~ ::> 16 .'z".. CHAIRMAN MARTIN: Okay. You've got it. Q Z 17 ~ '" Any other business? 18 Move that we adjourn. All in favor say aye. 19 (j>..yes .) 20 CHAIRMAN MARTIN: We adj ourn . 21 (Whereupon, at 12:40 p.m. the subcommittee meeting 22 was adjourned.) 23 +++ ++ 24 + 25 . INDEX Committee to Revise Article VII Subcommittee Meeting Held on Sept. 5, 1980 SUBCOMMITTEE MEETING, 9-5-80 Proceedings. pp. 3-4 SECTION III: PURPOSES AND METHOD OF STATE TAXATION Paragraph II: Revenue to be paid into general fund. pp. 4-16, 73-97 Article III, Section IX, Paragraph VI: Appropriations to be for specific sums. pp. 16-95 Paragraph VI(b): Motor f.uel taxes. pp. 50-72 Paragraph VI(c): Employers' workers' compensation. pp. 16-41, 97-109 Article III, Section X, Paragraph IV: Firemen's pension system. pp. 42-49, 109-110 STATE OF GEORGIA 2 COMMITTEE TO REVISE ARTICLE VII 3 OF THE 4 CONSTITUTION OF GEORGIA 5 6 7 8 9 10 CzI 11 l- ...oe< Q. 12 ~ @rl ! 14 IU'I : 16 .~.. Q Z 16 ~... Q Z 17 ::; 18 19 20 21 22 23 24 25 PAGE I-A PAGE 2 PRO C E E DIN G S 2 CHAIRMAN CASTLEBERRY: Canter, do you want to go 3 ahead? 4 MR. BROWN: Let me give them a copy of the draft 5 we're talking about. That might be a place to start. 6 As you can see, that is a clean draft. Here is a 7 struck through and underlined one. 8 This was the draft that was tentatively approved at 9 your last subcommittee meeting that Professor Blount chaired. 10 ...Czl 11 j: o... ~ 12 ~ ~r~14 ! IIII :z: .15 ~ Cl ::l 16 ~... az 17 ::; At the meeting the committee asked me to get with Jack Morton of the Tax Reform Commission concerning the language of the two provisions. The first one of those provisions was the language relating to the exception for the mill rate limitation on property taxes as regards bank stock and money capital held by financial institutions . The other of the two was the language of the 18 provision which grandfa~hers all the current property tax 19 exemptions into law as a part of the new constitution. 20 Jack and I did get together, and we have some 21 language for your consideration. 22 I'm in the position that I'm going to recommend to 23 you the adoption of one and not the other. I think Jack 24 concurs with me on that, but the first one is concerning the 25 bank tax, and the language that I have passed out to you is PAGE 3 this first page dealing with this first -- with this 2 Paragraph II here that is entitled Taxing Power Limited. 3 Th~ draft as it was approved at your last meeting 4 if I can find it read thusly: The annual levy of state ad 5 valorem taxes on tangible property for all purposes except 6 for defending the state in an emergency shall not exceed 7 one-fourth mill on each dollar of the assessed value of the 8 property, except that in lieu of ad valorem taxation of 9 property owned by banking corporations, shares of stock of 10 CzI 11 j: ..'o".... 12 ~ @ ~sv ~ ~F~ 14 ~ I- '" ::I: 15 ~ CI '":::> 16 ~... oz 17 : banking corporations and other money capital coming into competition with such banking corporations may be taxed at a rate not exceeding five mills on each dollar of the assessed value of the property. The point was raised, and it was a good point, that in fact we do tax some property of banking corporations with the ad valorem tax, and that this would seem to exempt all that property if a bank paid the bank share tax, so what 18 Jack and I did pursuant to your request was come up with the 19 following language: 20 Up to the "except that" on line 5 it's exactly the 21 same that's in the draft you tentatively approved. After 22 that, however, we changed the language to read: 23 Except that so long as the method of taxation in 24 effect on June 30th, 1983 for the taxation of shares of stock 25 of banking corporations and other monied capital coming into PAGE 4 competition with such banking corporations continues in 2 effect, such shares and other monied capital may be taxed 3 at a rate not exceeding five mills on each dollar of the 4 assessed value of the property. 5 We think that will give you your exception to the 6 quarter mill limitation, but will neither exempt additional 7 property of banks from ad valorem taxation or prohibit the 8 General Assembly thereafter from changing the method of 9 taxation of banks. 10 ~ Czl 11 I- ."o0.:".: 12 ~ ~F~ 14 ~ I- '<"l J: 15 .:I <.:l 0:: :) 16 .c~.. Z 16 .~.. Q Z 17 ::; decide, let's vote whether we want to accept, reject, or what we want to do, see if we can perfect this thing where we can send it back to the full committee. As you know, and I'm sure we will, if we make any mistakes, this goes back to the full committee, and it takes it up, then it goes to the big committee, then it takes it up, then it goes to the legislature and it's got to go through both houses there, so there is no use of any of us thinking 18 just because we do something in here this is final, because 19 this is not, this has got a lot more times to be watched, 20 and if we do make a mistake we will have an opportunity to 21 relook at it, if there's something we have questions about 22 we have an opportunity to relook at it, but we do need to do 23 something to get our report back to the full committee, I 24 believe we're meeting in some week or two weeks from now, 25 I put it on the calendar the other day, so if there's no -------- -~-------------' PAGE 4 objection we're going to start, let Canter go through this 2 thing one step at a time, and if we have objections, we want 3 to voice them. If we don't -- I'm going to ask you if there's 4 any objections to that, if there's not we'll pass on over it 5 and consider it approved until we get to the end of it. 6 Canter, if you would, I'm going to ask you to start, 7 go through it, explain to us what you have done to it to the 8 best of your ability, and if we have any questions you wall 9 want to ask anybody here, any questions or anything, be sure 10 cz.:I 11 ... 'o" A- 12 ~ ~ ~\)~~ 14 !... 'x" 15 .:l c.:I '";;) 16 .~.. Q Z 17 :: and raise them because don't any of us want to do something that we don't think is right, MR. BROWN: Thank you, Mr. Chairman. With your permission, I would like to take just a minute to explain how we have arrived at the draft that I passed out just a few minutes ago just to refresh the memories of the members of your subcommittee . When the original Article VII task force was 18 appointed a year and a half ago, you and Chairman Thrower 19 requested that the Office of Legislative Counsel prepare a 20 first, a very preliminary first draft of Article VII in its 21 entirety. 22 It wasn't the intent of that request as I understood 23 it to show what particularly should be done, but to illustrate 24 the types of changes which should be made by your subcommittee 25 and the other two subcommittees dealing with this article PAGE 5 without wreaking any sever~avoc on the constitutional 2 framework of the state finance. 3 We did do that, and you used the draft of Section 4 III of that proposal as the basis for your discussion in your 5 first subcommittee meeting. 6 We went through that draft, and at that time your 7 subcommittee directed me to work with a number of other people, 8 particularly a number of individuals who are closely -- work 9 closely with the legal bond field in the state of Georgia 10 .., as designated by Chairman Thrower . z 11 I- et: o.a.... He did designate a group of bond lawyers, and ~ 12 ~ although we were not able to meet as a group I have been (@)r i privileged to carryon over the past several months a fairly ! 14 l- extensive correspondence with Mr. Pope McIntire who was V> J: 15 ..:.., designated as working chairman of the group and who is here et: :::> 16 ~... today with the subcommittee Q Z 17 ~ I would want to point out that Mr. McIntire through- 18 out the correspondence that we had, which most of the members 19 of your subcommittee received copies of, has expressed 20 reservations, very serious reservations about any attempt to 21 rewrite the bond provision in the constitution. 22 He has been kind enough, given that reservation, to 23 suggest in a series of letters points of concern to him about 24 the particular language which was addressed in a succession of 25 drafts and revisions of the draft that you initially discussed. PAGE 6 I have attempted through that correspondence to 2 take advantage of his counsel and to correct errors based 3 upon his observations, 4 The draft that you have in front of you dated 5 September 1st, 1980, is the latest revision based upon that 6 correspondence. 7 I don't purport to say that I think that this is 8 what I would have considered the ideal draft you discussed. 9 I personally feel, and I believe the experience of other 10 states in recent years in their constitutional revision would illustrate that a state can perfectly well safeguard its bond rating and its fiscal integrity by handli.ng almost all of this by statute as opposed to having it handled constitutionally, I di.d feel, however, that the spirit of your direction to me was to work with Mr. McIntire and wherever possible to reach some sort of compromise or to solve any 18 problems that he and the members of his committee might feel 19 were there in the draft. 20 Consequently, you have a draft before you that I 21 feel is a good compromise. and with that I would just like to 22 begin and go through it paragraph by paragraph to show you 23 what I've done. 24 As an overview, just so we're all talking about the 25 same terms, this is drafted in the standard legislative PAGE 7 bill drafting format. Words that are struck through are 2 words that are presently in the constitution but which would 3 be deleted by this draft. 4 Words that are underlined are words that are not 5 presently in the constitution and which would be added in 6 this draft. 7 It was the intent of this draft generally to carry 8 into effect the charge to the Article VII task force by 9 Governor Busbee and by Mr. Harris, As I understood that 10 charge, it was to wherever possible provide for more coherent CzJ 11 I- ..o0..<.. ~ 12 ~ ~F~ 14 ~ I': CJ 0< ;;) 16 ~ Q z 16 .~.. Q Z 17 : You referred to them, and that implied that they had done something like this to mee, you see, MR. MICHAEL: The only reason I mentioned that is that they look at the states very closely, and they start looking, think very closely, California was probably because of some of the other problems they're having, It's not because of a debt change provision, 18 CHAIRMAN COLLINS: When you referred to it and 19 referred to this, that sort of implied to me -- 20 MR. MICHAEL: There's no connection one way or the 21 other. 22 C}~I~~ COLLINS: -- that they had changed theirs, 23 and I wanted to make sure. 24 MR. MICHAEL: I admit a lot of the language probably 25 in the current one probably could be changed to make PAGE 12 it clearer. Of course, I guess you may have some pride of 2 draftsmanship-- 3 CHAIRMAN COLLINS: That's exactly what we're trying 4 to do, what this committee wants to do I think -- as one I 5 know I do -- and that is to make it clearer, simpler, that 6 we're not going to mess up. 7 But, you know, if we get afraid of change or get 8 pride of authorship or something, then we won't do the ~ob 9 that this committee has been charged to do, and I don't have 10 any pride of authorship, all I want to do is to come out of CzI 11 j:: ..'o".... here with a good bill if possible. 12 ~ MR. MICHAEL: My only point was that I think I @ r l guess it's for the committee to decide whether they think ! 14 ... it needs rewriting to make it better understanding and then '<:"zl: 15 .:l whether it's necessary to do that, and then go back to the CI '"::;) 16 ~... rating agencies, et cetera, to present our case that there Q Z 16 .~.. Cl Z 4 17 :;; back in the provision that you can only invest in U.S. governments. CHAIRMAN COLLINS: The sinking fund? MR. NIXON: I would suggest that. CHAIRMAN COLLINS: When we get to that, we'll sure take that into consideration. Canter, did you want to -MR. BROWN: If I could just briefly respond to what 18 Mr. McIntire and Mr. Micheal said, I would like to reiterate 19 to the subcommittee that in preparing this draft our office 20 and I particularly were attempting to do that within the 21 limits of the charge that was set for the constitutional 22 review commission by the Governor. 23 As I understood it, it was exactly the point that 24 the Governor wanted the constitution written in simple and 25 modern English terminology as possible; it was the Governor's PAGE 14 point that he wanted the constitution organized in as clear 2 and direct and easily accessible a manner as possible. Those 3 were two of the major and fundamental principles upon which 4 the Governor based his desire to revise the constitution. 5 He also as I understand it felt that wherever 6 possible flexibility should be left to handle matters by law 7 rather than in the constitution, if by handling it in that 8 manner you are not harming the state constitutional framework. 9 Again, I think that was the fundamental principle 10 upon which this whole three-and-a-half-year effort has been based, and I frankly can't see how you could take one section of the constitution even if it does deal with state debt, as much money as is involved with that, and just simply exempt it from the three basic premises upon which the whole effort has been undertaken. I just don't feel you can rationally and logically do that. I would like to point out that also this is not the 18 only debt provis ion in the Georgia constitution. Article IX 19 contains very important provisions relating to local debt. 20 The Article IX subcommittee, as Mr. Hill will tell you, has 21 already met, has already tentatively approved a draft that 22 goes far beyond anything attempted in this draft before you 23 as related to local debt, and as far as I know did that 24 without objection, and it is inconceivable to me that just 25 because this language has served the state well for six PAGE 15 years that it can't be improved upon without harming the 2 substance of it. 3 I personally don't think this language does harm the 4 substance of any of the constitutional debt protections, and 5 I would like to invite you to go through it with me so that 6 I can i11ustra~e that point to you. 7 I had not meant to suggest, though, and I do want to 8 be fair, when I use the term compromise that there had been 9 any sort of agreement between our office and Mr. McIntire or 10 Czl 11 I- 'lo."L.. ~ 12 ~ @ ~r~14! I'<"l J: 15 .:l Cl '":::l 16 .~.. Q Z "rt: :> 16 ~ Q z 16 .~.. collect taxes which were already levied. If you leave the Q Z 17 ~ word out, somebody might footsie around and borrow money 18 when they hadn't actually levied a tax that wasn't in the 19 budget to begin with, and this is essentially limiting -- 20 MR. BROWN: I don't have any objection to leaving it 21 in. I had just forgotten that I had put it back in. 22 MR. DAVIS: You don't have any objection to it 23 staying in like it's worded, do you? 24 MR. McINTIRE: Canter put it back in after he and I 25 discussed it. PAGE 22 2 247 CHAIRMAN COLLINS: That straightens it out on line 3 MR. DAVIS: Yes, that's okay. 4 CHAIRMAN COLLINS: If there are no objections, then 5 we'll move on. 6 MR. BROWN: Again on line 24 there was a fourth 7 conjunction in that sentence with the words "and no," and I 8 just -- again I just made a separate sentence out of it. 9 The third kind of state debt that was authorized, 10 and this is one of the two major innovations in the work that ~ 11 ~ Mr. McIntire and Mr. Michael and others did in 1972 is to @;i authorize the general obligation debt, as you know. What I have attempted to do in this first paragraph !.. 14 is just to specify the kind of debt that can be levied, and ''"Il % 15 o:l ~ I have broken out from this one paragraph the two kinds, the i 16 OIl general obligation and guaranteed revenue, so that Paragraph Q Z 17 ='Il (c) would only deal with general obligation debt. 18 As you can see on line 3 I have struck the guaran- 19 teed revenue debt, but you'll find it again back on line 13. 20 I have stricken the sentence or the words "general 21 obligation debt may be incurred by issuing obligations" 22 because if you'll go back to the lead in to the paragraph 23 says the state may incur, and this would read general 24 obligation debt to acquire, construct, develop, extend, enlarge. I think that just follows in the use of the ,..--------------------- structured sentence. PAGE 23 2 CHAIRM)J~ COLLINS: Any objections on this particular 3 section? 4 MR. BROWN: On lines 10 through 12 the present 5 language reads "prior to the amendment adopted November 8, 6 1960, to Article VII, Section VI, ParagraphI(a) of the 7 constitution of 1945, ,! I have just replaced that with the 8 effective date of that amendment. It seems to me it was 9 clearer just to specify the date rather than to go through 10 CzI 11 t- ...oo< 0.. 12 ~ @~ F~ ~ 14 ~ t':z": 15 ~ CI 0< ::> 16 .~.. 17 agz; all that language. MR. FUNDERBURG: Going back to the observation that counsel made, when he takes this to New York or somewhere, the question is what's significant about November 8, 1960. MR. BROWN: That was the date upon which the a~mendment to the constitution was approved which permitted the state to MR. FUNDERBURG; I understand that, but if you 18 strike it out it doesn't have that in there, so I'm reading 19 it and I'm saying "November 8, 1960, what does that refer to?" 20 Then I've got to go do research to find out what's significant 21 about November 8, 1960. 22 MR. BROWN: You really don't, because all that 23 relates to is the dividing date as to when a particular state 24 authority was formed. I think you'll find it really is 25 clearer that way. PAGE 24 It's fairly easy to determine whether an authority 2 was created. 3 MR. McINTIRE: I think the point is exactly the point 4 I've been trying to make. That language has been in circu1a- 5 tion for eight years and everybody knows what it means. 6 When it changes, rather than making it clearer, somebody is 7 going to have to explain to them that November 8th, 1960, was 8 the date on which that amendment was adopted, so you are 9 forcing a discussion which is totally unnecessary for the 10 purpose of saving five or six words, and it's a matter of philosophy, but that sort of thing is repeated over and over again. MR. BROWN: Yes, sir, that is true, it is repeated over and over again, which to me illustrates why this whole 15 ~ process should have been through. Again, I don't see what it '"Ill: 16 ;l z z~ adds to put all that language in there. 17 :Ii You're talking about a date prior to which state 18 authorities were created. It seems to me that the dividing 19 line is that date, it doesn't matter what happened on that 20 date, it's just that date is where you draw your line. 21 CF.AIRMAN COLLINS: Any more discussion from any 22 member? Any objections to the section? 23 If not, we will move on. 24 MR. BROWN: Mr. Chairman, as I mentioned a little ~:' earlier, this is the section that deals with guaranteed PAGE 25 ,,----------------------------------------------------, revenue debt, the second type of new debt which was authorized 2 in 1972. 3 Mr. Michael brought up -- I think it was Mr. Michael 4 or Mr. McIntire -- that I had eliminated toll roads from this 5 section. 6 I had not intended to eliminate the authority for 7 toll roads, and certainly if your committee feels there's a 8 question I have done that there's no problem in putting that 9 back. 10 The reason that I did eliminate it was because if 11 "z j: you'll follow the language there it says toll bridges, toll o~ .".". ~ 12 ~ roads and any other land public transportation facility. It ~F~ seems to me if you use the words "and other" there it showed 14 ~ me that they intended toll roads to be a land public trans- I- '" :I: 15 ~ portation, and clearly that is included in Paragraph II there. "~ ::> 16 ~ I had not intended to delete the authority for toll roads, Q z 17 ~ it just seemed to me the language there implied it was part 18 of the larger term. 19 MR. DAVIS: It's not a complete thought, Subparagrapl 20 II there, "Land public transpottation facilities or systems." 21 MR. McINTIRE: That's my point. I think you could 22 have a Supreme Court case on whether a toll road was a land 23 public transportation facility, whereas if you put the two 24 words in "toll roads," the whole argument disappears. 25 MR. BROWN: Mr. Chairman, as I mentioned earlier, PAGE 26 I certainly have no objection if your committee wants to put 2 toll roads back in there. I was simply trying to explain why 3 I felt it could be ~moved. 4 5 in? CHAIRMAN COLLINS: Do we have a motion to put it bac 6 MR. NIXON: I make a motion that we do. 7 CHAIRMAN COLLINS: All in favor of putting it back 8 in let it be known by lifting your hand. 9 (A show of hands.) 10 CHAIRMAN COLLINS: Reverse your position. (A mow of hands.) sir. CHAIRMAN COLLINS: Canter~ put it back in, please, MR. BROWN: Yes, sir. On line 19 I have eliminated the words -- MR.~VIS: We need clarification on land public transportation facilities or systems. 18 MR. FUNDERBURG: I would agree now if we put that 19 back in,how would it read? 20 MR. ,BROWN: "Issued to finance: (1) toll bridges 21 and toll roads; (2) Land public transportation facilities or 22 systems." 23 MR. DAVIS: What's significant about the word "land" 24 MR. BROWN: It's just a word that's in the constituti_on now. -------- ----------~-_._-------------' PAGE 27 MR. DAVIS: Well, how to limit it causes confusion. 2 The word "land," I think it was inserted there, wasn't it, 3 Canter-- 4 MR. BRO\~: No, sir. It's presently in the 5 constitution. As you'll see, it's the last word on line 17. 6 MR. DAVIS: It's "any other land" on line 17. 7 Now, when you insert Paragraph II you say land pub1i 8 transportation facilities or systems. That's where it creates 9 some confusion. 10 ~ z 11 I- 'o<.".>.. ~ 12 ~ (~@r1~4! lo-n ~ :l: 15 ol) ~ '~" 16 ~... a Z ~ 17 ::i Are we talking about just those that went on land, are we just talking about land for those systems? MR. FUNDERBURG: And you said and any other land. You know, any other land covers everything. }1R. HILL: Any other land would be stricken from the proposed draft. Right, Canter? Then it would appear in line 2 . MR. BRO~~: I think the relationship between the 18 word "land" and "public transportation" facilities would 19 remain the same in the new draft as in the old. 20 MR. McINTIRE: What we're talking about in those 21 days was MARTA. 22 MR. DAVIS: I think you would want to drop the word 23 "land" in Subparagraph (2) and let it read public transportati n 24 facilities and systems. 25 MR. McINTIRE: We weren't talking about airlines or PAGE 28 buses. 2 MR.~E: I think that would change the present 3 constitution, it would be a change. The present constitution 4 reads, after toll roads there's a comma and it says "Any other 5 land public transportation facilities or systems." 6 If you wanted to retain the present language, you 7 would put in "other" preceding "land." 8 MR. FUNDERBURG: You're saying eliminate (2) 9 altogether and incorporate what you need in (1); right? to Is that what you're saying? MR. KANE: I wasn't saying that. I was saying that in order to retain the present language you would leave it as it is except insert "other" before "landn in Subparagraph (2). I don't think we're discussing much of a change here as far as I can determine. MR. FUNDERBURG: Since you're talking about sin~lifying it, I don't see why we can't just incorporate it 18 all in one paragraph, toll bridges~d toll roads, land public 19 transportation facilities or systems. 20 MR. BROWN: The reason I had broken it out like this 21 was assuming in the future that there was any attempt to 22 amend the section, it seemed to me that it would be easier to 23 have it in a format which you could just add a new paragraph 24 at the end, in this instance the sixth paragraph to specify ~" i: which program vou were referring to. U~ ~_ __ ------------------ PAGE 29 It was just a matter of drafting style in attempting 2 to break these out so that they would be more easily 3 identifiable. 4 Again I think Mr. Hill will tell you this is in line 5 with the style that is generally being adopted in the 6 constitutional revision. 7 MR. DAVIS: Mr. Chairman, in (1) I think it ought to 8 read toll bridges, toll roads; (2) ought to read public 9 transportation facilities or systems, drop the word "land." 10 That will cover it. That will give you land on either the Czl 11 j: ~ o'" 0w 12 ~ ~r~ ! 14 I- VI :r 15 ~ Cl :'>" 16 ~ ozw 17 :; toll roads or bridges or the public transportation system. MR. BROWN: I do think, Mr. Chairman, you would want to -- if the subcommittee wants to do this there's no problem in drafting, but I do think that Mr. Kane is right that would make a major substantive change in the present provision. MR. FUNDERBURG: Charlie, then you're saying that ail and sea transportation facilities would be included? 18 MR. DAVIS: Uh-huh. Right now -- 19 MR. FUNDERBURG: Not that I see anything wrong with 20 that, but I just -- 21 MR. DAVIS: It reads "and other land." It looks 22 like there's a comma there, or was a comma there. 23 MR. BROWN: The Comma is underlined there, it's 24 added. The comma is not in the present constitutional 25 provision. PAGE 30 MR. McINTIRE: I didn't get a chance to formally. 2 introduce Barry Phillips. I think most of you know him. 3 CHAIRMAN COLLINS: How do you do. Glad to have you 4 with us. Glad you've taken the time to be with us, 5 MR. MICHAEL: I remember discussing that when it was 6 originally drafted. As Mr. McIntire mentions, that was 7 primarily designed to cover a situation like MARTA in the 8 event the state ever wanted to get into that. 9 CHAIRMAN COLLINS: If we took land out, do you think 10 this would open it up to air and sea and everything else? MR. MICHAEL: Yes. MR. McINTIRE: It would. MR. DAVIS: Your alternate word would be "ground." CHAIRMAN COLLINS: If anybody has a motion, let's If we haven't, we can move on. I'm not going to rush you either. MR. BROWN: You're considering the deletion on 18 line 18 on page 2 of the word "land," and it has been 19 suggested that if you did that you would be authorizing the 20 state to issue guaranteed revenue debt against sea and air , 21 transportation facilities and systems. 22 CHAIRMAN COLLINS: Do we have any motion on line 18? 23 If not, we'll move on and leave it like you have it 24 drafted there at this time. When we get through, you'll have 25 an opportunity to come back and try anything else you want to. PAGE 31 As I say, you're going to have three or four more 2 chances. 3 MR. BROWN: Mr. Chairman, the next two lines there, 4 the present language reads "or water or sewage treatment 5 facilities or systems. " I felt like that water and sewage 6 were both supposed to modify treatment facilities and systems 7 and wrote them in that way. Just again to me it appeared 8 clearer that way. 9 CHAlill1AN COLLINS: Any objections? Any discussion 10 on that? Czl 11 j: MR. DAVIS: Water treatment, water purification -- 'o.0".... @;I MR. FUNDERBURG: That treats it. You purify it, you treat it. You're not going to treat it for some other 14 ~ reason. I- ':<"rl 15 ~ Isn't the word purification more restrictive? I Cl '":::> 16 ~... don't know what you do with water, but it seems to me you Q Z 17 . 12 ~ (~ @))~ r~ 14 ~ I': 16 ~ suggestions or anything on this paragraph? Any suggested zQ 17 ~ changes or anything? 18 MR. DAVIS: Mr. Chairman, I think in good bonding 19 practices and all I would want in there reserves, if any, 20 both in the first section which goes from line 26 to 31, 21 and when you get to defining exactly what annual debt service 22 is, that phrase there too, reserves if any. 23 You're guaranteeing principal, interest and reserves 24 MR. MICHAEL: I'm talking about the guaranteed 25 revenue provision in this article, because you're required PAGE 44 to have a reserve fund and you're required to supplement 2 should there ever be a shortfall. 3 MR. DAVIS: If there should be a shortfall, the 4 shortfall is guaranteed just like principal and interest. 5 MR. McINTIRE: You can'tplt a number on it because - 6 MR. DAVIS: You can put a number on it if you've got 7 bounds out. You know, when you issue that set of bonds you 8 know what the principal requirements are and you know what 9 the interest is, and you want the highest P&I boserve this. 10 If it's one year you can pinpoint it, if it's accumulative .~ ..11 j: Ill: for three years which is old and antiquated it can be fixed, '0 'Go 12 ~ and today it's just as much a part of marketing bonds as the @ r l security you've got on a lease or anything like that. The ! 14 !ii better the reserve, the lower the interest cost. You don't 16 ~ Q z 16 ~ Q z :t MR. PHILLIPS: You're really getting your problem .( 15 ~:r: when you're talking about the one percent, because that's ~ 16 ! when you're subject to other provisions, subject to (a) or 0x- 17 ~ (b) rather. 18 CHAIRMAN COLLINS: Any more discussion on this? 19 If not, Canter, let's move to the next. 20 MR. BROWN: Yes, sir. (d), Mr. Chairman, is another 21 instance just like (c). It deals with the educational loans 22 we were talking about earlier. 23 MR. MICHAEL: Before you get to (d), I would like to 24 make the changes in (c) to conform with the changes that you 2S made earlier on page 2 because you've deleted -- you know, PAGE 55 ..-------------------------- -----------~ - - - - - - - - - - - - - - - - - , you said water treatment facilities and sewage treabment 2 facilities. 3 CHAI~Uili COLLINS: What we're saying, we're going to 4 take treatment out of both of those? 5 MR. BROWN: Just say water facilities or systems 6 or sewage facilities or systems. 7 CHAIRMAN COLLINS: All right. Is there anything 8 else? 9 Okay, Canter. 10 MR. BROWN: Mr. Chairman, the (d) as I mentioned is 1.7 Z 11 I- "."o.". the educational provision, and I think in line with Mr. ~ 12 ~ McIntire's comment that you should include a reference back ~r~ to that. 14 ~ I- Perhaps it would read the aggregate amount of :'"r 15 .:. guaranteed revenue debt incurred to make loans for educational 1.7 "=> 16 .~.. purposes as authorized by -- I:l Z 17 : MR. McINTIRE: Educational loan programs is what you 18 called it. 19 MR. FUNDERBURG: You went back over there and you 20 changed it to loan programs. 21 MR. McINTIRE: I don't know how you ended up, 22 whether it was loan programs for educational purposes or 23 whether you said educational loan programs. 24 MR. BROWN: We said loan programs for educational 25 purposes. PAGE 56 MR. FUNDERBURG: The aggregate amount of revenue 2 debt incurred to make loans. It's not just for the purpose 3 of making loans. You changed it on page 2, you did say loan 4 programs. You need to -- 5 MR. BROWN: It's my understanding the amount given 6 in this paragraph was intended to be the total amount of the 7 state's participation in these programs, it wasn't supposed 8 tobe just limited to where the state itself actually loaned 9 the money. 10 ~ 11 i= .~... @ -12 ~ ~ MR. FUNDERBURG: That's why you've got to take out incurred to make loans. MR. BROWN: I think if you just said incurred for loan programs for educational purposes that would -- 14 ~ ~ 15 '~;"z: ~ 16 &~ ~z 17 g MR. MICHAEL: One thing you need to consider, you've got two limitations in there, you've got an $18 million limitation on loans directly to the students, that was where the education assistance occurred if you make a direct loan; 18 and then $72 million limitation really was where the 19 educational authority is going to buy the loan from the bank 20 or place as security, so the two limitations there are much 21 narrower than what your general purpose was. If you had some- 22 thing that didn't fit into one of those categories you 23 wouldn't have a limitation other than your ten percent. 24 MR. BROWN: Perry, in looking at that language do 25 you feel that because of that distinction the language could PAGE 57 ---------- ------------, stay the way it is in the draft, because there is a limita- 2 tion on actual loans in the first one, the $18 million. And 3 then the second one is 4 MR. MICHAEL: I think it could probably stay like 5 it is. The question I'm raising is whether you want an 6 overall limitation too. 7 MR. McINTIRE: My problem is when you change the 8 language on page 2 you talk about loan programs as opposed to 9 loans, you've got no authority to incur any debt to make 10 loans; you've only got loan programs. Czl 11 i= Now, they mayor may not mean the same thing. Some- .'o0".... ~ 12 ~ body could say that a loan program is a different thing from ~r~ buying up loans from financial institutions that they have 14 ~ made to students, that one of the purposes of that thing was I- '" % 15 olI to -- if the market wouldn't keep the loans you could buy Cl :'>" 16 .~.. them up like Fannie Mae does for the mortgages and that kind Q Z 17 ::i of thing, so I think you have to first decide exactly what 18 you're talking about to make these two restrictions work. 19 MR. FUNDERBURG: I thought the language loan 20 programs was inclusive enough to include direct loans and 21 support for loan programs. 22 MR. McINTIRE: That's exactly the way I'd say it. 23 I've been accused of using too many words, but I'd say loans 24 and loan programs. Then that\WDuld apply one limit to the " 25 loans, and the other one to loan programs. PAGE 58 MR. BROWN: That's fine. I don't have any problem 2 with that. 3 CHAIRMAN COLLINS: Do any of the committee members 4 have any objections to using these two extra words and 5 putting them in the constitution to clarify what we're trying 6 to do? 7 MR. FUNDERBURG: That means we go back to page 2, 8 Paragraph (5), line 24, and say loans and loan programs. 9 CHAIRMAN COLLINS: That's right. If there are no 10 objections, Canter, will you change that in the proposed draft? MR. BROWN: Loans to, and loan programs for. MR. FUNDERBURG: Down here at 33 I guess you would say for loans and loan programs. CHAIRMAN COLLINS: All right. Canter, go ahead with your next one. MR. FUNDERBURG: I want to ask a question. 18 CHAIRMAN COLLINS: Go ahead. 19 MR. FUNDERBURG: I just want to ask a question about 20 these two dollar limitations. 21 CHAIRMAN COLLINS: All right. I'll try to help you. 22 MR. FUNDERBURG: wbat makes it adequate? Is it 23 does it allow enough ceiling to handle the needs twenty years 24 from now? 25 CHAIRMAN COLLINS: At the time this was passed I PAGE 59 don't think we were looking at a ceiling twenty years from 2 now. We were looking at what we thought the state was able to 3 incur at this time, and this money, you know, is in a revolving 4 fund, it's supposed to come back in -- some of it hasn't. 5 I think if you go to taking out your caps in here 6 then we're going to be making such a substantive change you 7 might run into a problem, and I realize maybe two years, 8 four years or somewhere down the line we might come back and 9 have to amend this to change this. 10 MR. FUNDERBURG: There's no way to place limitations effectively unless we put dollar amounts in? CHAIRMAN COLLINS; I don't think there is in my opinion. You could put percentages in there, but I don't know -- in other words, I personally hate to see the dollar amounts taken out. Mr. Auditor, you might can tell them why. MR. NIXON: I don't know how they arrived at the 18 dollar amounts in the thing, but we haven't sold any of these 19 bonds for this purpose. 20 MR. FUNDERBURG: If you haven't sold any, that 21 gives us a long ways to go. 22 MR. McINTIRE: I think Don just tried his best, 23 and as Perry mentioned they stuck that thing in in the 24 General Assembly itself. I think you're right it was a trade- 25 out as to what they thought the state could do. PAGE 60 MR. NIXON: AS I recall now this was to get the GO 2 bond law, to get it in there. As Pope said, I think this was 3 part of a trade, trading process if I'm right, Pope. 4 MR. MICHAEL: Was that on the schools? 5 MR. McINTIRE: Yes. That was added later. 6 MR. NIXON: It was added. That was one of the 7 provisions added after they got beat. 8 CHAIRMAN COLLINS: There are going to be some 9 added when we get through here too. 10 MR. NIXON: I'm sure there will be. i! 11 But they never have sold any of these bonds. ~JI ~ 12~ that in? CHAIRMAN COLLINS: Is there any objection to leaving 14 ~I MR. FUNDERBURG: No, you can leave it in. 16 .~.. Q Z 17 :; certainly did. I'm sorry. MR. DAVIS; Okay. Any objection to that? All right. MR. McINTIRE: I don't know whether you've gotten to it yet or whether you're about to get to it. That's the point that I was making earlier on line 18, the obligation first of all that the sinking fund be as fully invested as is practicable, and second kbe restricted to general obligations 18 of the United States government. 19 MR. NIXON: I would strongly suggest that go back 20 in. 21 MR. BROWN: Because rating agencies have some real 22 hangups about that, I grant you, and I know that under 23 statutory law it gives you provisions which are very similar, 24 but it gives them a great amount of comfort and so forth for 25 it to be in the constintion, and for that reason if for no PAGE 64 other I'm suggesting that be put back in. 2 MR. DAVIS: We've got two or three provisions there. 3 One it's to be fully invested, one it's to be a direct 4 obligation, and the last is for terms no longer than twelve 5 months. 6 The twelve-month bit probably could be longer. 7 MR. McINTIRE: It doesn't say twelve-month maturity. 8 You might have originally had a longer maturity. 9 MR. DAVIS: I'm saying in buying the bond you could 10 have one that would mature more than twelve months from date ~ 11 j:: ~ of purchase and still make it work for you. ~ 12 u MR. FUNDERBURG: In fact you might get a better @r l return. 14 ~I MR. DAVIS: That's right. 0( % I15 ~ ~ MR. McINTIRE: The risk is if you~t a fiscal 16 officer who for whatever reason, maybe an effort to increase 17 I= revenues, buys a maturity that is more than twelve months 18 and then has to sell it in order to make the sinking fund 19 payment and the market has shifted, he might not have enough 20 money, whereas if he had made a conservative investment in the 21 first place that risk wouldn't be there, and the rating 22 services like everybody else, .all the provisions of the state 23 constitution are expressions of somebody's fear and concern 24 about an unbridled legislature. They don't want the 25 legislature able to fiddle around with the provisions PAGE 65 relating to the state sinking fund. They want that left up to 2 only the people to change. They don't want to make it easy to 3 change, that's their view. Whether it would affect rating or 4 not, I don't know. 5 l1R. NIXON: I'm in the same position. I do know they 6 get uneasy about that. 7 MR. FUNDERBURG: Charlie, when you're talking about 8 loan maturities, you're not talking about investments that 9 would carry beyond the time you had to make the payment? 10 MR. DAVIS; That's right. Czl 11 i= l1R. McINTIRE: That's the purpose of the one-year .oC'."L. ~ 12 ~ limitation. ~r~ l1R. BROWN: If the subcommittee does want to put ! 14 this back in, I would like to make one suggestion that would I- ':"z: 15 .:I save a little space. Cl :'"l 16 .~.. There are two identical provisions, one relating Q Z 17 ~ to the reserve fund and one to this fund. and I have 18 attempted over on page 9 -- that was the general authority I 19 was giving the General Assembly to provide the administration 20 of the two funds. and if w~ could limit it to putting it back 21 just in this one paragraph, as you can see I have related the 22 paragraph to both funds. so I think the limitation would be 23 there. 24 MR. NIXON; I think twelve months is fine for the 25 reason. Charlie. is that we appropriate the highest debt PAGE 66 service really, but then we come around at the end of the .year 2 and the money we don't need we lapse it back and put it right 3 back in investment. We're not losing anything doing it the 4 way we do it. It's not going to cost us anything one way or 5 the other. 6 MR. DAVIS: You had a motion? 7 MR. NIXoN: I make a motion that line 18 through 28 8 be reinstated. 9 MR. BROWN: Would it be within the spirit of your 10 motion to do that by putting the language back in at the 111 11 5Z bottom of page 9 relating to both funds, since I assume you'll ~ @ ::::1::0:0 :: ::n::?one ~,! r::::1:~:Y~~::i::::t::l:fj::: -. 14!... MR. NIXON: I have no objection to that . ':"r 15 ~ MR. DAVIS: Is there any objection to adding that 111 '":lI 16 I back relating to the sinking fund and the reserve fund? I 17 III You go tit. 18 Now we're down to line 29, Canter. 19 MR. BROWN: As was pointed out, this is language that 20 had just been stricken above. I put it back down in here for 21 clarity. 22 MR. DAVIS: Okay. 23 MR. BROWN: Page 7 as you can see, the first para- 24 graph is essentially verbatim with the present constitution. 25 MR. McINTIRE: I might point out in that paragraph PAGE 67 you have violated your rule about the General Assembly -- I 2 don't know whether it makes any difference or not -- you say 3 the General Assembly has enacted legislation. 4 MR. BROWN: I did that in response to one of the 5 requests in your letter that you felt that the original 6 language there served well, and it just didn't seem to me 7 worth arguing about that particular reference. 8 Of course, I would be delighted to -- 9 MR. McINTIRE: I think you could -- the reason I 10 point it out, I think the point that I was making was the CzI 11 j: .oQ'.".. recitation by the General Assembly that the determination that ~ 12 ~ the bonds would be self-liquidating, that that would be a ~r~ conclusive determination. I don't think you need "the ! 14 I- General Assembly has enacted." ':"z: 15 .:l MR. BROWN: If we say until legislation has been CI '":;) 16 ~... enacted authorizing the guarantee --7 I think I would Q Z 17 : certainly prefer that. 18 How about if you said legislation is enacted, just 19 using the present tense? 20 MR. McINTIRE: I'm no expert in grammar, but I don't 21 know what "may not be incurred" and "is enacted" mean, whether 22 they're proper or not. 23 MR. BROWN: I'll just put ''has been enacted." 24 MR. DAVIS: Okay. Any objection tofuat? 25 MR. BROWN: The reference on line 15 and 16 is just PAGE 68 back to the paragraph before. 2 I separated out again one of these long sentences. 3 I just want to makeft clear the reference there. 4 The language down at lines 25, 26 and 27 is one of 5 those sentences, all such appropriations shall not lapse. 6 Again, I was just trying to use modern usage which would be 7 "no appropriation. shall lapse." 8 I have stricken the language there "for any reason 9 and shall continue in effect until the debt for which such 10 appropriation was authorized shall have been incurred," just 11 5~ simply because that is all encompassed in the prohibition on .o... 12 ~ u it lapsing. All that naturally flows from the fact that it @ j l does not lapse. ! 14 ... MR. McINTIRE: You have changed the positive statement ':"r 15 olI that the General Assembly may repeal mone that I presume CI ! 16 z lz!l gives them the right by implication -- you say unless repealed. 17 \l The present language expressly says the General 18 Assembly cannot repeal if the bonds have not been sold. This 19 one I guess implies it. 20 MR. BROWN: Again I think I did that without 21 intending to make a change in the authority, but to avoid 22 this reference to the General Assembly. I don't really feel 23 it makes a difference in authority. 24 MR. McINTIRE: I'm not sure that it does, I'm just 25 pointing that out. PAGE 69 That's another ambiguity I think might be created. 2 MR.~VIS: Any further objection to that? 3 MR. BROWN: Lines 32 and 33, all I have done is 4 replace the word "same" with "appropriation" and the word 5 "said" with "the." 6 You will see in the paragraph that we have just 7 reincluded the language on investment. We specified these 8 funds are to be administered as provided by law. We have 9 already made reference to the appropriate state fiscal officer 10 CzJ 11 j: ...o...:.. ~ 12 ~ ~F~ ! 14 ~ VI : 16 ~ ozw 17 ::i United States Constitution prohibits the payment of these obligations. I have also included in there out of an abundance of caution, and I'm going to draw attention to it in a minute, on the last page, the very last provision it says that this article shall not be construed to revive or permit the revival of any obligation carried forwardin the old constitution. I don't think you need that, but I did put it 18 in out of an abundance of caution. 19 CHAIRMAN COLLINS: Any objections to this? If not, 20 we'll move on to the next one. 21 MR. BROWN: Paragraph IX, Mr. Chairman, required 22 that the proceeds of the sale of the Western and Atlantic 23 Railroad and any other state property be used to retire the 24 bonded debt of the state. I have deleted that I think for 25 reasons that are obvious. We sell property all the time, and PAGE 86 2 too. CHAIRMAN COLLINS: We pay our debts all the time 3 MR. BRO\VN: I feel that is obsolete. 4 The old Paragraph X related to the old state 5 sinking fund. Mr. Nixon helped me remember this was 1937 or 6 '38-- 7 MR. NIXON: Thats the one I'm talking about. One 8 of them, the first one you had some certificates of 9 indebtedness, we've got one of those, a hundred-dollar one, 10 and that was up in the first part. The old state sinking fund is the one that's got 18,OOOor something like that left in the account, and it's been so long since they've paid anything out of it I can't remember when they did. We still hold the money in reserve because the bonds are outstanding. MR. BROWN: I think my expert in the state appropriations process sitting to my immediate left here, 18 but even if there are questions as to payment out of the 19 sinking fund I think the state would clearly still have the authority to appropriate the funds to pay the bond if it were 21 presented. I don't think there would be any question about 22 their getting that money if they were lawfully entitled to it. 23 CHAIRMAN COLLINS: I don't have anything against 24 an $18,000 savings account either. 25 MR. BROWN: So other than for the purpose we've PAGE 87 mentioned that's all that it's used for. 2 CHAIRMAN COLLINS: As long as it's working and makin 3 money I don't have any objection. 4 MR. NIXON: It's working. 5 MR. BROWN: Mr. Chairman, the new Paragraph XI which 6 is the final provision in this draft, as I mentioned earlier 7 does intend to do one thing. It states what I believe the 8 courts would hold anyway, and that is that the enactment of 9 this new section will not impair any obligations that are 10 out, nor will it permit the General Assembly if it wanted to Czl 11 ..joa..::.. to pay the Civil War debt. ~ 12 ~ As I say, I think the federal constitution already would do this, but it's just to make clear. @ ~r~14!t- CHAIRMAN COLLINS: Has anybody got anything we've V> J: 15 ~ been over that they have changed their mind about, would like Ca:l :> 16 ~... to change their mind about, or would like to discuss any more oz 17 : before we instruct Canter to get this report ready for the 18 full committee? 19 MR. FUNDERBURG: Mr. Chairman, I gather that the 20 committee notwithstanding the observation of counsel about 21 if it ain't broke don't bother it feels that it needs to go 22 ahead with its mandate. Is that correct? 23 CHAIRMAN COLLINS: Yes. If this is approved by 24 this subcommittee, we are directed to get a report back to 25 the full committee on our recommendations, and if you feel PAGE 88 that this is your recommendation, then I think we should vote 2 to send this back or ask Mr. Brown to give us a corrected 3 copy and mail it out if he has an opportunity to or can. 4 and I think he will -- 5 MR. BROWN: I'll do it tomorrow. 6 CHAIRMAN COLLINS: Then if we were to need to have a 7 called meeting between now and the time the big committee 8 meets we would; if not, this would be our report, and this 9 would be done in face of the cautions that we've had brought 10 out by, you know, if it ain't broke don't fix it. Maybe there's lots in the constitution that some of us probably would say if it ain't broke don't fix it, but if you're going through it and trying to simplify it and put it in order, it's something that you're going to take a chance on, and the effective date of this constitution is set -when, Canter? MR. BROWN: It will be July 1st, 1983, Mr. Chairman. 18 CHAIRMAN COLLINS: Which would give you how many 19 general elections between now and then? 20 MR. BROWN: )bu have one general election. There 21 would be two sessions of the General Assembly, as well as a 22 special constitutional revision session which theoretically 23 will be next fall. 24 CHAIRMAN COLLINS: You'll have your regular session, 25 you'll have one where you get the whole thing together and PAGE 89 approve it, then after you once get it in order and get it 2 to where the bond people and other people can study it, you 3 still will have another session of the General Assembly 4 before the election to come back and correct it, correct the 5 mistakes that are made. 6 MR. BROWN: Yes, sir. It's my understanding as well 7 that the intention of the commission at the present time is to 8 introduce the proposed constitution at the 1981 session, or at 9 least to present it for study at that session. 10 It will be considered for adoption at the special "z 11 I- 'o0.".... session, and then the regular 1982 session will be available ~ 12 ~ to amend it to correct any mistakes. @F~ MR. FUNDERBURG: Then the process if I'm hearing ! 14 you does include having some evaluationof the bond people ol:-nr 15 ~ before it's finally enacted? "'"::l 16 .~.. CHAIRMAN COLLINS: I'm in hopes they will, and I'm Q Z 17 :; in hopes if there's something they can point out to the -- 18 when it goes to this next committee before it goes to the 19 big committee on constitutional revision In other words, 20 you've got to go to our committee cnthis article, then to 21 the big committee, then to the General Assembly, then into 22 the special session of the General Assembly, then you've got 23 the General Assembly to come behind to correct whatever we 24 can find that needs to be at that time, so you've really got 25 five more shots at it in my opinion. PAGE 90 MR. FUNDERBURG: Would it be improper for us to 2 include in one of the recommendations we make that at some 3 point prior to finally submitting it for action that it be 4 reviewed by the proper investment people? 5 CHAIRMAN COLLINS: I'm in hopes they review this 6 when we get through, I'm in hopes that they review what the 7 full committee does and then what the big committee does. 8 MR. FUNDERBURG: My question is, would it be 9 improper for us to include as a recommendation that they do 10 that? CHAIRMAN COLLINS: It wouldn't hurt a thing to include it as a recommendation, because I can assure you I think they're going to do it anyway. I don't think it would hurt a thing to make it as a recommendation that we ask them to have fUrther counsel with these people. MR. FUNDERBURG: I would like to see us do that. 18 I think it ought to be in the record. 19 CHAIRMAN COLLINS: All right. Let's see if we can 20 sort of figure out what we're trying to do. 21 What we're going to do at this time, then, is to 22 get Canter to correct this, mail each one of us a copy, and 23 then present this to the full committee, ask them to ask the 24 bond people to study and see if they have any recommendations 25 for changes that need to be made. Is that basically what PAGE 91 you're thinking about? 2 MR. FUNDERBURG: I'm thinking about that, or if 3 this is improper, then maybe we could do it. Either way. 4 MR. BROWN: You may want to consider just as a part 5 of your 6 MR. DAVIS: Mr. Chairman, let me make a suggestion 7 that Mr. Nixon will just take the draft after it comes out 8 and send it to Moody's, Standard & Poor, and ask for their 9 comments. 10 MR. NIXON: I can do that. That's no problem. .., z 11 Ioa-: 0.. @ r l12 ~ copy. CHAIRMAN COLLINS: We'll be glad to send them a MR. DAVIS: That will cure what I think Owen is 14 ~ worried about. I- '" J: 15 .~., CHAIRMAN COLLINS: In other words, we'll be doing a: :> 16 .~.. it ourselves. Okay. That will be fine . Q Z 17 : All right. Are there any objections to Canter 18 making up what you all have done, because I'm sure all of you 19 know what's in it except me, and I was gone part of the time, 20 and sending this back to the full committee as a recommendatio~ 21 from this subcommittee? 22 MR. DAVIS: Mr. Chairman, I would also like to make 23 an observation that Canter and our outside specialists here 24 have done a yoeman's job in helping us with our chore as a 25 committee by getting it ready in this fashion, and I'd like PAGE 92 to commend them on it. 2 MR. BROWN: Mr. Chairman, in that regard I would lik 3 to mention to the committee how helpful Mr. McIntire's efforts 4 and correspondence have been to me. I think that the draft 5 is much improved based upon his work than. over what I had 6 presented to you earlier. 7 CHAIRMAN COLLINS: We do appreciate them doing all 8 this work, we appreciate them taking time to be with us 9 today, and I'm sure that their counsel is goiftg to be sought 10 following this thing on through until it gets completely 11 "% j: ..'o".... through the General Assembly. @;i Now, all in favor of sending this back to the full committee as the subcommittee's recommendation let it be ! 14 ... known by a show of hands . '" :r 15 ~ Reverse your position. "'~" 16 ~... Mr. Brown, please get it straightened out and Q % 17 :: distribute it to the proper people. 18 MR. BROWN: Yes, sir. Thank you, Mr. Chairman. 19 CHAIRMAN COLLINS: If there is nothin.g else, we are 20 adjourned. 21 (Whereupon, at 5:00 p.m. the subcommittee meeting 22 was adj ourned . ) 23 +++ ++ 24 + 2S _ _ _ _ _ _ _ _ ~_. ____J INDEX Committee to Revise Article VII Subcommittee Meeting Held on Sept. 11, 1980 j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j SUBCOMMITTEE MEETING, 9-11-80 Section IV: -St-a-te-D-eb-t Proceedings, pp. 3-17 Paragraph I: Purposes for which debt may be incurred. pp. 17-39 Paragraph II: State general obligation debt and guaranteed revenue debt; limitations. pp. 39-60 Paragraph III: State general obligation debt and guaranteed revenue debt; conditions upon issuance; sinking funds and reserve funds. pp. 60-74, 86-87 Paragraph IV: Certain contracts prohibited. pp. 74-75 Paragraph V: Refunding of debt. pp. 75-79 Paragraph VI: Faith and credit of state pledged debt may be validated. p. 79 Paragraph VII: Georgia State Financing and Investment Commission; duties. pp. 79-82 Paragraph VIII: State aid forbidden. p. 82 Paragraph IX: Construction. p. 82 Paragraph X: Assumption of debts forbidden; exceptions. pp. 82-84 Paragraph XI: Section not to unlawfully impair contracts or revive obligations previously voided. pp. 85, 87 j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j PAGE 1 2 3 STATE OF GEORGIA 4 COMMITTEE TO REVISE ARTICLE VII 5 OF THE 6 CONSTITUTION OF GEORGIA 7 8 9 10 CzI @;;.11 i=.o=.. ! 14 ... 'x" 15 .:I =CI => 16 .~.. Q z 17 ~ FULL COMMITTEE MEETING 18 19 20 21 Room 133 State Capitol 22 Atlanta, Georgia 23 Wednesday, September 24, 1980 10:00 a.m. 24 25 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 PRESENT: 2 3 4 5 6 7 8 9 10 Czl 11 ~ ".oa.... @;I ! 14 .... VI :c 15 .:I Cl ":::> 16 .~.. Q Z 17 ~ 18 19 20 21 22 23 COMMITTEE MEMBERS: VICE CHAIRMAN MARCUS E. COLLINS REPRESENTATIVE DON CASTLEBERRY MR. CHARLES L. DAVIS MR. JAMES R. DAVIS MRS. CONSTANCE HUNTER SENATOR JIMMY LESTER MR. JAMES F. MARTIN MR. ABIT MASSEY MR. ROBERT NASH MR. WILLIAM NIXON DR. GEORGE L. O'KELLEY MR. HENRY D. ROBINSON MR. W.E. STRICKLAND REPRESENTATIVE GEORGE WILLIAMS ALSO PRESENT: J. ROBIN HARRIS MELVIN B. HILL) JR. MICHAEL HENRY VICKIE GREENBERG CANTER BROWN JACK MORTON JIM KEYES EDWARD W. KILLORIN ED SUMNER TOM BAUER DAVID GODFREY CHARLES TIDWELL JAMES THOMPSON JOHN ANDY SMITH DEAN FARMER RAY FARMER KEN LAWRENCE KENT SWAYZE HOWARD VICTRY JIM PULLIN SAM OTT ROB SUMNER WALTER WINGFIELD DAVID KANE 24 25 PAGE 2 j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j PAGE 3 PRO C E E DIN G S 2 VICE CHAIRMAN COLLINS: If everybody will find a 3 seat, we will try to get started this morning. 4 As all of you know, we have been divided into three 5 subcommittees to go through this article. The purpose of 6 this meeting this morning is for the subcomnittees to make 7 their reports back. 8 I want to tell you all I am not trying to take this 9 committee over. Mr. Thrower had some pressing business to 10 CzI .11 oa.i=.:. ~ 12 ~ @F~ 14 !... '<:"z: 15 olI aC:I ::l 16 .~.. oz 17 :<; have him some place else, and he asked me if I would try to preside over it this morning, so we are lookin~ for him to come back when he can. We have the sure enough big chairman sitting over here, Mr. Robin Harris. Would you like to say anything, Robin, at this time? MR. HARRIS: Not other than the Governor appreciates all the time that the members of the committees have, the 18 various article committees have put into their efforts, and 19 it's still his plan to have the action on the new constitution 20 in a special session that will be called of the General 21 Assembly in 1981 for the purpose of reapportioning of the 22 house and senate congressional districts. This is just some~ 23 thing that would give them oh, maybe two or three days to work 24 on while they are handling the other small matters. 25 VICE CHAIRMAN COLLINS: Thank you, Robin. PAGE 4 SENATOR LESTER: Mr. Chairman, is that two or three 2 days or two or three weeks? 3 VICE CHAIRMAN COLLINS: You know, Senator, if Robin 4 and has committee don't mess this thing up after the sub- 5 committee gets through with it we probably can handle it in 6 two or three days. We're going to look forward to him not 7 having it in a mess when he gets it back to us. 8 At this ttme we're going to calIon Mr. Hill here to 9 call the roll. 10 ~ CzI 11 oa..l..L.:.. 12 ~ ~r~ 14 .~... V:r> 15 ~ Ca:I ::> 16 ~... Q Z 17 : 18 19 20 21 22 23 24 25 MR. HILL: Thank you, Mr. Chairman. Mr. Blount. Representative Castleberry. REPRESENTATIVE CASTLEBERRY: Here. MR. HILL: Marcus Collins . VICE CHAIRMAN COLLINS: Here MR. HILL: Charles Davis . MR. C. DAVIS: Here. MR. HILL: Jim Davis. MR. J. DAVIS; Here. MR. HILL: Owen Funderburg. Representative Hatcher. Senator Holloway. Mrs. Hunter. MRS. HUNTER: Here. MR. HILL: Mr. Irons. PAGE 5 Mr. Keenum. 2 Senator Lester. 3 SENATOR LESTER: Here. 4 MR. HILL: Jim Martin. 5 MR. MARTIN: Here. 6 MR. HILL: Abit Massey. 7 MR. MASSEY: Here. 8 MR. HILL: Dr. McDaniel. 9 Robert Nash. 10 zCl 11 ~ oa....:.. ~ 12 ~ (@!)F~ ! 14 ~ .. 12 '" MR. BROWN: The copy that does not have strike- @ r l throughs and underlines which is number LC 5 4159 is exactly ! 14 ... the same as 4165 except for not having strike-throughs and '" :I: 15 o:l underlines. Cl '";;;) 16 .Iz.I.I VICE CHAIRMAN COLLINS: You are going to call the cz '" 17 III committee's attention to the changes as you get to them? 18 ~1R. BROWN: Yes, sir. 19 VICE CHAIRMAN COLLINS: All right. 20 REPRESENTATIVE CASTLEBERRY: If it please the 21 committee, I would like to request that Canter go through 22 this, and he can explain it to you I think more thoroughly 23 and give those changes that he has there, and then when we 24 get through I've got one further recommendation. 25 MR. BROWN: Yes, sir. PAGE 12 VICE CHAIRMAN COLLINS: All right, Canter, go right 2 ahead. 3 MR.. BROWN: Thank you, Mr. Chairman. 4 Before I start I would like to point out that I 5 think the work of all three suecomrnittees in line with the 6 guidelines you adopted at the last meeting embodied three 7 main goals. 8 One of the goals was wherever possible to leave to 9 statutory flexibility provisions that are now in the 10 "z gy:;.11 Io.'".. ~ 14! IVI "..- ~ 12 ~ SENATOR LESTER: I would think so too. ~F~ MR. BROWN: -- resort to this in any event. ! 14 SENATOR LESTER: You're giving the General Assembly t- '" :I: 15 .: the authority to in the event of an emergency, which of course Cl '"::l 16 .~.. they have the power to determine su~ct to review by the Q Z 17 g courts, to tax the people of Georgia more than one-quarter 18 of a percent. 19 MR. BROWN: One-quarter of a mill on the assessed 20 valuation. 21 SENATOR LESTER: One-quarter of a mill on ad valorem 22 taxes. 23 MR. BROWN: I would point out that before that could 24 happen a law would have to be passed to 25 SENATOR LESTER: To declare a state of emergency? PAGE 18 MR. BROWN: -- to define what the circumstances were 2 to be considered an emergency, and also appropriations would 3 have to be passed to spend the money that was raised, so it's 4 not j~st a question of several people getting together and 5 deciding to spend some money arbitrarily raised, a number of 6 steps would have to be undertaken before that could happen. 7 SENATOR LESTER: I'm not trying to raise a point 8 here about the wordage itself, but I did feel that it does 9 give the General Assembly a great deal of discretion. Of ~~ 10 course, the constitution is supposed to be a limitation. ~ z 11 I- .'0G".o. @-~12 '" .... /j'i. MR. BROWN: Yes, sir, I don't want to try and say exactly what the subcommittee had in mind, but I think their intent was to just use a little bit broader terms to provide 14 ~ I- a little bit more flexibility to meet changing circumstances. '<"l % 15 ~ I don't think it was their intent to open this up to any ~ '":;:) 16 .'z.". sort of abuse at all. c Z 16 .~.. changes in it for clarity. Where on line 13 on page 2 the Q Z 17 : date June 30, 1983 is now written, he has suggested adoption 18 of the date January 1, 1981. This would peg this exception 19 to the bank tax that is in fact currently in law, and there 20 would be no confusion at a later date as to what bank tax 21 we're talking about. 22 The other change he is recommending to you is on 23 line 17, the next to last word "a" be stricken and the words 24 "an annual" be added, just to clarify we are talking about an 25 annual tax rate of five mills. That is consistent with the PAGE 20 other usage throughout this section. 2 REPRESENTATIVE CASTLEBERRY: Mr. Chairman, how about 3 letting him go to the clean copy and go back over that one morE 4 time? 5 MR. BROWN: Yes, sir. As we mentioned earlier, the 6 clean copy he's referring to is -- has the number LC 5 4159 7 at the top right corner, and the date of 9/10/80. 8 Has everybody got one? 9 The change that is being recommended is that on 10 line 15 after the words "Taxing power limited" that you add I:l .. 11 % j: a paren small "A" and a closed paren to create a new sub- ..0G.o. 12 paragraph. 9;1 Okay. On line 19 on page 1, after the word ! 14 "property" which is the next to last word, you would put a I':"r .. 15 .:I period, you would strike out the word "except" at the end of I:l ::;) 16 III .%.. line 19, and on line 20 the word "that" and the comma. ..D Z 17 III At that point you would add a paren small "b" and 18 capitalize the word "so," which would create two subparagraphs ., 19 On line 21 where the date June 30, 1983, appears 20 you would add the date, or in lieu of that date add January 21 1st, 1981. 22 The only other change would be on line 25, after 23 the words "tax at," in lieu of the word "a" you would put 24 "an annual," just for uniformity of usage. 25 Those are the changes he's suggesting for clarity. PAGE 21 I think all of us who were at the meeting felt that 2 these were merely editorial and technical changes. 3 VICE CHAIRMAN COLLINS: Do we have any objection? 4 SENATOR LESTER: Mr. Chairman, I would like to get 5 the subcommittee's reasoning why was the date June 30th, 1983 6 put in there? 7 MR. BRO~~: That date is the date immediately 8 preceding the effective date of the new constitution. 9 SENATOR LESTER: Does that mean then to change the 10 method of taxation of banking corporations then it would take III Z 11 j: if we should do so in the next General Assembly would take 0'.l".L. . ~@F~ ~12 '" an a~mendment to the constitution? MR. BROWN: No, sir. That's exactly what we're tryin~ ! 14 to avoid. This is just saying that so long as the one that's lo-n :r 15 0:1 in effect this coming January 1st before the General Assembly ..III '"::> 16 z... meets again is in effect, you've got this exception to the Q ..Z 17 . @ r l12 : usually done, the end of the year rather than January 1st. MR. BROWN: I don't think he would have any objectio~ 14 ~ otn- to that. Do you, Dave? : 16 .~.. Q Z 17 :; specifies theelection it's to be held at. I think the subcommittee felt that that was desirablE because it would permit the question to be voted on at a time that other questions were not necessarily being voted on, and would draw more attention and hopefully more debate as to the merits of a particular proposed exemption. VICE CHAIRMAN COLLINS: Canter. back to this time -of course I'm not objecting to this, but homestead exemption 18 is not a local matter. 19 When you see a county such as Appling that has a 20 power plant in it to pay 75 percent of th~ tax, and they 21 increase their homestead exemption to 75 or to $10,000. the 22 power company is paying some 75 percent of their tax. and 23 what they're really doing, they're moving their tax to every 24 power consumer in the state and moving it away from them, so 25 I've got my doubts that homestead exemption is a local matter PAGE 34 at any time, because when you're moving it from one group 2 of people to the other 158 counties there's something wrong 3 with calling that local legislation in my opinion. 4 Ma. BROWN: Yes, sir. As a matter of fact, the 5 subcommittee as I recall even discussed that very point, and 6 as I recall it was their agreement that that really related to 7 the treatment of the bill in the General Assembly and related 8 more to the rules of procedure in the house of representatives 9 and in the senate, and really the constitution wasn't the 'i 10 appropriate place to address that if it was to be addressed. Czl .11 j: .'0".. 12 '" @rl 14 ~ ~ OIl : :r 15 .:I like to take them all out myself and have no homestead Cl 0:: ;;;) 16 .lzD.. exemptions. Q Z 17 0:: lD . MR. BROWN: Senator Lester, additionally too there 18 was some concern by several members of the subcommittee that 19 people wouldn't use this mechanism but would just resort to 20 constitutional amendments, and it was pointed out to th~ and 21 I believe they agreed in the end that we have in fact adopted 22 this in a number of other instances throughout the 23 constitution. 24 I think that probably the one you're most familiar 25 with would be changing the composition or other details of a PAGE 36 county board of education. 2 Several years ago that was permitted to be done by 3 local law subject to referendum. As far as I know, we haven't 4 adopted a single local constitutional amendment dealing with 5 that since that was authorized, so I think experience would 6 show that this procedure would be utilized and would result 7 in lessening the need for these constitutional amendments on 8 a continuing basis. 9 VICE CHAIRMAN COLLINS: Mr. Nash. 10 MR. NASH: Mr. Chairman, on this here, would this Czl 11 I- ..'0".... @F~12 '" give the General Assembly the right to perhaps come up with a uniform homestead exemption and would be able to eliminate these local exemptions? 14 >- MR. BROWN: It would permit the General Assembly to I- '-: 16 C.Z.D. but you go through exactly the same process to get it approved Q Z 17 'C"D It takes a two-thirds vote, It can be introduced in either 18 the House or the Senate, the Governor cannot veto it, it has '" 19 to be approved in a referendum. That's exactly the same that 20 is now required for a constitutional amendment. 21 MR. STRICKLAND: It would take a constitutional 22 amendment, though. I mean the same thing -- one would be a 23 constitutional amendment, it would be -- 24 MR. BROWN: The action is the same. 25 VICE CHAIRMAN COLLINS: It takes a two-thirds vote PAGE 43 MR. BROWN: There's no reason by going through the 2 same motions right now that the General Assembly can't do 3 what I said they can do by statute. 4 REPRESENTATIVE CASTLEBERRY: They've got the right 5 to go the constitutional amendment route if they so desire. 6 This is to encourage them not to go and load up the 7 constitution. 8 MR. BROw~: But again let me make sure that every- 9 body is clear on this. This draft is not repealing anybody's 10 local homestead exemptbn, and as far as I know the sub- Czl 11 i= @;;o..'".... committee never intended that, and it does not give the General Assembly any power to meddle with the local exemptbn that they could not already do under the same procedures and ! 14 I':"z: 15 ~ Cl '"::> 16 .~.. Q Z 17 : limitations. VICE CHAIRMAN COLLINS: Senator Lester. SENATOR LESTER: To clarify Bob's question, let's say Richmond County has a $10,000 homestead exemption at 18 the present time, and the legislature wanted to abolish that 19 $10,000 homestead exemption. Now they would have to, of 20 course, pass an act calling for a referendum to abolish it. 21 Is that not correct? 22 MR. BROWN: That's correct. There would be a 23 proposed constitutional amendment now. 24 SENATOR LESTER: To abolish the present exemption. 25 MR. BROWN: That's correct. PAGE 44 SENATOR LESTER: Now another point, and I think 2 George Williamson had a very valid point, I believe all of 3 the voting jurisdictions in the state at every election but 4 a general election have a low voter turnout. 5 Now, of course, I don't think we want to set a 6 different rule here from the rest of the constitution, but 7 it's something we ought to consider throughout the 8 constitution is to require that all amendments be adopted at 9 a general election. 10 MR. BROWN: I think you will find, though, that a recommendation like that really kind of runs against the grain of the Governor's charge to the Constitutional Revision Commission, which was to avoid the very elongated ballot that the voters now face at the general election as I understood his charge, and I don't know if Mr. Harris is still here, it was in fact to try and reduce the number of questions on the general election ballot, and if it had to be decided 18 at a referendum, you know, possibly handled as we have in the 19 past in the other 20 SENATOR LESTER: I can realize that's a problem, but 21 also I think you also want to consider that in an amendment 22 to your constitution you want to get the expression of as 23 many voters as possible, and historically you have a larger 24 voter turnout at a general election than you have at any other ~ election. PAGE 45 MR. BROl~: Yes, sir. Again all I can say -- and of 2 course this can be written or rewritten in any way the task 3 force desires obviously, but again there is no limitation 4 whatsoever on a member requiring as part of his proposal for s an exemption to have it voted on the general election. We 6 do in fact have members that do that all the time now with 7 those local acts which otherwise in the constitution can be 8 proposed and voted on at a referendum. It just however the 9 sponsors of the exemption desire to have it handled. 10 SENATOR LESTER: I bring it up as a consideration. MR. HILL: For your information, Article IX is wrestling with this question with respect to consolidation of votes, and the very same point was made that at a special election they don't get that many, and they felt that consolidation was so important an issue they are at the moment proposing that it be limited to a regular general election, so that we may have another place in the proposed 18 draft where we don't follow the format we've been following 19 elsewhere, so it really is for the committee to decide if 20 this is an issue of enough importance to try to resolve the 21 balance between the two sides. 22 VICE CHAIRMAN COLLINS: Don, did you have a question~ 23 REPRESENTATIVE CASTLEBERRY: What we were trying to 24 do was leave it up to the option offue local delegation as to 2S when they wanted it. PAGE 46 You have some instances in the state of Georgia 2 where I feel like, and this is my personal feeling, that you 3 would have more talk and people would know more about what 4 they're going to vote on if you had just one issue during a 5 local election. In some instances I think you would probably 6 get more people input into it than you would when you're 7 going to the general election ballot with this long list of 8 amendments, but you can still do it. 9 In other words, the legislative delegation will say 10 what election they want it on when they introduce the Czl 11 i= @;;.'o.".... legislation. SENATOR LESTER: At the same time, Mr. Chairman, if I wanted to slip something through for a specialized group ! 14 ... '" ::I: 15 ~ Cl '"::;) 16 .~.. zQ or something, I think my chances will be better on a special election than at a general election. VICE CHAIRMAN COLLINS: We know you wouldn't do 17 : that, Senator. 18 SENATOR LESTER: That was an example I was giving. 19 VICE CHAIRMAN COLLINS: Charlie has a question. 20 MR. C. DAVIS: First dealing with Paragraph II on 21 the clean draft, we agree what we're doing is leaving it to 22 the discretion of the local jurisdictions granting of home- 23 stead exemptions in various amounts, and that would not be 24 in the constitution orm the code as far as I know -- 25 MR. BROWN: No, sir, that's not it at all. No PAGE 47 exemption can be granted except for the two that are now 2 authorized in the constitution by any local action, it would 3 take a vote of the General Assembly. 4 MR. C. DAVIS: All right. Now dealing with free- 5 ports, Paragraph III, we omitted the 20740-60-80 stepup. 6 MR. BROWN: Yes, sir. We really haven't gotten 7 there yet. If you-could wait just a second, that really is 8 in a different provision of this draft. 9 MR. C. DAVIS: It's spoken to in Paragraph IlIon 10 page 3. ~ Czl 11 I- IoX l>. w 12 ~ yet. MR. BROWN: Yes, sir. We're not quitefuat far along (8)F~ REPRESENTATIVE WILLIAMSON: I was going to comment ! 14 on what Representative Castleberry said. I think if you have I- '<"l: 15 J: ~ one issue on a special election ballot you're going to Cl IX ~ 16 ~ certainly get a lot more discussion of that one issue, but w Q Z 17 16 .~.. people? a Z 17 ~ MR. BRO~~: I think you need to understand there is 18 no single way in which these are written. Some of them 19 authorize the General Assembly to do it, and some of them 20 automatically grant it, and none of them are uniform. It 21 would be very difficult to find any two homestead exemptions 22 in the state of Georgia which are exactly alike. 23 MR. J. DAVIS: Just let me ask you this in a general 24 way. If we enacted the draft as it stands and all these 25 current acts become law, general law, local law, as a general PAGE 50 rule could the General Assembly revoke some or any local 2 constitutional -- I mean local property tax exemptbns without 3 a vote of the people? 4 MR. BROWN: Yes. Any property -- under this draft, 5 any property tax exemption could be in the future repealed 6 by the General Assembly subject to the Governor's veto, but 7 I want to reiterate to you that with the general statewide 8 exemptions that except for five exemptions as is the present 9 case, that whole long'list of property tax exemptions in the 10 constitution begins with the words "The General Assembly III Z 11 ...Ioo-o lL ~ 12 ~ ~F~ 14 ~ I- '-"< :J: 15 .:J IoIoI :::> 16 .~.. Q Z 17 f-: 16 ~... VICE CHAIRMAN COLLINS: Yes. Mr. Nash . Q Z 17 ~ MR. NASH: As I understand it. it would have to be 18 specified by the General Assembly at the time it was -- at 19 which election it would be. -- 20 MR. BROWN: That's correct. 21 MR. NASH: -- as this is written. 22 MR. BROWN: That's correct. That is in fact the 23 case in all other instances now where we authorize something 24 to be done subject to a referendum. 25 MR. NASH: As far as I know under the present PAGE 52 constitution there's no exception to that. 2 What George is saying, it could only be at a 3 general election. 4 MR. BROWN: A general election, yes, sir. 5 VICE CHAIRMAN COLLINS: Yes, Senator. 6 SENATOR LESTER: One comment, Mr. Chairman. That 7 is, one of the biggest complaints voters have now is the 8 cost of elections are very much on their minds and, of course 9 this would eliminate this additional cost of hiring poll 10 workers and so forth if this particular amendment is passed. Czl 11 i= o.."..'.. ~ 12 ~ ~F~ ! 14 lV> J: 15 .:> Cl "':::> 16 .~.. oz 17 : REPRESENTATIVE CASTLEBERRY: Unless you had it on the same date you have a local election. SENATOR LESTER: But it could be. You were talking about it could be the only issue brought up on a particular election. Unless this amendment is passed, unless George's amendment is passed that could be the case . REPRESENTATIVE CASTLEBERRY: I'm not going to 18 introduce one, and I don't think you would either unless 19 your local elected officials want it. They're the ones that 20 are going to foot the bill. 21 SENATOR LBSTER: But the point is that it could be. 22 REPRESENTATIVE CASTLEBERRY: Oh, it's possible. 23 VICE CHAIRMAN COLLINS: Dr. O'Kelley. 24 DR. o'KELLEY: Just a matter of information. I 25 assume that somewhere thre is in law protection against a PAGE 53 called election without giving adequate notice to the people 2 that it's coming. 3 MR. BROWN: Yes, sir. 4 DR. o'KELLEY: That would protect this. You 5 couldn't call one overnight. 6 MR. BROWN: No, sir. In fact, the language that: 7 the General Assembly uses to call a referendum repeats what 8 the general law requirement is, and that is -- let's see -- 9 the election cannot -- Let's see. The called election 10 cannot be made within thirty days of the effective date of Czl 11 j: the law, and the election cannot be held within thirty days .'00"... 12 '" after the call. I may be wrong, that is generally what the @ r l requirements are. 14 ! VICE CHAIRMAN COLLINS: All right, George. I- '<:"r:l 15 .: REPRESENTATIVE WILLIAMSON: Mr. Chairman, I know Cl .';":,) 16 azz what Representative Castleberry is saying, certainly if 17 .'<",:l you've got one or two issues on the ballot those people that 18 are interested will be more involved and they will get out .. 19 and vote . 20 The thing that worries me is all the election 21 statistics I have seen show that your greatest turnout is on 22 general election day, and I think we owe it to the people of 23 Georgia to make sure that we have major issues like this on 24 the day when most of them are going to get out and go vote, 25 and that's why I would like to keep it on the general PAGE 54 election day. 2 VICE CHAIRMAN COLLINS: Any more discussion? 3 Yes, sir. 4 MR. J. DAVIS: I guess I'm also -- I was on the 5 subcommittee that did this, I'm basically supporting our 6 position primarily because it has been my experience over the 7 years in my particular area of the state that where we have 8 had a general election and the ballot has been so full of 9 these amendments, while you may have more people, when you 10 look at the end results people have ended up voting -- you may 11 "z i= have had a presidential race, a vice presidential, et cetera, .."o..".. ~ 12 ~ and you may have 50,000 people voting for the candidates, but ~F~! you look down at these where you had 25 constitutional 14 amendments and you had one-tenth or one-fifth of the people I- '" :I: 15 .:> that went in the booth that ever bothered to look at them, """;;) 16 .~.. so it appears to me, it has appeared to me the same, quote, Q Z 17 : special interest groups which in this case would be the 18 homeowners, because if it's a homestead exemption you're 19 talking about the great majority of the people in the county-- 20 I thought the intent of getting this out of the 21 constitutional amendment thing was so you wouldn't have them 22 crowded on this large ballot to increase the interest of the 23 people, not to decrease it, and for that reason I felt like 24 we were going to propose this change. 25 Now, with the fact the local delegation can call PAGE 55 for it to be if they so desire on the general election day 2 it seems to me you're getting the best of both worlds. 3 You're eliminating the requirement that if you have a change 4 in the homestead exemption it has to be on the ballot whether 5 it's 55 candidates and maybe 15 proposed changes, and 6 experience has shown while you may have 90 percent of the 7 voters there, how many of them are really going to take the 8 time to explore it. 9 They're going in there specifically to vote on 10 repealing their homestead exemption or increasing it. If Czl 11 i= they go there at all that day, they're going to vote on it "..o.... ~ 12 ~ if it's a special. ~r~ REPRESENTATIVE WILLIAMSON: }1x. Chairman, there's ! 14 no debate the longer the ballot the more people are going to I- '" J: 15 .:l get tired from the first spot to the end. It's incredible Cl "::> 16 ~... the dropoff from the first vote to the second vote; there's oz 17 : no debate about that. 18 I'm just flabbergasted at the number of folks who 19 go in and they vote for one race, and they leave because they 20 don't even want to get down to the next vote. The longer 21 the ballot, the more attrition you have. If there are 22 people when they don't understand the issues, they leave. 23 But the point I'm making is I would rather have a 24 large turnout that has an opportunity at least to get down 25 and read that question than to put it on a special electiOn PAGE 56 day when you know that you're going to have a less than fu~l 2 turnout. I mean special election days just aren't anywhere 3 near as heavily voted as general election days, and the 4 reason is general election day people are coming out to vote 5 for Governor, they're coming out to vote for President, and 6 then they can get to these other issues that are important 7 to them. 8 On a special election day all you're -- you're going 9 to ensure the people that want that special amendment passed, 10 they're going to be there, but John Doe, the man in the street Czl 11 j: if the weather is nice he may not come out, and I would rather '"o.".". ~ 12 ~ have him come out and give him a chance to say the ballot's ~r~ too long, I don't understand the amendment, and not vote ! 14 than to make a change today knowing full well if we make t- V> x 15 the change there's just a lot of folks that will just not come Cl '"::J 16 ~ out to the polls on those special election days. Q z 17 g SENATOR LESTER; I call the question. 18 VICE CHAIRMAN COLLINS; I'm ready. We have a motion 19 before us -- George, I believe it is to put the referendums 20 on the general election. 21 All in favor of George's motion signify by uplifting 22 of the hand. 23 Reverse your position. 24 VICE CHAIRMAN COLLINS; George, you and the Senator 25 have los t . PAGE 57 REPRESENTATIVE WILLIAMSON: We never give Up. 2 VICE CHAIRMAN COLLINS: All right. Go right mead. 3 ~1R. BROw~: Mr. Chairman, I would like to point out 4 since we were on the topic of the referendum that on page 5, 5 lines 6 through 9, the subconnnittee has created an exception 6 to the referendum requirement in a very limited instance. 7 As most of you are aware, the General Assembly is 8 presently involved in recodifying the Georgia Code. As a 9 part of that it is anticipated that the General Assembly will 10 readopt the code officially possibly every two to four years 11 CzI I- so that we will have a continuing official code of Georgia. .'o".. 12 ::; ~~ r~ ~ The subcommittee didn't intend for every time we readopt he code for all the property tax exemptions to be 14 ~ revoted on. This simply creates an exception to when we are I- III <:c 15 0) merely recodifying a previously approved exemption -- you CI :'>" 16 .~.. wouldn't be able to grant any new exemptions, but one that's zco < 17 : already been approved by referendum you would be able to 18 codify or recodify without a referendum. 19 VICE CHAIRMAN COLLINS; Any questions? 20 Go ahead, Canter. 21 MR. TIDWELL: Mr. Chairman, I've got some nitpicking 22 language on that I don't need to involve the committee with. 23 It would be more appropriate to bring it up with the staff 24 arrlthey can look at it at another time. It doesn't change 25 the substance of what Canter said he was trying to do. PAGE 58 It's lawyer type -- 2 VICE CHAIRMAN COLLINS: Either way. If you would 3 like to bring it before us now, Charlie, we will; if you 4 would like to get with the staff later, that will be fine. 5 MR. TIDWELL: It's whatever your preference is. No 6 need to bore you all with it, but if you want to profit by it 7 I'll be glad to -- 8 VICE CHAIRMAN COLLINS: Roll it, let's see what 9 you've got. " 10 REPRESENTATIVE CASTLEBERRY: Briefly, Charlie, 11 "z j: ..'0".... briefly. 12 '" MR. TIDWELL: The point being you don't have an @ r l exemption previously authorized in this constitution; it's ! 14 ... either in the constitution or it's out, so it would be more '" :I: 15 .:> appropriate to sayan exemption previously authorized in the "'";:) 16 zID Q constitution of 1976, or an exemption authorized pursuant to z '" 17 ID this constitution. 18 MR. BROWN: I think that's a real good point. The 19 reason that I use this language is that it is still possible 20 you could have exemptions in the constitution. We can't 21 prohibit a member if he so desires from going the 22 constitutional amendment route, and it's just been my 23 experience that if it's possible for somebody to do something 24 in the General Assembly eventually they will. 25 MR. TIDWELL: The point being you can't have PAGE 59 something previously authorized in this constitution. 2 MR. BROWN: I had meant the previously there to 3 relate to previous to the time that the law is codified or 4 recodified. 5 MR. TIDWELL: It's just picking, Mr. Chairman. 6 MR. BROWN: Mr. Chairman, if you would like Charlie 7 and I andthe other staff to get together we'll work something 8 out. 9 VICE CHAIRMAN COLLINS: Fine. Go ahead, Canter. ~.- 10 MR. BROWN: Mr. Chairman, as I have ment ioned "z 11 I- ..'o.".... ~ 12 ~ (@r~ ' g 14! I':"r 15 .:I "'"::> 16 .~.. Q Z 17 : previously, the language on lines 5 through -- I mean page 5 through page 16, the middle of 16, is the present language dealing with the exemptions which has been grandfathered in as I mentioned earlier in the last paragraph. On page 16, line 18. under the present constitution there are two rare animals, and those are two types of exemptions from ad valorem taxation which may be granted 18 locally without the General Assembly acting on them prior to 19 the time they are granted. 20 This paragraph that's being added recognizes that 21 fact; it does not add any new exemptions that can be granted 22 locally, it simply puts into law what we have already got. 23 Now, the first one is the present freeport amend- 24 ment. Let me explain how this language was arrived at. 25 The subcommittee had considered. after they PAGE 60 considered the rest of this article looked at the language of 2 the freeport amendment and decided that they felt that most 3 of that language should be handled statutorily and didn't 4 belong in the constitution. 5 They directed me with Mr. Hill and his staff to meet 6 with representatives of the Association of County Commissioner~ 7 and the Georgia Municipal Association and any other interested 8 parties to try and hammer out some language that would save 9 the guts of the limitations as a part of the constitution 10 but which would permit everything else to be handled .. 11 zCI j: statutorily. .o..... ~ 12 ~ We did in fact meet and agreed on a presentation ~r~! which is essentially what's before you here. 14 At that meeting it was felt that there were three I- '" .15 J: oll main points to that exemption which should be kept for various CI ;:) 16 .~.. reasons in the constitution . Q Z 17 g The first was the specific authority by which these 18 exemptions could be granted locally. It was felt that was a 19 very major point here. 20 The second one was to generally limit the types of 21 property upon which the exemption CQuld be granted while 22 giving some flexibility for the General Assembly to treat the 23 terms used by statute. 24 The third nne was the present constitution provides 25 that an exemption once granted can be repealed only subject PAGE 61 another referendum. It requires that rive years elapse betwee 2 the time the exemption is first approved and that referendum 3 being held. It also provides that an additionnl fiv~ yearH 4 must elapse between the time the repeal of an exemption is 5 approved and it is in fact repealed. That limitatibn has been 6 retained as a part of this draft. 7 Let's see. I think that is the -- And also the 8 requirement as I mentioned earlier that the exemption must be 9 repealed only subject to referendum. 10 ..'z" 11 i= .o..... ~ 12 ~ ~ri ! 14 1;; 16 ~... CI Z :I: 15 ol) "e< ~ 16 .~.. cz 17 ~ SENATOR LESTER: But it is a local -MR. BROWN: Yes, sir. Now it's done locally. VICE CHAIRMAN COLLINS: Any other questions? MR. BROWN: Mr. Chairman, if I could, Chairman Thrower had on the freeport I believe a very few, a number of very technical types of changes. Again, I think you will find that all of these are just for conformity with the usage we have used everywhere else. 18 Back on page 16 -- 19 REPRESENTATIVE CASTLEBERRY: Let's get back on the 20 clean copy. How about that, does that suit everybody? I 21 can folbw the clean copy better than I can a lined through 22 copy. 23 MR. BROWN: The first change is on page 2 right at 24 the very top -- let's see -- no, it's not, it's on page 3 25 right at the bottom. PAGE 64 On line 28 right at the end, the last two words are 2 "of the." This is page 3. And he has suggested that the 3 language which now reads "approval of electorates of such 4 political subdivision" be changed to say "approval of a 5 majority of quaDfied electors of such political subdivision 6 voting in a referendum thereon." 7 That is the same language we have used in a number 0 8 other instances. 9 SENATOR LESTER: Say it again. Subject to the 10 approval "z @;;.11 I'o.".. MR. BROWN: Of a majority of the qualified electors of such political subdivision voting in a referendum thereon. VICE CHAIRMAN COLLINS: Has everybody got that down ! 14 I- now? One more time. '" :I: ..15 .: "'";:) MR. BROWN: Okay. It woUd read approval of a 16 ~ majority of the qualified electors of such political sub- zQ 17 ~ division voting in a referendum thereon. 18 Again, as I say -- 19 VICE CHAIRMAN COLLINS: Any discussion on this 20 technical language? 21 REPRESENTATIVE CASTLEBERRY: It sounds like good 22 lawyer language to me. 23 MR. BROWN: Mr. Thrower proved to me he was a good 24 lawyer, there's no question. 25 The next change on line 30, you will see the word taxes used there. PAGE 65 - - - - - ----------- This is line 30, page 3 of the clean copy. 2 If you will note in the same line you have used the word 3 taxation, and he pointed out that thesrome word should be used 4 both tDnes and has recommended that where it says taxes you 5 simply put in taxation. 6 VICE CHAIRMAN COLLINS: Is there any objecCbns to 7 these two changes? 8 If not, Canter 9 MR. BROWN: Mr. Chairman, there is one minor 10 additional change. "z 11 j: ..'o.".... ~ 12 ~ ~r~ ! 14 I'" :r 15 .: "'::"> 16 ~ Q z 17 ::; He pointed out when we were discussing exemptions fo inventories of goods or inventory of goods that in fact that should be plural, it should be inventories. That would be on line 32, page 3, and line 33, page 3. Again, it's just proper grammar. VICE CHAIRMAN COLLINS: Any objection to making thos two changes? 18 MR. BROWN: Mr. Chairman, in this section the only 19 other change that he has recommended, and except for Mr. 20 Castleberry's recommendation to you in just a minute, is the 21 last thing I wanted to bring up, and that is on page 4 on 22 line 26 we have incorrectly labeled this Paragraph V, it 23 should be Paragraph IV, and on line 4 he has recommended that 24 after the word "continued in effect" you add the word "as 25 statutory law." PAGE 66 He quite correctly pointed out the constitution 2 includes the Georgia constitution and the federal statutes 3 and everything else as part of Georgia law, and this was 4 intended to be statutory law and consequently should say that, 5 and I certainly agree with him. 6 REPRESENTATIVE CASTLEBERRY: Where is that on the 7 clean copy? 8 MR. BROWN: This is on line 29, page 4 of the clean 9 copy, just after the words llin effect" add the words "As 10 statutory law." 1:1 Z 11 j: MR. KANE: Canter, there was one other question ..'o".... @;i where we suggested some good lawyer language as Mr. Castleberry has termed it, and that is at the top of that 14 ~ page, page 4 of the clean draft where it lBYS exemptions may I- ':"z: 15 be revoked, he suggested that it shou~d read exemptions 1:1 '::"> 16 .~.. granted pursuant to this subparagraph may be revoked . Q Z 17 : MR. BROWN: That's exactly right. I missed that, 18 I t m sorry. 19 VICE CHAIRMAN COLLINS: Any objections to either one 20 of these changes? 21 MR. BROWN: Mr. Chairman, the only other thing that 22 I have for you is Mr. Castleberry has given me a possible 23 amendment he has drawn up and has asked me to pass this out, 24 and I think he wants to discuss it. 25 REPRESENTATIVE CASTLEBERRY: Or you can discuss it. PAGE 67 MR. BROWN: Let me just pass around copies. 2 REPRESENTATIVE CASTLEBERRY: Let them get a copy of 3 that right quick. 4 MR. BROWN: At the subcommittee's very first 5 meeting, Mr. Chairman, and at the very first meeting of this 6 task force you discussed the very real problem of these local 7 constitutional amendments, and in the draft the subcommittee 8 gave you and which you have just tentatively approved you 9 have adopted a formula by which the number one local amend- 10 ment villian will be removed from this article, and that is Czl ~ 11 i= oIll: 0w 12 ~ @)F~ ! 14 ... ':"r 15 Cl Ill: ::l 16 .~.. Q Z 17 : homestead exemption. The second greatest number of local amendments to this article deals with authorizing counties to levy occupational license fees in the unincorporated~eas of counties . The reason that that is required as a constitutional amendment is the uniformity provision in Section I of the constitution. 18 We have any number, I would guess forty or fifty 19 counties that are already authorized to levy these 20 occupational license fees in the unincorporated areas of the 21 county. 22 All that Mr. Castleberry's amendment would do would 23 be to permit these counties tobe authorized to do this by 24 local act, or to permit the General Assembly by general law 25 to permit all counties to do it as an exception to the PAGE 68 uniformity requirement, and he is recommending that you adopt 2 it as an amendment to Section I, Paragraph III, sub (a). 3 It would just add the language you see as a new 4 subparagraph 2 in Paragraph III, Subparagraph (aO. S VICE CHAIRMAN COLLINS: Canter, will this cover 6 payroll taxes and things? 7 REPRESENTATIVE CASTLEBERRY: No, sir, nothing to do 8 with occupational taxes. 9 MR. BROWN: Mr. Chairman, it really doesn't deal witt 10 that in one way or the other. As you know, there is already a general law on the books that prohibits payroll taxes in Georgia. This would not either positively or negatively affect that law. VICE CHAIRMAN COLLINS: I just wanted to make sure WE wasn't affecting it. MR. BROWN: This would just permit the General Assembly outside the constitution to do what it is doing every 18 year in the constitution. 19 REPRESENTATIVE WILLIAMSON: You put that general law 20 in the constitution about those payroll taxes? 21 MR. C. DAVIS: Canter, I've still got the problem 22 with local law, third line. 23 MR. BROWN: Again, if I could just assure you that 24 local law is a term that is used throughout the constitution 2S and has a very definite meaning I think for any constitutional PAGE 69 purposes. 2 What you are thinking of is local laws are 3 considered either ordinances or regulations. 4 MR. C. DAVIS: You made a statement the county could 5 authorize by local law -- 6 MR. BROWN: No, sir. I said they may be authorized. 7 MR. C. DAVIS: Okay. I misunderstood. I'm sorry. 8 MR. HILL: Is there any reason why we couldn't say 9 counties may be authorized by general or local law to -- 10 MR. BROWN: I wanted to make clear that in the Czl 11 I- o.'l."L. ~ 12 ~ ~ri l 14 lo:z-n: 15 .:l Cl '"::> 16 .~.. Q Z 17 : event the General Assembly opted not to adopt a general law on the subject that individual counties could do it without recourse to a constitutional amendment. That's the only language I could come up with that clearly said that. VICE CHAIRMAN COLLINS: Do you have anynore questions? MR. HENRY: Canter, I have a question. Isn't local 18 amendment a colloquial term? Aren't all amendments amendments 19 to the constitution, they just may have general or local 20 application? 21 I just don't know whether that is a proper term for 22 the constitution. I think when they continued in effect 23 previous local amendments they said all amendments to this 24 constitution which have only local application shall continue 25 in force and effect. I don't think that local amendment PAGE 70 really is a proper term. 2 MR. BROWN: If you want to say each amendment of 3 local application, it is fine. It's inconceivable to me that 4 a court looking at this provision would not know what a local 5 amendment to the constituion was, but if you would feel more 6 comfortable saying amendment of local application there's 7 certainly no objection to it. 8 VICE CHAIRMAN COLLINS: Any more discussion? 9 SENATOR LESTER: I've got one further. A county may 10 be authorized by local law -- by that you mean a local act Czl 11 I- .'o.".. 12 ~ @~ ~ ~.-)j'~:J. ! 14 lV> :I: 15 01) Cl '::"> 16 .~.. zo 17 ~ of the General Assembly? MR, BROWN: Act of the General Assembly. SENATOR LESTER: Then why don't you say that? MR. BROWN: Because everywhere else in the constitution we use the term local law. Again, you have to understand this is within the context of Artic Ie XII I believe which does rank the law of 18 the state of Georgia, and specifically mentions local law. 19 VICE CHAIRMAN COLLINS: Any more questions? 20 MR. TIDl~LL: Canter, why did you have the last 21 sentence there? Run that by me. 22 MR. BROWN: So that all of these local amendments 23 that are presently in the constitution would become statutory 24 law and the details afthem could be handled by local law from 25 now on, just so we won't have to go back and amend the PAGE 71 technical details of previously existing local amendments. 2 MR. TIDWELL: What if it should be a policy decision 3 not to have local amendments? Would that be abolished? 4 MR. BROWN: Again, I think this would successfully 5 grandfather those, protect those local governments that alread) 6 have them by grandfathering them in by statutory law. 7 VICE CHAIRMAN COLLINS: Any more discussion? 8 MR. BROWN: I'll tell you why I put that in there. 9 MR. TIDWELL: You're doing two different things. 10 You're granting authority, then you're freezing it. .zCI 11 j: MR. BROWN: I think I'm just continuing currently ....0 Q. 12 existing authority, and the reason I did that was to make @ r l absolutely clear to the local governments involved that we ! 14 weren't taking anything away from them, we were just trying ~ I:zII: .. 15 .:l to make it easier to do it for them in the future, and it CI ::;) 16 .Iz.I.I just didn't seem to me that it was appropriate to come back .az 17 III and pass forty or fifty local laws in the first session after 18 this constitution is adopted to continue this. 19 MR. TIDWELL: What if they were carried forward as a 20 matter of substance as far as the new constitution? Then 21 you've got this one saying they're not a part of the constitu- 22 tion, they're statutory law. 23 MR. BROWN: That's right. I have done the same 24 thing with local homestead exemptions. _. 25 MR. TIDWELL: It's two or three different concepts, PAGE 72 and I guess what I understood Don wanted to do is just grant 2 some authority to the unincorporated areas. 3 MR. BROWN: I think he wanted to authorize the 4 General Assembly to do it. I don't think he intended for the 5 constitution itself to grant that authority. 6 MR. TIDWELL: I understood Don wanting in his 7 first sentence that's what he's trying to accomplish. 8 MR. BROWN: He's trying to accomplish that. 9 REPRESENTATIVE CASTLEBERRY: I don't want to mess up 10 the other either. Czl 11 i= 'o."".". @;I MR. BROWN: He wants to write into law which is authorized in the first sentence all the current authority that local governments have to do this already. ! 14 MR. TIDWELL: What is this article committee doing I- '<:"al:: 15 .:l with all the local amendments to the constitution of 1976? Cl '":::l 16 ~... MR. BROWN: As a practical matter they have Cl Z 16 .~.. MR. BROWN: I think the language dealing with Q Z 17 g 15 :I: .: be amended just as a statute could. Cl '"::> 16 .CZ.D. You know, we're not trying to take anything away froll Q 17 Z 'C"D anybody, but I don't see any problem in the very relatively 18 few number that are left in compiling those for this task 19 force, let them look at it at their meeting at the end of 20 October, but there just aren't that many of them. 21 SENATOR LESTER: Mr. Chairman, what Charlie Tidwell 22 was talking about, I understood that somebody had contacted all 23 of the local delegations about their county constitutional 24 provisions and had asked these delegations to review these 25 constitutional provisions and decide which ones they wanted PAGE 76 included in this constitution, and the rest of them were going 2 to be left out. Am I right, Charlie? 3 MR. TIDWELL: I don't know what's been done, Mr. 4 Chairman. I know that there are a lot of local amendments to 5 this article, and if you don't look at them and decide which 6 ones you want and which you don't want you cannot assume they 7 are going to be carried forward somewhere else, because that 8 policy decision may be made by the Select Committee that all 9 local amendments are going to be wiped out. 10 This has raised the issue here. You have addressed 11 "z j: one specific set of local constitutional amendments that are @;;o.'0".... in effect on this article. There are -- I assume there are others -- we know there are a lot of homestead exemptions, but ! 14 ... there are others too I wou~d assume. I have just drawn too '" :J: 15 .:l many in the twenty years -- "'";;;) 16 ~... MR. BROWN: The overwhelming majority of local Q Z 17 : amendments to Article VII deal with either local license fees 18 or with local homestead exemptions. 19 There are some other ones and, as I was saying, I 20 think we could compile a list of them. All they're doing 21 today is tentatively adopting the draft; the task force is 22 going to be coming back with at least one more meeting. You 23 know, it would be very easy for the staff to present it to 24 them, but it seems to me the Select Committee has the cart 25 before the horse here. You're telling the task force that PAGE 77 they ought to do everything contingent upon what the Select 2 Committee mayor may not decide in the future. 3 It seems to me the Select Committee is to decide 4 what they want to do with them and use that decision as a 5 guide for this task force in their work. 6 MR. TIDWELL: I know the Select Committee appreciate 7 your thoughts on that, Canter, but the article committees are 8 to -- all of them to look at fue local amendments that affect 9 their article and make some substantive decision about whether 10 they should be carried forward or not, or specifically zCJ 11 l- repealed or specifically retained. ..oe..<.. ~ 12 ~ Is that your understanding from the staff, Mel? @ri MR. HILL: Inthis article it is conceivable that ! 14 some recommendation be made, because you can put in the three IU:- 15 .:I or four categoreis that cover what they are, but Article IX CJ e< ~ 16 .~.. where most of them are to be found will have no comprehensive cz -< 17 : set, so I mean for them to make a recommendation to eliminate 18 them without seeing them would be impossible. It's just not 19 beEn possible to do that this summer. 20 MR. TIDWELL: I'm suggesting this committee do that 21 now, I'm suggesting it be brought to their attention. 22 MR.. C. DAVIS: Mr. Chairman, let me make a 23 recommendation. We'll continue two sets of constitutional 24 amendments, one dealing with licensing and one dealing with 25 homestead exemptions. All right. Any other amendments to PAGE 78 the constitution dealing with this article would be identified 2 and sent to the appropriate subcommittee for recommendation. 3 MR. MASSEY: Mr. Chairman, I wonder if it would also 4 be appropriate to do what Senator Lester mentioned, if we 5 could ask members of the General Assembly or request it be 6 done where there are local amendments if they want to continue 7 it or not. Wouldn't that be an approach we should take, or 8 somebody should? 9 SENATOR LESTER: I know we've got one, we've got a 10 special liquor tax that supports our colosseum that would have 11 "z I- ..'o".... to be protected or we would lose it. Q;i thing. REPRESENTATIVE CASTLEBERRY; Let me tell you someI ain't going to vote to take out something that the ! 14 I- local people has done voted to put in there now. '" J: 15 .:l You know, you start talking about these local "'"::;) 16 .~.. constitutional amendments; if they've done voted to put it in z13 17 ~ there, then they need to have another referendum to take it 18 out, but I don't think this committee or any other committee 19 ought to meddle with that. 20 MR. MASSEY; We ought to ask the members of the 21 General Assembly, we ought to put in a catch-all paragraph 22 like we've done here to continue them. Maybe that's the 23 approach. 24 REPRESENTATIVE CASTLEBERRY; I think we've got to put 25 a catch-all in there. PAGE 79 MR. MASSEY: Just in two areas. You mightwant to 2 follow up what you talked about and go ahead and cover all of 3 them. 4 SENATOR LESTER: That was the reason for your 5 amendment here. 6 VICE CHAIRMAN COLLINS: I think maybe we should 7 request Canter to try to get a list of these amendments or 8 laws together for us, and we're going to have -- this is just 9 a preliminary round On this, we're going to have a meeting 10 later to have a final approval and bring this before us at "z 11 j: @;;..'o".... that time and let the full committee act on it at that time. if that suits you all, we'll ask him to get all this information together for us if possible. l 14 Are there any more -- I- '" % 15 ~ REPRESENTATIVE CASTLEBERRY: Ques t ion, Mr. Chairman. "'::"> 16 ~... On this amendment I've got here where down there Q Z 17 : somewhere "Each local amendment of the constitution of 1976 18 which authorizes a county to levy a fee or tax as provided 19 in this subparagraph," we could add another one there and just 20 put a catch-all paragraph at the end of this thing and just 21 catch them all if that's what we want to do. Of course, I 22 agree we ought to look at them, 23 MR. BROWN: Bear in mind this is not the same as 24 you're talking about adding a provision at the end and 25 continuing it as part of the constitution. This continues it PAGE 80 as statute which subject to the other limitations of the 2 constitution can be amended, changed as any statute. That 3 is very different, and what you have done is taken the 4 necessity for continuing constitutional amendments both on a 5 statewide and local basis away and let it be treated 6 statutorily, so that is different. 7 You certainly could add a provision at the end of 8 the article continuing all those except those which relate 9 to the local occupational fees and the homestead exemptions as 10 .., ~ z 11 j: 'o..".... 12 ~ ~F~ ! 14 .... ':"z: 15 .o.l,I '"::l 16 .~.. Q Z 17 :: a part of the constitution. VICE CHAIRMAN COLLINS: Yes. SENATOR LESTER: Couldn't you treat them all the same? I mean if you're going to let these continue as statutes, let all the rest afthem continue as statutes, and then your local legislative delegations could get rid of those that are no longer applied . MR. HILL: You see, there is a very big problem, 18 though. These local amendments were in general !Bssed in order 19 to get around a provision of the local law, and if you're 20 going to continue them as local acts they will fall because 21 they will conflict with the general laws on the subject, so 22 you can't just say let's by magic wand change them all into 23 local acts, because the general law will preempt the area, so 24 it's not that simple. 25 Micheal has been working for two or three months on PAGE 81 an analysis of ten years' worth -- well, no, twenty years' 2 worth of local amendments, and it covers ten volumes on our 3 shelves to try to see what's in them, and it's a massive 4 project, and to try to even compile all the ones that relate 5 to this article I think will be an impossible task between now 6 and the next meeting. I mean it's something that's going to 7 take much work on the part of a larger staff than we have to 8 be able to do it. 9 MR. TIDWELL: What will the staff recommend on that? 10 MR. HENRY: My understanding in looking at it was 8-111 "~that, ..oa..:.. you know, as we went through this process that I would 12 a: try and the staff would try and recommend at appropriate times where there was a problem and where changes could be ! 14 made to either authorize the General Assembly to do something IIII 15 ~:4z: or authorize the local government to do something which would "a: :> 16 ~ alleviate the need for local amendments, and that you could zQ 17 ~-< once you have that authority in place hopefully you could turn 18 them around and make them local laws so as not to pull the rug 19 out from under the people who are operating day to day in the 20 trenches, but that you could repeal a great, great number of 21 them by operation of a provision such as this and provisions 22 such as the one on local homestead exemptions, and then after 23 that then I think you would have to go to your local delega- 24 tion and find out what has fallen out, find out -- you know, 25 for instance, there's counties that allow deferred payments PAGE 82 on ad valorem taxes which would certainly circumvent 2 uniformity and which would, but which would not be covered by 3 this article. Then you would just have to go in there and 4 find out, you know, do you still need this, how can we amend 5 the constitution to accommodate you, but the project was just 6 so massive, and plus the fact we have twenty years' worth, 7 but as you know prior to 1956 they were voted on statewide 8 so you really don't have a defined general amendment or local 9 amendment, but you have to go in there and find out which ones 10 actual~y only applied locally, and Legislative Counsel is in CJ % ..11 ;: 'o" 12 ~ @;I the process of preparing those which they have determined to only have appliep locally although voted on on a general state wide basis, but the bottom line is I think that where you can ! 14 ... '" 16 .~.. Q Z 17 ~ to take up; this one and another one. MR. NASH: We'd better take a break and start over. VICE CHAIRMAN COLLINS: How long do you all want to take? VOICES: Thirty minutes . VICE CHAIRMAN COLLINS: I'll tell you"what we'll do, we will adjourn until 1:30 . (Whereupon, at 12:00 noon the committee meeting 18 was recessed, to reconvene at 1:30 p.m. in the same place.) 19 AFTERNOON SESSION 20 VICE CHAIRMAN COLLINS: Since Jim is not here, if it 21 is agreeable with the group we will go ahead and start with 22 Section C, the Subcommittee on State Debt, and Canter has 23 worked with us on this and I am going to ask him to present 24 to the committee what the subcommittee has recommended. 25 MR. BROWN: Thank you, Mr. Chairman. PAGE 87 The draft that I will be working with, the struck 2 through and underlined draft is LC 5 4163, and the clean draft 3 is LC 5 4164. 4 Has everybody got those? 5 If I could just very briefly, let me explain to you 6 the process by which this subcommittee report was arrived at. 7 At its first meeting the subcommittee voted to 8 request Chairman Thrower to appoint an ad hoc committee of 9 experts in bond law to work with the staff of the subcommittee 10 in reviewing the draft that had preViously been prepared and zCl 11 j: 'o..".... which had been passed out to the entire task force at its ~ 12 ~ first meeting. ~F~ Over the summer we did that. The chairman of that ! 14 I- task force, Mr. McIntire, was generally concerned with any '~" J: 15 .:l revision of the state bond law in light of the possibility for Cl '":::l 16 ~... error . Q Z ~ 17 : The staff was encouraged by its chairman, though, 18 and the chairman of the task force to continue the process, 19 and we attempted through a series of letter exchanges to meet 20 the specific objections that Mr. McIntire had or anyone else 21 did in this process, and I think in terms of the specific 22 things that were raised really in almost every instance we 23 agreed to make a change to correct whatever had been suggested 24 The subcommittee then met about two weeks ago then 25 requested that Mr. McIntire and his ad hoc committee meet PAGE 88 with the subcommittee to review the draft and went through it 2 item by item. 3 MR. McIntire again expressed his concern as to any 4 revision, but did participate in the subcommittee in going 5 through the draft and made several very helpful suggestions. 6 I believe it would be fair to say that he still has 7 reservations about the idea of redrafting the constitution, 8 but we had sent copies of this tentatively approved draft out 9 to his ad hoc subcommittee and as far as I know -- and David 10 and Walter may have heanidifferent -- we have had no negative "% 11 j: feedback at all from that ad hoc committee as of today. "..0.... 12 " I think in going through this draft you will see @ r l that primarily all that is done here is in line with the ! 14 guidelines which the committee set, and that is to organize o~ :nr 15 ol) these provisions for clarity, to consolidate duplicative "";) 16 III % provisions, to use a little clearer modern English wherever Qz 16 ~... Cl Z MR. BROWN: It would read on lines 17 and 18, ":':"> 16 .~.. Article IX, Section VI, Paragraph I~) of the constitution of 17 :oz; 1976. 18 MR. HILL: There are two other places in the section 19 where this same change would be made if it's approved here. 20 VICE CHAIRMAN COLLINS: Is there any objections to 21 putting it in, the constitution of '76? 22 If not, Canter, put it in. 23 MR. BROWN: Thank you, Mr. Chairman. 24 Mr. Chairman, I'm now on page 4, line 21. Again we 25 have created a new paragraph here which simply reorganizes PAGE 97 the existing language. 2 On lines 25 and 26you find an illustration of 3 something you'll see throughout this section. In attempting 4 to remove the language the General Assembly does something, 5 in fact under the constitution it's the General Assembly 6 with the Governor subject to his veto. We have attempted 7 there, and you will see again and again to simply say 8 legislature has enacted rather than the General Assembly has 9 enacted. It doesn't constitute any substantive change. 10 On page 5 the next change in this paragraph is the 11 "z I- deletion of language on lines 6 through 11 relating to the o0< 0- w ~ 12 ~ requirement to appropriate sums necessary to make payments @F~ under the old authorities contracts, but I believe if you will ! 14 look on page 7, lines 1 through 7 you will find the same I- ':<"r 15 .: provision. Thiswas just removed again in the interest of "0< :;) 16 ~ clarity to be able to find it easier. It is the same Q z < 17 : language. 18 When we get to that, we will be recommending the sam 19 change Mel recommended just a moment ago .. Right now we are 20 just reorganizing it. 21 On lines 13 and 14 again in the interest of avoiding 22 these old legalistic words we have stricken hereunder and put 23 in the language pursuant to this section. 24 The next two subparagraphs on pages 5, 6, 7, 8, 9 25 deal with the general obligation debt sinking fund and the PAGE 98 common reserve fund for guaranteed revenue debt. 2 You will find typical of the changes that are made 3 here the elimination of the long repetitious phrase "the 4 Director of Fiscal Division, Department of Administrative 5 Services, or such other officer as may be designated by law." 6 We have simply in almost every instance where it 7 was necessary to say anything said the appropriate state 8 fiscal officer. We have also provided that until otherwise 9 provided by law these funds will be administered by the 10 ~ 11 j: 'o.0"..- ~ 12 ~ ~F~ ! 14 ~ ' 16 az~ that change on the clear copy which would be found on page 11 " 16 l.zD.. z" 17 'lD" and you would put in its place the word "an," and it would read "for the purpose of providing an effective method of financing the state's needs." You would also delete, of course, on lines 4 and 5 the words "than that in effect prior to January I, 1973. 'I VICE CHAIRMAN COLLINS: Any objections to this change? If not, move on to the next one, Canter. MR. BROWN: Mr. Chairman, since you have given me 18 a proposed a~mendment to this section, I would just like to if 19 I could explain the deletion of the language there and then 20 pass out your proposed amendment if that's all right. 21 VICE CHAIRMAN COLLINS: All right, sir. 22 MR. BROWN: On lines 13 through 28 you will see 23 stricken an awful lot of language dealing with the assumption 24 of debts of the Costal Highway District and certain assess- 25 ments made as a result of public road and highway PAGE 108 construction. 2 The subcommittee determined that all this language 3 was obsolete, and in any event felt that the language which 4 you see at the end of this section would continue any present 5 lawful obligation and would prohibit the revival of any 6 obligation which is now unlawful, so they just simply felt 7 this could be eliminated. 8 Mr. Chairman, if I could just pass these around. 9 Do you want me to explain this? 10 VICE CHAIRMAN COLLINS: Yes, sir, I'll let you explain to them what you're trying to do. MR. BROWN: Mr. Chairman, as I understand it the concern of yours which prompted this amendment deals with the fact that it may well be a proper position for the General Assembly to take to provide some assistance or savings in one way or another for local goverr~ents who are in default on their obligations because a default by any local government 18 in the state might well affect the bond rating and the tax 19 structure of every other local government in the state. 20 Consequently as I understand it you're proposing an 21 amendment that was just passed out. The effect of that 22 amendment would be that the General Assembly by two-thirds 23 vote by general law could provide a program for the assumption 24 of local debts by the state. It does not mandate the state 25 do that, it simply provides that by a two-thirds vote the PAGE 109 state could do it. 2 As I understand your feelings, you felt that it 3 should be difficult for the state to approve the assumption of 4 any local debts, but that that flexibility should be 5 available and the General Assembly should be able to act upon 6 it with haste in the event the situation should arise without 7 having to await the necessity of a referendum at the general 8 election which could be as long as two years after the 9 default arose. 10 VICE CHAI~Jill COLLINS: Right. This is a Czl 11 j: ..'o."... substantive change, I'll assure you. ~ 12 ~ MR. BROWN: Yes, sir. It's also in line with the ~r~ fact that the constitution already authorizes the General ! 14 l- Assembly simply to make grants to municipalities, and it's UI 16 .~.. grants will probably be extended to include counties so the o Z " 16 ~... owned by the state had to be used to service the bonded debt Q Z 16 ~... oz 17 : MR. NIXON: There's been some discussion about that too, and there's never been an official opinion on it one way or the other. VICE CHAIRMAN COLLINS: Would you like for me to give you one? Go ahead, Canter. MR. NIXON: We would be interested in your legal opinion. 18 MR. BROWN: Mr. Chairman, on page 17, old 19 Paragraph X relates to the state's sinking fund for debt 20 which wasereated in 1928 or '27. This is the old sinking 21 fund. At present the sinking fund is not utilized at all, 22 the common reserve fund and the guaranteed obligation debt 23 sinking fund are utilized for state debt. 24 We had the undewstanding that approximately $20,000 25 worth of bonds -- PAGE 114 MR. NIXON: Something like that, $18,000. 2 MR. BROWN: -- are still outstanding, but the sub- 3 committee felt that the savings clause in Paragraph XI would 4 require that they be honored in any event and there's no need 5 to keep this in this constitution. 6 MR. NIXON: We've got the reserve in the treasury to 7 pay them if anybody ever brings them. It's been I dOB't Y~Ow 8 how many years since we have paid off one. 9 VICE CHAIRMAN COLLINS: Any objections? If not, we 10 will move to the next. Czl 11 ... o..0..<.. MR. BROWN: Mr. Chairman, we're getting close to the @;i end here. As you can see, in an abundance of caution the ! 14 ... subcommittee adopted a new Paragraph XI which would specify '" :r 15 .:l that this new section on state debt would not unlawfully Cl 0< ;;;) 16 .~.. impair the obligation of any contract,in effect under the Q Z 17 : present constitution or revive or permit the revival of the 18 obligation of any bond or security declared to be void in the 19 constitution of 1976. 20 Again, I think they felt this would have been the 21 case in any event, but they wanted to make it clear that that 22 was their intent. 23 VICE CHAIRMAN COLLINS: Is there any discussion on 24 this? Any objections to us tentatively approving it? 25 lL- If not, we will tentati~ly approve it. ~ _ _ ~~ PAGE 115 Next we have Mr. Martin's subcommittee on the 2 purpose and methods of taxation. 3 I have got an appointment to be up on the second 4 floor -- it's unusual for me to have one up there -- I'm going 5 to step out and leave while he is discussing it, so you all 6 just keep running. 7 MR. MARTIN: At this point, who is the chairman 8 for questions? 9 A VOICE: I think you're it, Mr. Chairman. ,. 10 MR. MARTIN: I can't present and be the chairman Czl 11 j: ..0c..t.. 12 ct @rl ! 14 ... '4:"r 15 .:l Cl ct ::::l ... 16 zIII Q Z 4 17 ct III at the same time. Don, will you do that? Are you the vicevice? REPRESENTATIVE CASTLEBERRY: Go ahead. I'm the vice vice . MR. MARTIN: Our subcommittee met on several occasions to discuss Section II of Article VII. In that process we were faced with three major issues. 18 The first was the provision in the existing Article 19 VII, Section II, dealing with the purposes of taxation, and 20 for the purposes of the discussion the best thing to do 21 would be to have a copy of LC 5 4166 which is the struck 22 through and underlined version of our section, and LC 5 4167 23 which is the clear copy. Those are correct, aren~ they, 24 Canter? 25 MR. BROWN: Correct. PAGE 116 rr------------------~~------------------_____, MR. MARTIN: Okay. 2 The first issue, as I said, was the powers of 3 taxation which were specified in the state constitution, and 4 I think the origin of that was the constitution of 1986. 5 Of course, there have been a number of amendments to that. 6 The second major issue was the provision in our 7 section which dealt with the requirement that all state 8 revenues, taxes, fees and assessments be paid into the 9 general fund. 10 The third issue was several special purpose "z 11 i= ...Ioll: "" provisions that had been over time added to this section of ~ 12 ~ the constitution. ~r~ Our meetings sort of dealt with those three major 14 ~ l- issues. V> 16 .~.. of helping us with our committee work and, Mike, I would like az 17 g :r 15 .: beginning on page 1 and going through page 5 are all the Cl e< ;;;) 16 .~.. purposes of taxation that are currently listed in the state Q Z 17 ::; constiorion stricken out. 18 In its place is the language that is underlined 19 beginning on line 5 of page 1 of the stricken through and 20 underlined version, LC 5 4166. 21 The provision we recommend to the full committee is 22 this: Except as otherwise provided in this constitution, 23 the power of taxation of the whole state may be exercised 24 for any purpose authorized by law, and any purpose for which 25 the powers of taxation of the whole state could have been PAGE 118 exercised on June 30, 1983, shall continue to be a purpose 2 for which such powers may be exercised. 3 We do two things by that. One is we've made it 4 clear that the statute passed by the General Assembly that 5 does not conflict with other provisions of the state 6 constitution, for example the prohibition against gratuities, 7 some of the prohibitions we have already talked about in 8 terms of debt, other provisions that limit the use of state 9 funds, if it does not conflict with those other provisions 10 then it would be an authorized purpose for which tax funds z~ 11 I- .'oA"... could be spent. @);~I Secondly, to ensure that the current purposes are not eliminated by this draft we have provided that the ! 14 I- purposes for taxation which are in the current constitution '" :I: 15 .:I shall continue to be a purpose for which such powers may be ~ '"::l 16 .~.. exercised. In order to eliminate a purpose, you would have t:l Z 17 ::i to amend the state constitution, in order to eliminate a 18 purpose that existed in our current constitution. 19 Mr. Chairman, that is the explanation of that 20 section. 21 REPRESENTATIVE CASTELBERRY: Any questions? 22 MRS. HUNTER: Let me just say this, that the 23 purposes were always permissive, so if the General Assembly 24 wished to eliminate a purpose it just simply wouldn't fund 25 one. It doesn't really require a constitutional amendment ~--- . _ - - - - - - - - - - - to make a purpose no longer funded. PAGE 119 2 MR. MARTIN: Thank you, Connie. That's correct. 3 They have always had the right in the annual 4 appropriations act not to fund one of the stated purposes. 5 The difficulty was if there was a new purpose for which the 6 General Assembly believed tax funds should be spent that 7 wasn't in this restricted list in the state constitution 8 a constitutional amendment was necessary. 9 MR. BROWN: Jim, am I right in thinking that this 10 "z 11 ... .'oQ"... ~ 12 ~ ~F~ 14 .~.. V:rI 15 ~ 16 "'~="' Qz 17 :; language was not intended to limit these new purposes to that old traditional definition of public purpose? MR. MARTIN: That's correct. MR. BROWN: In fact, you had contemplated all the things that state government is generally involved in . MR. 11ARTIN: As long as it's a purpose which is provided by a law passed by the members of the General Assembl and signed by the Governor, again under this section it would 18 be a lawful purpose for which tax funds could be spent, and 19 the courts could not then look at that statute and say 20 "Well, this is a quote valid public purposes," closed quotes, 21 even though it is embodied in the state statute. 22 MRS. HUNTER: We carefully left out the word 23 "public," it just says purpose authorized by law. It should 24 cover anything the legislature enacts. 25 REPRESENTATIVE CASTELBERRY: The General Assembly, PAGE 120 in other words, those people still have two shots. They 2 would be defeating the legislation or either not appropriating 3 the appropriation. 4 MR. }~RTIN: That's correct. 5 REPRESENTATIVE CASTLEBERRY: Any further questions 6 on this? If not, go ahead, Jim. 7 MR. MARTIN: The next major issue that we tackled 8 was the provision in Article VII, Section II, that earmarked 9 -- I'm sorry, that provided that -- Let me turn to that in 10 our stricken through so I'll know precisely what that is. Its on line 17, page 5, of our strike through and underlined version. That is Article VII, Section II, Paragraph III in the current constitution, and it requires that all moneys collected from taxes, fees and assessments for state purposes as authorized by general revenue measures enacted by the General Assembly shall be paid into the general fund of the state treasury. 18 We spent a good bit of time looking into that issue, 19 the requirement that state taxes, fees and assessments be 20 paid into the general fund. 21 This is the first step that assures the General 22 Assembly the authority that -- this is the first step in the 23 process which gives the General Assembly the authority in the 24 appropriations process to determine what to do with all the 25 state funds; it is the first step as it were in the process PAGE 121 -------------- of permitting earmarking of state funds, because this money 2 is paid to the general fund, then it's available to be 3 appropriated by the General Assembly for whatever purpose 4 it wants. 5 Because of that we considered not only this require- 6 ment but also the earmarking requirement and looked at some 7 of the provisions in other sections, in other articles of the 8 state constitution that deal with earmarking. 9 The committee made several recommendations and heard 10 from Department of Transportation, from the Georgia Czl 11 oa......:... Municipal Association, the Association of County Commissioners ~ 12 ~ of Georgia, of the League of Women Voters and various ~r~ representatives of business and industry concerning several 14 .~.. of the provisions of the state constitution that deal with VI :I: 15 o:l earmarking. Ca:l ::> 16 ~ Q Our recommendation to the full committee is z 17 : contained in this language here in three resolutions -- no, 18 I'm sorry, two resolutions. 19 MR. HENRY: Three. 20 MR. MARTIN: One deals with municpa1 debt, but that' 21 another section. 22 In terms of the general fund provision there are 23 two resolutions that deal with that. 24 MR. HENRY: Okay. 25 MR. ~~RTIN: We have this language to recommend in PAGE 122 two resolutions that we want to recommend to the full 2 committee for its adoption. These resolutions would transfer 3 to other articles in the state constitution some of the 4 provisions that relate to the requirement that state taxes, 5 fees and assessments be paid to the general fund. 6 Finally, the one m~r change here is to add the 7 requirement that all interest earned on revenues collected by 8 the state will be paid to the general fund. That apparently 9 is current practice, the state constitution was silent on 10 that point, it currently silent on that point. We add to the 11 Czl i= types of funds that have to be paid into the general fund ~ ..'o".... 12 ~ all interest earned on revenues paid to the state fund. ~r~ Let me explain the resolutions as well. Mike, 14 ~ would you pass those out, please? I- ':"r 15 ~ REPRESENTATIVE CASTLEBERRY; Let me ask a question Cl '"::> 16 ~ here to satisfy something in my mind. cz 17 ::; In the last session, or session before last, or 18 both of them, Canter, we passed legislation -- let's use 19 the Forestry Department for instance to sell timber, the 20 Natural Resources Department to sell timber, to take that 21 money that they receive from that and use it. You know 22 what I'm talking about? 23 MR. BROWN: Vaguely. I don't believe they can do it 24 either presently or under this language. 25 MR. MARTIN: Mr. Castleberry, I think what you're PAGE 123 talking about if I'm not mistaken is the category of funds 2 that never go into the general fund that would not be 3 affected by this, they call those agency funds. 4 We heard from Mr. Pete Hackney in some detail 5 talking about the type funds that never go into the general 6 funds, that are retained by the agencies. 7 REPRESENTATIVE CASTLEBERRY: Right. Is this going 8 to have any effect? 9 MR. MARTIN: This will not have any effect on those 10 type of agency funds because it had been the interpretation CzI 11 ~ of the Attorney General that those types of funds are not o... ~ --I ~ ~ 12 ~ taxes, fees or assessments, but are funds generated by the agency. 14 ~ REPRESENTATIVE CASTLEBERRY: I just wanted to be sure, '" J: 15 ~ because I didn't like it to start with. Ca:I :::> 16 ~ MR. BROWN: Jim, just before you get consideration oz 17 : of these three, Mr. Thrower had one change that he would like 18 to be considered on the bottom of page 5. This is language 19 dealing with the Agricultural Commodities Commission, and he 20 asks is that between the words "of the" on line 34 and the 21 word "program" be added "agricultural promotion" for clarity. 22 23 that? 24 HR. NASH: What's that now, Canter? Would you read MR. BROWN: On line 34 after the words "of the" 25 this is in the struck through and underlined copy -- the PAGE 124 words "agricultural promotion." We have already used the 2 term higher, quote, promotion of agricultural products, and 3 he just wanted to make clear that we're still dealing with 4 that same concept. 5 REPRESENTATIVE CASTLEBERRY: For agricultural 6 promotion programs? 7 MR. BROWN: Right. 8 MR. NASH: That doesn't eliminate just your promo- 9 tion of that product. 10 MR. BROWN: Under the present constitutional zCI 11 i= @);;o..'".... provision the entire program is predicated upon the promotion of product really, it includes the authority to do everything else they do. This wouldn't change that. 14 ~ tIlt :I: 15 ~ CI '"::> 16 ~... Q 17 :Zll MR. NASH: Okay. MR. MARTIN: Canter, what Mr. Nash's question indicates is something that we found out -- I'm not a farmer so I don't understand this at all, but apparently there are 18 activities that the Agricultural Commodities Commissions do 19 other than just promote the commodity itself under the 20 commission's jurisdiction. 21 Mr. Nash, you may want to speak to that. 22 MR. NASH: For instance, each one of them has to 23 specify in the marketing order -- and there's only three 24 items that are used in the marketing orders at the present 25 time, education, research and promotion, and that's the PAGE 125 reason I asked tfie question. 2 MR. CANTER: I think the language relating to 3 promotion, of course, is the same as the present constitution, 4 . and I think that what's happened is the General Assembly in 5 the laws establishing the commodities commissions have 6 interpreted that to include that. 7 MR. NASH: That's right. 8 MR. MASSEY: These other things are in the law. 9 MR. BROWN: I don't think the change would change 10 that. cz.:l 11 ~ e -1.o.. 12 ~ MR. NASH: I didn't want us to get limited where we couldn't bring it into -- I realize these other items are spelled out in enacting those laws from the statutory end 14 ~ of it, but I just didn't want us to get limited here to where '" :E: 15 .:I we couldn't do that. c.:l '":::l 16 ~ MR. BROWN: We will certainly take another long look Czl 17 : at it, but I think you're on solid ground. 18 REPRESENTATIVE CASTLEBERRY: It says the General 19 Assembly may provide, and they provide it in that general law. 20 MR. M.SH: That's where it's at, and then there are 21 others, but there's only three of them that's ever been used, 22 and that's education, research and promotion. 23 MR. MARTIN: Canter, if you wouldn't mind just 24 looking into that, but it's your understanding that Mr. 25 Thrower had in mind the current program as conducted by the PAGE 126 commodities commission and not to limit it? 2 MR. BROWN: That's correct. That's exactly correct. 3 MR. MASSEY: If there is any dangerous thing about 4 it, certainly other words then that are in the law -- if you 5 think it limits it in any way 6 MR. NASH: We don't want to get it limited just to 7 promotional programs. 8 MR. BROWN: I understand. It was not his intent to 9 do that, he was just trying to clarify that since we created 10 CzI 11 ~ ..'o".... @;~ ! 14 ~ ':"z: 15 .:I CI '";;;) 16 ~... az 17 ~ two sentences like we did he just wanted to clarify that we're still talking about the same program. HR. NASH: Okay. MR. MARTIN: Let me try to focus exactly on what we're talking about by this paragraph. The change that we had made with the existing language begins on page 5, line 17 of the strike through and underline. The major changes that have been made are one to add interested earned on such 18 revenues to the types of funds that are required to be paid 19 into the general fund, to take the provision that is in 20 Section II dealing with the agricultural commodities 21 commission which is an exception to the requirement that 22 taxes, fees and assessments be paid into the general fund and _,.', to list that as an excepdbn to this paragraph rather than 24 having it as a separate paragraph, and then to define 25 agricultural products as defined in the state constitution PAGE 127 now? 2 Is that correct, Mike? That's the same definition? 3 MR. HENRY: Yes. 4 MR. MARTIN; Then as part of our study we had some 5 recommendations to make to the select committee concerning 6 other situations of earmarking, one of which is in our 7 article, one of which is in our section and one of which is 8 not. 9 The first recommendation is the resolution that 10 starts out -- in fact, it's the shorter one with the letter ..Czl 11 ... o...... A in parentheses in the therefore part . (~ @r:~ This is a provision that is currently in Article X, Section I, Paragraph IV, that is an exception to this require14!... ment that we're talking about, that is that funds be '<"C( :I: ..15 .: Cl taxes, fees and assessments be paid into the general fund. ;;) 16 ~... Q It allows the firemen's pension system. it exempts the firemen's Z .".. ~ 12 ~ ~r~ ! 14 lV> :z: 15 .:l c.:J '"::l 16 ~... Q Z 17 : body that objects just to moving it from Article VII to Article III. REPRESENTATIVE CASTLEBERRY: If they don't take it over there, though, we've got to put it back in here. MR. BROWN: That was the question that I had asked of Mr. Martin, it was their intention that if Article III doesn't want to include it there that it would be included in Article VII. 18 MRS. HUNTER: From a procedural standpoint we have 19 two sections like that we think should be moved, retained but 20 moved. How do we go about amending this resolution so that 21 that would occur? Is it necessary to state in here if it 22 is not moved it needs to be retained? 23 MR. BROWN: You may want to simply have Mr, Hill 24 check in the interim between this meeting and the next one 25 with the powers that be with that article. PAGE 132 REPRESENTATIVI CASTLEBERRY: I was going to say 2 somebody has got to keep an eye on it. 3 MR. HILL: As a matter of precaution, it might be 4 better to include it here with a recommendation you know, 5 put it in with a recommendation that it should be transferred, 6 so then it won't get lost. I think that's what should be done 7 with it. 8 The Article III committee is all finished with its 9 work, so that it will be to the Select Committee to make a 10 decision, but just to be sure it's not lost I think we should 11 zCl ot..o..-:..: probably include it with an accompanying recommendation that ~ 12 ~ it be transferred. ~F~ REPRESENTATIVE CASTELBERRY: You stated it very well, 14 ~ Mr. Hill. That's what I've been trying to say. t- '<:"zC:( 15 ~ MR. MASSEY: Could I ask too if it's covered in Cl 0:: ;:) 16 .~.. there about the subsequent injury workers compensation trust Q Z Cl '";:) 16 ~... Q Z 17 : MR. NASH: Have you got the one that's got (A) and (B) on it, or just (A)? MR. HILL: I have both, but I -MR. NASH: The one we passed justhas (A) on it. MRS. HUNTER: Mine doesn't even have (A) on it. REPRESENTATIVE CASTLEBERRY: Mine has a resolution on it. I ain't seen no B resolution. 18 (Laughter.) 19 MR. MARTIN: We can take these one at a time, Mr. 20 Chairman, if you want to do that, and then we will expain 21 each one. 22 VICE CHAIRMAN COLLINS: We will let the subcommittee 23 make its motion or suggestion and we'll act on it. 24 MR. MARTIN: I was trying to explain what all was 25 involved in this. We can take them now one at a time. PAGE 136 In our study of~e requirement that funds be paid, 2 that taxes, fees and assessments be paid into the general 3 fund we discovered that the firemen's pension system which 4 is located, a provision that's located in Article X, Section I S Paragraph IV is in conflict with that provision, is an 6 exception to that provision. 7 After hearing testimony and studying that provision 8 we found out that last year the recommendation of the Article 9 X committee was to eliminate the firemen's pension system 10 provision in Article X, and we concur with that recommendation after our study. Since this is an exception to the provision that requires taxes, fees and assessments be paid into the general fund, it's our recommendation that this committee recommend to the Select Committee that provision be deleted from Article X, Section I, Paragraph IV. MR. MASSEY: You're not recommending deleting the workers' comp fund? It will stay in? 18 MR. NASH: Throw that one away and forget about it. 19 REPRESENTATIVE CASTLEBERRY: The committee to 20 study this other article is recommending this be deleted from 21 their article? 22 MR. MARTIN: Here's the problem, Don. There is no 23 Article X task force or committee. Article X and Article III 24 have already been disbanded, so where you have a conflict or 2S a suggestion to transfer language over to an article that's PAGE 137 already been completed it would seem to us the best procedure 2 was to make a recommendation to the Select Committee, which 3 is the only existing body, that that change be made since 4 we can't refer this back to the Article III committee since 5 it doesn't exist, and we can't refer this particular one back 6 to Article X committee since it does not exist. 7 VICE CHAIRMAN COLLINS: Your recommendation is to 8 recommend to the Select Committee that they delete what we've 9 got here in (A)? 10 ~ CzI 11 j::: ..'o".... 12 ~ ~r~ 14 ~ I'-" :J: 15 .) CI '";;;) 16 .~.. Q -Z 17 ::; MR. MARTIN: Yes, sir. VICE CHAIRMAN COLLINS: From Article X? MR. MARTIN: That's right. VICE CHAIRMAN COLLINS: Does everybody understand what we're talking about now? Have you got (A) in your hand? MR. MASSEY: Mr. Chairman, let me follow up on Don's question. When the Article X committee was in existence they deleted this and apparently they did not include it. 18 MR. MARTIN: That's my understanding. 19 MR. HENRY: No, no. They included it. 20 MR. MARTIN: Article X did? 21 MR. MASSEY: Oh, they did include it. 22 VICE CHAIRMAN COLLINS: You're recommending to the 23 Select Committee for them to take it out if I'm understanding 24 you right. 25 MR. MARTIN: That's correct. PAGE 138 2 to it? REPRESENTATIVE CASTLEBERRY: What's going to happen 3 VICE CHAIRMAN COLlINS: The Select Committee is 4 going to make a decision to leave it in like the other 5 committee has done or whether to take it out, just like they'rl 6 going to go through everything we've done and decide. 7 SENATOR LESTER: We're not going to have any input. 8 VICE CHAIRMAN COLLINS: The motion is to recommend 9 to the Select Committee to delete what we have got here 10 listed (A) from Article X. Is there any more discussion on it? All in favor let it be known by uplifting your hand. Reverse your position. The recommendation will go to the Select Committee. Now, what was our next controversy? MR. MARTIN: The next is that there is a provision in Section II which is our section that deals with the ear- 18 marking, which allows the earmarking of additional penalties 19 in circuit court cases for the purpose of providing training 20 for law enforcement officers and prosecuting officials. It 21 is my understanding that provision has never been implemented, 22 but that provision exists in SectiOn II. 23 It is our recommendation, since that is an exception 24 to the earmarking provision, that it be moved to Article III, 25 Section X, Paragraph VII, which is the provision that PAGE 139 number one prohibits earmarking 1 and number two then goes 2 ahead to state an exception for the motor fuel tax. This 3 would be a (b) under those exceptions. 4 MR. BROWN: Jim , as per what Mel said, would it be 5 appropriate to read into that that it's your recommendation 6 that we go ahead and include it, but recommend that it be 7 moved? 8 MRS. HUNTER: If it will make it easier, I will be 9 glad to go ahead and make a motion that we-amend our report 10 Czl 11 ... ...o0< 0. ~ 12 ~ ~r~ 14 !... '" :I: 15 .:l Cl 0< ::::l 16 ~ oz 17 ~ to include the language as Section IV, Paragraph IV rather with an appropriate title, and the language is found on page 6 of the marked up copy, lines 7 through 20. That is fairly recent language, it really doesn't seem to require any -- MR. BROWN: v]ould it be all right for the staff just to do the editorial changes, just to rework that for you? MRS. HUNTER: That will be fine. VICE CHAIRMAN COLLINS: Is there any objections to 18 including this recommendation? 19 REPRESENTATIVE CASTLEBERRY: You're going to make 20 the recommendation -- you're going to include it in and make 21 the recommendation that it be moved; what way it won't get 22 lost. 23 VICE CHAIRMAN COLLINS: Right. 24 REPRESENTATIVE CASTLEBERRY: Okay. 25 VICE CHAIRMAN COLLINS: Was there any objections? PAGE 140 2 3 out? If not, we will include this in the recommendation. Now have you all got all the rest of it straightened 4 MR. MARTIN: One more then we'll be all straightened 5 o~. 6 VICE CHAIRMAN COLLINS: All right, sir. 7 MR. MARTIN: All right. There is a provision in 8 Section II that deals with grants to municipalities. We 9 heard testimony both from the Municipal Association of 10 Georgia and the Association of County Commissioners, an.d it's our recommendation to the subcommittee that language be retained as is, but that it be moved to the gratuities provision of the state constitution since it is a -- REPRESENTATIVE CASTLEBERRY: You're getting lost like I did now. VICE CHAIRMAN COLLINS: I haven't even got a feel. I just walked in here. 18 MR. BROWN: Am I right again you would be recommend- 19 ing that it be included in this draft? 20 MR. HENRY: It is included in the draft. 21 MR. MARTIN: It's included as Paragraph III in our 22 proposed language. It's our recommendation to the full committee that it recommend to the Select Committee that that 24 provision be moved to Article III, Section VIII, Paragraph 25 XII. PAGE 141 VICE CHAIRMAN COLLINS: Don, is this where you want 2 to make your recommendation? 3 REPRESENTATIVE CASTLEBERRY: This is where I want to 4 make a recommendation. 5 VICE CHAIRMAN COLLINS: Let's hear it. 6 REPRESENTATIVE CASTLEBERRY: That's the reason I've 7 been waiting until he got to that one. 8 Where the word ''municipalities'' there on line 1, 9 page 7, grants to municipalities, and down on line 2, that 10 "z 11 I- .'lo".L. ~ 12 ~ ~r~ 14 ~ I':"r 15 ~ "'";;;) 16 .~.. Q Z 17 : that be changed to local governments. SENATOR LESTER: Instead of the word municipalities change it to local governments? MR. BROWN: That would authorize grants to counties and consolidated governments. REPRESENTATIVE CASTLEBERRY: Ifwe change this to local government, that would conform to what we did in my section. 18 You're limited now to municipalities. This would 19 make it local governments. 20 , SENATOR LESTER: Wouldn't you have to change line 1 21 then too to local governments instead of grants to 22 municipalities? 23 MR. BROWN: It would be the same thing on 1 and 2. 24 REPRESENTATIVE CASTLEBERRY: Lines 1 and 2. 25 MR. MARTIN: As chairman of the subcommittee I PAGE 142 ean report to you the Municipal Association of Georgia is 2 opposed to that and the Association of County Commissioners 3 is in favor of it. 4 VICE CHAIRMAN COLLINS: Don, are you offering this 5 as an amendment to - - 6 REPRESENTATIVE CASTLEBERRY: If we need a motion 7 I'll just make a motion that the word be changed, where 8 municipalities is put local governments. 9 SENATOR LESTER: I would like to second that. 10 VICE CHAIRMAN COLLINS: All right. We're going to vote on that first. Now what we are doing here, you all understand it, we're voting on Don's motion to change it to local governments All in favor signify by saying aye. Opposed same. All right. We will change it. Now, then the next is your since it's been amended. 18 You can tell us what it does now. 19 MR. MARTIN: Our proposal is that since that is an 20 exception to the gratuities provision that it be moved from 21 our section which is -- well, our Section II and moved to 22 Article III, Section VIII, Paragraph XII, which is the 23 provision dealing with gratuities since it's appropriately 24 an exception to the gratuities provision rather than a part 25 of our sectbn . PAGE 143 MR. BROWN: It would remain in here until it was 2 actually moved. 3 MR.MARTIN: That's right. 4 VICE CHAIRMAN COLLINS: Is there any objections to 5 the subcommittee's recommendation? 6 If not, we will do it. 7 MR. MARTIN: Mr. Chairman, we probably still have to 8 adopt the language that we recommended in our Paragraph II on 9 line 17, page 5. 10 VICE CHAIRMAN COLLINS: All right. Explain it to me sort of briefly. I hate to have to be caught up on all of it. MR. MARTIN: Okay. VICE CHAIRMAN COLLINS: That's all right. I see what it is. Is there any objections in accepting Paragraph II as the subcommittee has recommended? If not, we will move on to the next, then. We'll 18 accept that. 19 MR. MARTIN: The final proposal is the, for lack 20 of a better term the Abit Massey-Charlie Tidwell amendment, 21 both of whom are present in the room. 22 Beginning on line 8 of page 7 of the draft, a 23 provision of real foresight was put into our constitution 24 dealing with industrial development conEissions some twenty 25 years ago, and it has notbean ~plernented, and it's our PAGE 14L~ recommendation that that be deleted. 2 VICE CHAIRMAN COLLINS: Any objections? 3 If not, go on to ~ur next one. 4 MR. MARTIN: That's it, Mr. Chairman. 5 VICE CHAIRMAN COLLINS: Is there any objections to 6 tentatively approving this subcommittee's report? 7 REPRESENTATIVE CASTLEBERRY: I've got to find out 8 something about this subsequent injury fund. Now where is 9 that thing? Is it in or out? 10 :IzII 11 j: '~.".. ~~ 12~ ~r~ ! 14 I'<"l % 15 o:l III 16 '~" ~ 17 ~ MR. MARTIN: It's just like it was, we didn't change it. No problem. VICE CHAIRMAN COLLINS: If there is no objections, this will be tentatively approved. I've got something here some place. MR. BROWN: Mr. Chairman, could I make sure while everybody is here -VICE CHAIRMAN COLLINS: Again let me check my 18 calendar. 19 MR. BROWN: It's my understanding at this point you 20 want me in cooperation with Mel and his staff to incorporate 21 all these three reports into one draft of the revised 22 Article VII, making the changes you have approved today, 23 and mailed to everyone. 24 VICE CHAIRMAN COLLINS: Yes, sir. 25 MR. BROWN: Including revising the language of that PAGE 145 one thing on the assessed penalties. 2 All right. 3 MRS. HUNTER: Which would need to be a Paragraph IV 4 because it does not fit into any other paragraph. 5 MR. BROWN: Right. I'll do that. 6 REPRESENTATIVE CASTLEBERRY: I move we adj oum, Mr. 7 Chairman. 8 VICE CHAIRMAN COLLINS: We're going to in just a 9 minute, sir. 10 "z 11 j: o."0."... ~ 12 ~ ~ri 14 !... ':"r 15 ~ ""~" 16 .~.. a Z 17 ~ 18 Mr. Thrower suggested thatwe have our next meeting the 30th unless I notify you differently. If there is no other business, then we stand adjourned. (Whereupon, at 3:00 p.m. the committee meeting was adjourned.) +++ ++ + 19 20 21 22 23 24 25 INDEX Committee to Revise Article VII Full Committee Meeting Held on Sept. 24, 1980 FULL COMMITTEE MEETING, 9-24-80 Subcommittee Reports Proceedings, pp. 3-13 Section I: Power of Taxation Paragraph I: Taxation; limitations on grants of tax powers. pp. 13-14 Paragraph II: Taxing power limited. pp. 14-25 Paragraph III: Uniformity; classification of property; assessment of agricultural land; utilities. pp. 25-27 Section II: Exemptions From Ad Valorem Taxation Paragraph I: Unauthorized tax exemptions void. pp. 27-28 Paragraph II: Exemptions from taxation of property. pp. 28-59 Paragraph III: Exemptions which may be authorized locally. pp. 59-65, 66-85 Paragraph IV: Current property tax exemptions preserved. pp. 65-66 Section III: Purposes and Method f State Taxation Paragraph I: Taxation; purpose for which powers may be exercised. pp. 116-120 Paragraph II: Revenue to be paid into general fund. pp. 120-140 Paragraph III: Grants to counties and municipalities. pp. 140-143 Section IV: -St-at-e-D-eb-t Paragraph I: Purposes for which debt may be incurred. pp. 88-92 Paragraph II: State general obligation debt and guaranteed revenue debt; limitations. pp. 92-96 Paragraph III: State general obligation debt and guaranteed revenue debt; conditions upon issuance; sinking funds and reserve funds. pp. 96-102 Paragraph IV: Certain contracts prohibited. p. 102 Paragraph V: Refunding of debt. pp. 102-104 Paragraph VI: Faith and credit of state pledged debt may be validated. pp. 104-105 Full Committee Meeting 9-24-80 Page 2 Paragraph VII: Georgia State Financing and Investment Commission; duties. p. 105 Paragraph VIII: State aid forbidden. pp. 105-106 Paragraph IX: Construction. pp. 106-107 Paragraph X: Assumption of debt forbidden; exceptions. pp. 107-111 Paragraph XI: Section not to unlawfully impair contracts or revive obligations previously voided. p. 114 See also the 1976 Constitution, Article VII, Section III Paragraphs VII: Profit on public money VIII: Certain bonds not to be paid IX: Sale of State's property to pay bonded debt all deleted and to be provided for by law. PAGE 1 STATE OF GEORGIA 2 COMMITTEE TO REVISE ARTICLE VII 3 OF THE 4 CONSTITUTION OF GEORGIA 5 6 7 8 9 10 CzI .11 .. .'o".. ~ 12 ~ @ ~r~14!.. ':z": 15 .:I CI :':"> 16 ~ Q z 17 : 18 SUBCOMMITTEE ON PURPOSES OF TAXATION 19 20 21 Room 402 State Capitol 22 Atlanta, Georgia 23 Wednesday, September 24, 1980 9:00 a.m. 24 25 PAGE 2 rr----------------.-------------~ PRESENT: 2 COMMITTEE MEMBERS: 3 CHAIRMAN JAMES F. MARTIN MRS. CONSTANCE HUNTER 4 MR. ROBERT NASH 5 6 7 8 9 10 z~ 11 i= ...oa: Q. ~ 12 ~ ~r~ ! 14 ... '" J: 15 .:l ~ a: :> 16 .~.. Q Z 17 :::i ALSO PRESENT: MICHAEL HENRY JOHN ANDY SMITH RAY FARMER ROB SUMNER SAM OTT GLENN ANTHONY KENT LAWRENCE DAVID GODFREY JIM PULLIN JAMES THOMPSON EDWARD W. KILLORIN HOWARD VICTRY 18 19 20 21 22 23 24 25 PAGE 3 PRO C E E DIN G S 2 CHAIRMAN MARTIN: Since we have some people here -- 3 we don't have a full committee present, but I know that the 4 subsequent injury fund people want to make a statement or 5 talk to us, in the interst of time since we have a meeting at 6 10:00 afthe full committee we might as well go ahead and get 7 started, and maybe some of the other members of the committee 8 will show up. 9 Before we get started, I would like to recognize the 10 Czl 11 t- ..oo..<.. ~ 12 ~ @r~ ! 14 t':"r 15 ~ Cl 0< ::> 16 ~... Q Z 17 : fact that Mr. Robert Nash, a member of the subcommittee, and Mrs. Constance Hunter, the vice chairman of the subcommittee, are present, and I am Jim Martin, the chairman. Mike Henry, the staff attorney for the subcommittee is also present. I would like to ask everyone else to introduce themselves for the record. I'll start with you . MR. VICTRY: Howard Victry. 18 MR. KILLORIN: I am Edward W. Killorin, and I am 19 here representing the Georgia For~estry Association as 20 chairman of its Workers Compensation Committee, and I am 21 here representing the Georgia State Chamber of Commerce as 22 chairman of its Workers Compensation Committee. 23 I have been practi~ing law for 24 years specializing 24 in constitutional law and workers compensation law. Those 25 two organizations represent some 9,000 Georgians. PAGE 4 MR. THOMPSON: I am James C. Thompson, chairman, 2 Georgia State Community Action Program, Council of United 3 Auto Workers. I am here as an employer who pays taxes into 4 the workmens compensation system of the state; I am here also 5 as a representative of the workers, and I am also here as a 6 trustee on the subsequent injury trust fund. 7 MR. PULLIN: Jim Pullin, secretary-treasurer, State 8 Board of Workers Compensation. 9 MR. GODFREY: David Godfrey, Department of Natural 10 Resources. MR. LAWRENCE: Kent Lawrence, Georgia Chamber of Commerce. MR. ANTHONY: I am Glenn Anthony, executive director Georgia Forestry Association. MR. OTT: Sam Ott, Georgia Farm Bureau. MR. SUMNER: Rob Sumner, Georgia Farm Bureau. MR. FARMER: Ray Farmer, American Insurance 18 Association. 19 MR. SMITH: John Anthony Smith, executive assistant, 20 State Board of Workers Compensation. 21 CHAIRMAN MARTIN: Okay. 22 For purposes of our agenda today, I would like to 23 propose that we hear the comments. I talked with Mr. 24 Thompson yesterday, and I know other people and Howard as 25 wil from the subsequent injury fund would like to say PAGE 5 something. 2 I think the best thing to dc, Connie and Robert, 3 would be to hear from them first, and then to take action on 4 the proposals that we have to finalize before the meeting at 5 ten o'clock. 6 Is there anything else we need to do, Mike, any 7 other business we need to conduct before ten o'clock? 8 MR. HENRY: Well, we need to take action on those 9 resolutions and on the final draft. " 10 MR. KILLORIN: Mr. Chairman, may I say I understand 11 C.z..l cr: you have a tight schedule, and we can save you time because ...0 11. ~@r~ ~12 cr: some of us can speak for others, but the business community of Georgia who has paid the money into this, who is responsiblE 14 .~.. ultimately in the first instance for having it in the law in '<"l :I: 15 .:. the first place would like to be heard. Ccr:l 16 ...:;) .z.. CHAIRMAN MARTIN: I understand that. Q Z ... 17 c" 16 .~.. insurance company holds, and the moneys in that fund become Q Z -et 17 : contractually obligated to be paid out in claims. 18 As a matter of fact, from a legal point of view / 19 any time there is an award which declares money should be 20 paid out of a fund which has to come about ultimately by the 21 workers comp board approving it, even though it's often done 22 by agreement by t he administrator in reconmending and so forth, 23 the ultimate concept is an award. That award as you know is 24 like a judgment, that judgment is enforceable in court against 25 the fund, and that judgment decla~es that the moneys shall PAGE 10 be paid under the terms of the fund and the workers 2 compensation law interp~ed meaning in a case of total 3 disability for life of the disabled person as long as that 4 disability continues, which means that in some cases the 5 moneys will be paid for thirty, forty, fifty years, 6 depending upon the longevity. 7 The amount of the money to be paid therefore is 8 uncertain, yet it's a matter of judgment and contract. 9 That's unique. We don't have that I don't think in anything 10 else. Everything else, the amount becomes certain. In this 11 "z j: it does not, but by contract and by judgment it must be paid @;;o.'0".... for life, and the amount of medical to be pad is unlimited. Those two things make the amount uncertain. 14 ~ It could be $1 million. There have been cases I- ':4"r 15 ~ already in Georgia, workers comp cases where the amounts paid "'"::::I 16 .~.. far exceeded $100,000. There are many workers comp cases in oz 17 : Georgia right now since we have had lifetime benefits and 18 unlimited medical where the reserves set up are more than $1 19 million because the insurance company knows they're going to 20 have to pay that ultimately, so that is the unique nature of 21 this fund. 22 Now, why must it be the way it is? Very simple. 23 It cannot be paid from state treasury money, it is money 24 which is contracted for a period of time, for longer than one 25 year, and as you know other parts of the constitution PAGE 11 prohibit state contracts for a period in excess of one year, 2 and it is money which is put into this fund to be paid out 3 for individuals according to findings by someone other than 4 the General Assembly, which is proper. 5 The General Assembly doesn't want to decide every 6 workers comp case, they want the Board or in this case the 7 subsequent injury fund plus the Board to decide. That's the 8 reason the administrative agencies are set up, because the 9 legislature is not equipped to do them piece by piece by 10 piece. CzJ 11 j: '.o".. 12 ~ ~~r~ ~ ! 14 lo:-rn 15 Q CJ :'>" 16 ~... oz 17 ~ So for those reasomwe submit that the subsequent injury trust fund must be in the constitution, and it must be in there in its present form, although words can be juggled slightly, obviously we can write a paragraph and write it a few different ways,but the point is the entire content is necessary in my opinion as a constitutional practicing lawyer, and any of you are welcome to check my references, in my 18 opinion it's necessary that this thing be in substance the way 19 it is, that is, that it have all of the explanatory language 20 as to the reasons and what it deals with, and that above all 21 it have in management of funds it may provide for the 22 disposition of the funds for purposes stated herein above 23 without being placed in the state treasury. 24 The explanation hereinabove tells exactly, describes 25 the program, and then the final clincher is not to be placed PAGE 12 in thestate treasury. 2 Now let me tell you how this thing came about. It 3 came about by a lot of well meaning people wanting to improve 4 our system for the injured workers, and also wanting to find 5 a way to encourage employers to hire the handicapped, and to 6 find a way to try to limit costs of operating the workers 7 compensation system. 8 It is felt that as long as this thing is operated th~ 9 way it is the employers of Georgia who are very cost-conscious 10 .., z 11 I- 'o.Q"... @;i 14 ~ lV> ::I: 15 ..:.,l '";;) 16 .~.. oz 17 ::; -- and whether or not tHs committee has had personal experience, most folks have -- the hottest item in Georgia today is workers compensation and its cost. There has been a study committee that just went around the state, went to about ten or twelve different cities on this from the General Assembly, a joint committee, there have been seminars put on byfue Georgia Chamber of Commerce and the Georgia Forestry Association and others -- the workers comp board has 18 participated, does many of their own seminars, we just did 19 one in Albany. 20 People are thirsting for two things, one, knowledge 21 about the workers compensation system so they can better 22 administer their own shops, and two, cost control so they 23 won't have to pay as much. 24 If this thing were taken out of the constitution, 25 I can assure you that in my opinion the cost would skyrocket PAGE 13 for its operation. It would have to if it gets into the state 2 treasury. 3 There is no way the state treasury could operate 4 the thing the same way it's being operated now and, number 5 two, the employers of the state would be up in arms. 6 We like to see progress in these constitutional 7 revision committees, we donJt like to see stalemates or get a 8 logjam like we did last year in the General Assembly where 9 nothing happened. There were a lot of good points, but there 10 were a few points of debate in the revision, and nothing 11 "z j: happened. ..'0".... - @r l12 '" I assure you -- and this is not a threat, this is a practical observation -- the employers of Georgia will go ! 14 through the ceiling if this thing is tampered with. It is a I':"r 15 ~ good thing, they all like it; I have never heard the first ..":'>" 16 .z.. dissenting word about the way its operated, all I have heard 13 .Z 17 '" is applause, and I've been very close to the employer 18 community of Georgia and to the insurance community. It's 19 their money that's in there, their money went in there on the 20 basis of this constitutional amendment, that is what persuaded 21 them that they should support its passage in the General 22 Assembly, and they relied on that. 23 They have put up now how many millions -- some odd 24 dollars, whatever the number is -- I forget the total -- 25 MR. VICTRY: A million-four. PAGE 14 MR. KILLORIN: They relied on that, and they should 2 not now be told that their reliance was not justified. 3 I am sorry we didn'tklow about this sooner, I just 4 learned about it yesterday afternoon, and all these people 5 who are here except for Howard and James because of my learnin~ 6 about it yesterday afternoon, and I assure you each one of 7 them represents thousands of heads of Georgians and Georgians 8 who can be heard -- they're not all in the room, but they're 9 here through us. 10 CHAIRMAN MARTIN: I understand. Thank. you for your comments, Mr. Killorin. In fact, I have had business with a number of people here in the room, and I understand the people that they represent. Howard, is Mr. Killorin speaking for you in the terms that there is no language that can be taken out of the provision? 18 MR. VICTRY: Absolutely. 19 CHAIRMAN MARTIN: Let me say at this point ~or the 20 benefit of the members of the subcommittee, I suggested when 21 Howard called me yesterday I tried to clarify what we were 22 saying when we took our action. 23 On the one hand, we're concerned about any exception~ 24 to the provision that requires that the funds be not paid to 25 the general fund; the second is that there are a number of PAGE 15 provisions like this one that seem to have a lot of statutory 2 detail in them, and that clutters up the state constitution. 3 I had asked Howard if there was any language that 4 perhaps could be treated by statute as opposed to in the 5 constitution. I guess the answer is that at this time you 6 all think there iSR' t a -- 7 MR. VICTRY: I have also reviewed this with our 8 attorney, with the attorney general's office, and he's advised 9 that in order for the fund to proceed with its mission 10 legally that this wording must be there. This of course in his, meaning Mr. Killorin's expertise. CHAIRMAN MARTIN: James, do you have any connnents? MR. THOMPSON: I think Ed pretty well covered everything that is to be said, except I would like to say and wear two hats, as an employer who pays into the fund I would like to see all the money that I pay in returned either 18 in benefits or for the administration of the fund. This 19 assures that; it assures it doesn't become a tax on me and 20 doesn't become a tax on the other business interests of the 21 state, but more importantly as one who represents thousands 22 of people in this state who are inside of plants and who 23 suffer incapacitation and injury and illness or disease, it 24 assures them that they can go out -- this fund assures them 25 under its present form, assures them that when they have PAGE 16 reached maximum healing even though they're disabled and 2 would normally not be able to secure employment in the 3 state, it gives them a degree of hope because of the off- 4 setting factors in this fund that they will b~ again gain- 5 fully employed in the state, and if this fund doesJnothing 6 else than that, then I think it is well worth it. 7 I will answer any questions that any of you might 8 have, but this is one of those rare instances where labor and 9 management and industry and everyone else has worked together 10 Czl 11 I- 'o..".... ~ 12 ~ @ ~r~14 ~ IU'I ~ :I: 15 .!) Cl '":;) 16 .~.. Q Z ~ 17 :; hand in hand in setting up this fund; there was no disagreement from the beginning, and there is still no disagreement that it is one of the best things that's ever happened to the state, and as a representative of labor you wontt find us sittinl in the same room asking you to do something very often. We usually are apart, but this is one of those rare instances that we all agree that it's one of the best things that ever happened in the state. 18 CHAIRMAN MARTIN: Are there any other comments,? 19 MR. PULLIN: I would just like to echo what Mr. 20 Killorin and Mr. Thompson have said. Without this vehicle 21 I think we're going to totally destroy the rehabilitation 22 program in our state of getting people back to work that have 23 been injured. 24 CHAIRMAN MARTIN: Anyone else? 25 MR. FARMER: Mr. Chairman, my name is Ray Farmer PAGE 17 with the American Insurance Association) I'm counsel for the 2 Southeastern Region. Our 150 stock companies write approxi- 3 mately 45 percent of the workers compensation in the state. 4 We would just like to echo what Mr. Killorin has so ap~ly 5 put. I would like to see this vehicle left as it is and not 6 going into the general treasury) and left as the account that 7 it actually is. 8 CHAIRMAN MARTIN: Ray) do you take the position 9 that Mr. Killorin takes that there is no language in this Q 10 provision that could be treated by statute as opposed to 11 "z j: constitutional amendment? "o."."". ._- ~12 ~ MR. FARMER: Mr. Chairman, we haven't reviewed any proposed language or really studied the current language 14 ~ recently. Mr. Killorin being the constitutional scholar that ':"z: 15 o:l he is, we would go along with his recommendations. """;;;) 16 ~ CHAIRMAN MARTIN: Fine. Q z 17 : Let me for the benefit of the people here explain 18 one of the problems. I am not a constitutional lawyer of the 19 stature of Mr. Killorin, although I did work on the draft of 20 the constitution of 1976, and one of the top constitutional 21 experts in the state took us to task with that, and I'm used 22 to the hard feeling and strong disagreement among lawyers. 23 One of the issues that came up last year or at our 24 last meeting was, for example, the budget or the administrativE 25 budget of the subsequent injury fund is not subject to PAGE 18 legislative review like other budgets. For example, the 2 workmen~ compensation board budget is appropriated through the 3 legislative process, it has nothing to do with the money that's 4 allocated for the payment of benefits. 5 I think one of the concerns was that maybe some 6 aspect of the subsequent injury fund should in fact be part 7 of the annual appropriations process as a means of ensuring 8 economies in administration and those sorts of things. 9 The other point is that in many cases when you deal 10 with a specific issue you tend to allow language in the 1:1 Z 11 ~ constitution that may not be absolutely necessary, and one of ..'o".... @;I our jobs is to try to get brevity and clarity in the constitution. I think that's an equally important issue that ! 14 I- came up at our last meeting, and may be one of the reasons '<"l: :J: 15 0)) that the subcommittee voted the way it did last time. Cl '"::> 16 ~III Are there any comments to that? a Z 16 .~.. down, that's what is involved here, and all our talk is not Q 17 Z : going to remove that. You can't get the support, you can't 18 keep a subsequent injury trust fund in this state without a 19 guarantee of that protection. 20 CHAIRMAN MARTIN: Thank you for those comments. 21 That's an interesting observation. 22 Does anyone Connie, do you have anything? 23 MRS. HUNTER: Well, of course, our objective in 24 looking at this particular thing at all was, one to 25 eliminate any exceptions that we could inthe constitution to PAGE 23 the funds being paid, I mean any exceptions that no longer 2 seemed valid. 3 The other was to remove any statutory detail that 4 could be removed, and the other was to make sure that the 5 constitution didn't put a stranglehold on things that needed 6 to be done, that the~tail was so limiting, but it would 7 appear that you like the language that's in here, that 8 it's accomplishing its purpose. 9 Now, I think a lot of things we put in the 10 constitution because we want constitutional assurances. 11 "z I- 'o" Thats not always a valid reason for putting it in the "- 1M @ ; j constitution, because it's always nice to have everything / you're interested in protected by the constitution obviously, 14 ~ but there are very good reasons for not putting every special I- '" :J: 15 ~ interest's particular baby in the constitution. "'::"> 16 ~ I was not here for the discussion, and aside from 1M Q Z 17 : what Jim said about budget control I can't think of any 18 reason for our recommending that this be changed at this 19 point in time, and if budget control is statutory, then of 20 course that really isn't an issue. 21 CHAIRMAN MARTIN: Why don't we go ahead and take 22 some action on this, since our time is running out. 23 Mike, maybe the thing to do, if you wouldn't mind 24 would be to see if you can find if any of the other members 25 of our subcommittee are either down on Room 337-B or around PAGE 24 would you just make that effort? 2 We can talk about the other resolutions while you're 3 gone, if that's all right. 4 MR. HENRY: Okay. Let me take this one resolution 5 and copy it. 6 CHAIRMAN MARTIN: We will act on that as soon as 7 Mike comes back and sees if he can find more members of the 8 committee. We will act one way or the other, with or without 9 more members. 10 ~ z ~ 11 i= 'o."".". 12 ~ ~ri ! 14 l- V> " 16 ~ Q z 16 .~.. Q Z 17 : Mike comes back. (Pause. ) CHAIRMAN MARTIN: Mike, we have already adopted the resolution that you Xeroxed. MR. HENRY: This one? CHAIRMAN MARTIN: Right. MR. HENRY: Okay . CHAIRMAN MARTIN: Now we have before us a 18 resolution with several whereases, but the operative part is 19 that: Be it resolved that the subcommittee recommends to 20 the full Article VII Committee that the final draft should 21 contain a recommendation to the Select Committee on 22 Constitutional Revision that (a) Whne the concept of a 23 subsequent injury workmens compensation trust fund has merit, 24 the provision at Article III, Section IX, Paragraph VI which 25 provides for an assessment for this purpose not to be paid PAGE 30 into the general fund should be deleted; and (b) while the 2 concept of a firemens pension system has merit, the 3 provision at Article X, Section I, Paragraph IV which provides 4 for a special tax for this purpose not to be paid into the 5 general fund should be deleted. 6 Are there any recommendations concerning that 7 proposal? 8 MRS. HUNTER: If we fail to move the adoption of 9 this, it would die from lack of having been proposed, would 10 it not? ..."z 11 i= o CHAIRMAN MARTIN: That's right. We could do that, @~:.i1M or someone could move that we amend our proposal to take out ~r~ the (a) part, which would just mean that our recommendation 14 ~ would be that the enabling language -- I'm not sure you call ~ ..':" 16 ~az t1R. HENRY: You instructed me to draft resolutions 17 : for the subcommittee to present to the full committee on 18 these issues. 19 CHAIRMAN MARTIN: To be adopted today? 20 MR. HENRY: To be adopted or declined. 21 MRS. HUNTER: May I ask with regard to the firemen' 22 pension system, do we have other pension systems that don't 23 operate this way? 24 MR. HENRY: Basically in the full revision of 25 Article X almost all the pension systems in Article X were PAGE 32 to be provided by law. They made the article very brief, 2 very clear and very flexible. 3 The firemen's pension system, as Senator Holloway 4 pointed out, was a point where politics was involved or came 5 in, and they were not able to delete this special tax for the 6 firemen's pension system, so it is kind of a sore thumb in 7 the revised Article X. 8 MR. NASH: It should be over there, but it's one of 9 those things. 10 .CzI 11 i= ~ 12 ~."o.". ~F~ ! 14 l- Oll ~ .15 ~ CI ::0 16 ~... oz 16 ~ to say that we would delete paragraph (a), in which case you Q 17 z ::i would not need the letter (b). 18 MR. HENRY: This is getting as confusing as last 19 time. If you want to take out (a) and recommend to the full 20 conmittee that the full committee recommend to the Select 21 Corrmittee that the firemen's pension system be deleted, or 22 the special tax for the firemen's pension system be deleted, 23 then I would suggest that you make a motion to take out 24 subparagraph (a) and adopt the proposal as amended, or the 25 resolution as amended. PAGE 34 MRS. HUNTER: It seems sort of unnecessary since 2 the motion has never been made. 3 CHAIRMAN MARTIN: There is no motion on the floor. 4 Someone could move that we adopt the resolution that would 5 contain only subparagraph (b), and we could adopt that, and 6 the only recommendation then being made to the full committee 7 would be the deletion offue firemen's pension system. 8 MR. THOMPSON: You need to renumber your paragraphs 9 accordingly, then you would be in order. As an ex- 10 parliamentarian, that I can tell you. I:l Z 11 j: o.la.L:. @;i here. MR. HENRY: I'm glad we've got a parliamentarian I'm going to defer to you from now on. CHAIRMAN MARTIN: Does anyone want to make a motion 14 .~.. to that effect? '" :I: 15 ~ MRS. HUNTER: I can read the whole thing if it Ia::l ~ 16 .~.. would make everybody more comfortable . az 17 ::i CHAIRMAN MARTIN: If you would. Are you going to 18 make that in the form of a motion? 19 MRS. HUNTER: I move the following resolution: 20 Whereas, the subcommittee considering Section II of 21 Article VII has determined that the provision in Paragraph III 22 of that section requiring all revenue collected from taxes, 23 fees and assessments for state purposes ... be paid into the 24 general fund of the state treasury, has merit and represents 25 sound public policy; PAGE 35 Whereas, the subcommittee recognizes that there are 2 several exceptions to this general fund requirement provided 3 for in other provisions of the constitution; 4 Whereas, the subcommittee has debated and discussed 5 the merits of each on~f these constitutional exceptions to 6 the general fund requirement; 7 Therefore, be it resolved that the subcommittee 8 recommends to the full Article VII committee that the final 9 draft proposal should contain a recommendation to the Select 10 zCJ 11 j: o.."..".. ~ 12 ~ ~F~ 14 .~.. '<"l: :J: 15 CJ "":::> 16 .~.. Q Z 17 ~ Committee on Constitutional revision that While the concept of a firemen's pension system has merit, the provision at Article X, Section I, Paragraph IV which provides for a special tax for this purpose not to be paid into the general fund should be deleted . CHAIRMAN MARTIN: Is there a second? MR. NASH: I'll second it . CHAIRMAN MARTIN: All in favor of the motion say 18 aye. Okay. 19 Is there any other business to come before the 20 subcommittee? 21 MR. HENRY: This one you're moving 22 CHAIRMAN MARTIN: We have adopted the resolution on 23 the law officers' earmarking, that's right. 24 MR. HENRY: You've adopted the one on yours? 25 CHAIRMAN MARTIN: That's right. PAGE 36 }ffi. HENRY: Okay. Do you want to adoptthe draft? 2 CHAIRMAN MARTIN: Okay. Let's now turn to the -- 3 Mike, for the purposes of the record, these other 4 two resolutions will be part of the records of the committee, 5 the actual resolutions themselves? 6 MR. HENRY; Yes. 7 CHAIRMAN MARTIN; We need to adopt the language in 8 Section II of Article VII. The only change would be that 9 this language -- well, we adopt this language knowing we have 10 made a recommendation that part of that language be moved to .., .. 11 z ~ Article III. .o".". @;i MRS. HUNTER: We would go ahead and adopt this language in case it doesn't move, right? ! 14 lII' < :E: MR. HENRY: Might as well. You want to retain it at ..15 o..!,l some point in the constitution, right? ;:) 16 .~.. CHAIRMAN MARTIN: Is there a motion we adopt that Q Z 17 :<:i language as drafted? 18 MRS. HUNTER; I so move. 19 MR. NASH: Seconded. 20 CHAIRMAN MARTIN: All in favor say aye. 21 Opposed. 22 Okay. Any other business? 23 Thank you all so much for coming this morning. 24 (Whereupon, at 10:00 a.m. the subcommittee meeting 25 was adjourned.) INDEX Committee to Revise Article VII Subcommittee Meeting Held on Sept. 24, 1980 SUBCOMMITTEE MEETING, 9-24-80 Proceedings. pp. 3-6 SECTION III: PURPOSES AND METHOD OF STATE TAXATION Paragraph II: Revenue to be paid into general fund. pp. 6-26 Paragraph III: Grants to counties and municipalities. pp. 26-28 ARTICLE III: LEGISLATIVE BRANCH SECTION IX: APPROPRIATIONS Paragraph VI(c): Appropriations to be for specific sums (employers' workers' compensation expenses). pp. 6-24 SECTION X: RETIREMENT SYSTEMS Paragraph IV: Firemen's Pension System. pp. 29-35 PAGE 1 2 3 STATE: OF' CEORGIA 4 COMMITTEE TO REVISE ARTICLE VII 5 OF THE 6 CONSTITUTION OF GEORGIA 7 8 9 ; <0. lD "z 11 ~ 0..~.... 12 ~ @rl ! 14 ..:.z...: 15 ~ "~ :::J 16 .Iz.I.I Q Z 17 ~ III 18 FULL COMMITTEE MEETING 19 20 21 Room 133 State Capitol 22 Atlanta, Georgia 23 Thursday, November 13, 1980 11:00 a.m. 24 25 PRESENT: 2 COMMITTEE MEMBERS: 3 4 5 6 7 8 9 10 CzI ... 11 Ioa-: Go @;I ! 14 I'1;; :~r 15 ~ "'";:) 16 .~.. Q Z ~ 17 : 18 19 20 21 22 23 24 25 Mr. Castleberry. Mr. Collins. Mr. Charles Davis. Mr. Jim Davis. MR. J. DAVIS: Here. MR. HILL: Mr. Fundgerburg. Mr. Holloway . Mrs. Hunter. MRS. HUNTER: Here. MR. HILL: Mr. Keenum. Mr. Lester. SENATOR LESTER: Here. MR. HILL: Mr. Martin. MR. MARTIN: Here. MR. HILL: Mr. Massey. MR. MASSEY: Here. PAGE 4 MR. HILL: Dr. McDaniel. 2 Mr. Nash. 3 Mr. Nixon. 4 Mr. O'Kelley. 5 DR. O'KELLEY: Here. 6 MR. HILL: Mr Presley. 7 Mr. Robinson. 8 MR. ROBINSON: Here. 9 MR. HILL: Mr. Strickland. 10 MR. STRICKLAND: Here. MR. HILL: Mr. Wade. Mrs. West. Mr. Williamson. CHAIRMAN THROWER: All right. Let me welcome you here. I believe each of you has a copy of the agenda, which I think we will be able to proceed through and conclude within the morning. 18 As is customary, I would like for our visitors to 19 introduce themselves. If you would, begin over in the corner 20 here, I would like for you to go around the room and intro- 21 duce yourselves, and we would certainly welcome any comments 22 that any of you might have to make as we go along. 23 MR. OTT: Sam Ott, Georgia Farm Bureau. 24 MR. R. SUMNER: Rob Sumner, Georgia Farm Bureau. 25 MR. VICTRY: Howard victry, Subsequent Injury PAGE 5 Trust Fund. 2 MR. LAWRENCE: Kent Lawrence, Georgia Chamber of 3 Conunerce . 4 MR. PULLIN: Jim Pillin, Workers Compensation Board. 5 MR. ANTHONY: Glenn Anthony, Georgia Forestry 6 Association. 7 MR. WILLIAMS: Harold Williams, Southern Bell. 8 MR. GODFREY: David Godfrey, Depatment of Human 9 Resources. 10 MR. MORTON: Jack Morton, Tax Reform Commission. ..Czl 11 i= CHAIRMAN THROWER: We are certainly happy to have @;;o...... you here. As I indicated, if you have comments to make, we would certainly be happy to receive them. ! 14 ... The minutes or summary of our last meeting have been '"<4( :I: ..15 .:I circulated. As you know, we have the detail on the tapes. Cl ::l 16 .~.. Do I hear a motion with respect to approval of those Q Z <4( 17 : minutes, or any modifications? 18 SENATOR LESTER: So moved. 19 CHAIRMAN THROWER: Second? 20 A MEMBER: Second. 21 CHAIRMAN THROWER: All in favor let it be known by 22 saying aye. 23 You have before you a commentary prepared by the 24 staff, and this has been reviewed and re-reviewed to 25 accompany our proposals in order to give to those who will PAGE 6 be reading them a general sense of what we have been doing. 2 I think it would be useful -- let me say that if 3 acceptable to you I would like for you to be in a position to 4 move to accept or not accept the commentary. I don't think of 5 it in the sense of an adoption as your own which would require 6 more detailed reading, but it is intended for the purpose 7 indicated, and I think it should be accepted by us with any 8 modifications we might wish to make, really either now or at 9 a later time, or suggestions. 10 ! 11 i 12 @rl .... 14 I ~ :I: 15 oll CI :::I 16 J ! 17 : I think it would be helpful if Mel would review for us, take us through this paper. MR. HILL: Thank you, Mr. Chairman. I would like to state first of all this commentary is based on the work of the staff, a collective effort of the staff to identify and put down in this paper the rationale behind the changes that are being proposed. We went back to the transcripts in some cases to make 18 sure that the reasons were in fact the reasons given in the 19 meetings, and it is as Mr. Thrower says an effort to provide 20 the people that look at the draft later with an idea of why 21 we did what we did and what exactly we did. 22 That is the origin of this commentary, and it's in 23 keeping with the other articles that have been revised in the 24 constitution; we also presented notes and comments on those 25 as well. PAGE 7 I would say first , of all that the revision of 2 Article VII as has been generated by the work of this committee 3 is primarily an organizational and editorial revision; there 4 are not too many substantive changes that have been made. 5 The objectives of the constitutional revision in 6 general have been brevity, clarity and flexibility, which we 7 have been trying to achieve as we move through this process, 8 and I believe those objectives have been achieved in this 9 draft that you have prepared. 10 The major substantive changes which I can highlight 11 Czl j: Io..l..l..: very quickly are a new method for granting exemptions to the @;I ad valorem taxation in the state, and I'll explain that in more detail as we go through, but that's one of the major ! 14 ... changes in this draft, the new method for granting those :'z": 15 Q exemptions; secondly, the authorization to counties to levy Cl Ill: ::> 16 .~.. business license fees and license taxes in unincorporated Q Z 17 : areas if authorized by general law or by local law in the 18 absence of general law. 19 Thirdly, the purposes for which the state may tax 20 has been broadened to indicate that they may tax for any 21 purposes as authorized by law as opposed to the situation now 22 where there is a list of 13 specific purposes for which the 23 state may tax, and those purposes only. 24 Finally, in the area of state debt a number of 25 changes have been made. The limit on state debt has been PAGE 8 reduced to ten percent from the present 15 percent, a forty- 2 year limitation on the term of the debt has been imposed, 3 and the state has been given the ability to assume the debts 4 of local governments if the General Assembly approves this 5 action by two-thirds vote of each house. 6 Those are primarily the substantive changes that 7 have been approved in this draft, and what I'm going to 8 discuss -- I'll try go to through the draft quickly to indicat( 9 what's been done in addition to that, but for the most part 10 these other changes are of an editorial and organizational ~ 11 ~ @;;2 III nature. I might indicate for the benefit of those who were not here at the last meeting that Canter Brown led us through ! 14 the draft on a paragraph by paragraph basis, and we did make M ~ % 15 q a number of wording changes as we went through to clarify I~ 16 things that weren't clear, and we did approve, or the committe( i 17 approved at the last meeting that change relating to the 18 taxation by counties of businesses in the unincorporated 19 area. It also authorized grants for local governments in 20 general as opposed to the present provision that limits 21 grants to municipalities only, and the assumption of debts 22 by the state of 10cal-gqvernments was another change approved 23 at the last meeting. 24 Those were the three principal changes that were 25 agreed upon at the last meeting. PAGE 9 Now I'll try to go through the draft quickly. If 2 you disagree, I hope you will speak up and indicate you don't 3 agree with the rationale that's been given, that was given 4 in this draft, and we can correct that. 5 We will start with Section I. Paragraph I of 6 Section I, Taxation; limitations on grants of tax powers 7 is an editorial revision to eliminate inoperative and 8 unnecessary language; otherwise, it's the same. 9 Paragraph II, Taxing power limited. This was a 10 .."z 11 I- o...... ~ 12 ~ (@)F~ ! 14 t; :~r ..15 0:1 "~ 16 ~... az 17 : restatement of the existing provisions todescribe more accurately the limitation on the state's power to levy ad valorem taxes, to modernize the exemption to the limitation relating to defending the state in an emergency, and it continues forward the present method of taxing shares of stock of banking corporations, but allows future changes in this method as authorized by law Paragraph IlIon Uniformity; classification of 18 property, of course is one of the most important paragraphs 19 in the entire article, and this preserves the present 20 uniformity language with the exception of the "for public 21 purposes only" because as I indicated earlier the authoriza- 22 tion to tax was broadened to include any purpose authorized 23 by law, so the present uniformity provision itself was 24 retained, but as I said, these exceptions for licensing of 25 businesses in unincorporated areas is added. If this was PAGE 10 not added, the county would not be able to tax only in the 2 unincorporated area, or levy such a tax only in the 3 unincorporated area, so that's why that particular provision 4 is added to the uniformity section. 5 I would say the local amendments authorizing these, 6 the present exemptions, are continued as statutory law, and 7 the classes of property are the same as in the present 8 constitution but they're reorganized. They're put together 9 so hopefully it will be clearer to thereader what the 10 different classes of tangible property are that the state i" 11 may -- @;i... MR. KANE: Excuse me, Mel. I believe you misspoke yourself. You used the word exemption in talking about the ! 14 :!;; 15 ~ i~ 16 local constitutional amendments which are carried forward as statutory law, and I'm sure you intended to say that the present local constitutional amendments authorizing the i 17 business licensing, taxes and fees has been carried forward 18 as statutory law. 19 MR. HILL.: That's right. Thank you. That I s correct. 20 Are there any questions about anything in Section I 21 as I have just summarized it? 22 All right. In Section II the major change proposed 23 in Section II is to allow future exemptions to be granted 24 pursuant to law subject to referendum. In the case of a 25 general exemption that's statewide it would be a general law PAGE 11 that would be subject to referendum statewide: in the case 2 of a local homestead exemption it would have to be approved 3 by a majority of the members of each house and approved in a 4 referendum in the locality. 5 This is the same procedure that is now followed in 6 amending the constitution, we need two-thirds approval of 7 each house and approval of the voters to have a statewide 8 constitutional amendment, so that is the saroe procedure that 9 we now use for that type of an exemption. 10 For local homestead exemptions we now need two- CzI 11 j: ..'o".... @;i thirds approval of each house and approval of the citizens in the locality, but because of the local courtesy rule if the local amendment has the approval of the local delegation ! 14 In :I: 15 ~ CI '";;;) 16 .~.. Q Z 17 : it is approved hy the General Assembly, so the local homestead exemptions will be able to be granted by a majority vote of each house and the approval of the citizens in the locality. 18 There is one difference in the sense that between 19 the procedure that we're proposing and the procedure we have 20 now, when you can vote on them, the constitutional amendment 21 can only be voted on in even numbered years, and this change 22 would allow this exemption to be voted on at the time that the 23 law provides for the election, so that it would change the 24 present procedure to that extent. 25 Otherwise it would be the same procedure that we now PAGE 12 have, and it would eliminate the need in the future for 2 constitutional amendments relating to these issues because 3 we've set forth a procedure in the constitution to do the job. 4 Now, Paragraph I of this section is moved up from 5 the end of the present section, and it states that all 6 exemptions from ad valorem taxation which are not granted in 7 or pursuant to this constitution are void. 8 Now, the present language says that all exemptions 9 that are not granted in the constitution are void. That 10 provision is what caused any exemption to have to be a part ! 11 j:: of the constitution itself and caused the people to have to :2= 12 u vote on these things as an amendment to the constitution. @ r l With the new procedure we've established they would be 14 t.I. :I: 15 ~ III Il:l 16 :t 17 i authorized to be done by law sUbject to referendum similar to what I've described. Okay. Paragraph II is an explanation of that procedure that I described earlier. 18 I think I should point out that the grant of any 19 such an eemption in this law that's subject to referendum 20 would then be sUbject to the conditions, limitations and 21 administra~ive procedures specified by law to give the General 22 Assembly flexibility to provide for these administrative 23 details in implementing the exemption by law. 24 You see, presently if you have an amendment to the 2S constitution that has a long list of procedures, then in order PAGE 13 to change even those procedures you need a new constitutional 2 amendment, and so this provision is an effort to give more 3 flexibility to the General Assembly to in fact handle these 4 kind of administrative matters by statute. 5 Paragraph IlIon the freeport exemptions, it's the 6 present provision on freeport, but editorially revised. It's 7 been shortened to allow the administration and implementation 8 of exemptions to be provided by law, and until such a law is 9 enacted the exact same procedures, definitions, limitations 10 and conditions that are provided in the present constitution are carried forward, so the freeport provisions as I say are preserved but revised editorially. Paragraph IV i.s an extremely important paragraph in this section because it carries forward all existing exemptions so that all the exemptions we have in the present constitution are carried forward. They will be authorized in the future to be repealed as are regular statutory law. 18 Paragraph V of the present constitution relates to 19 exemptions from taxation in corporate charters, and this 20 provision was deleted because the Supreme Court in a very 21 early case held that this type of provision was void and of 22 no effect, so it's been eliminated from the draft. 23 Are there any questions on Section II as I have 24 tried to summarize it? 25 All right. Section III, Purposes and Methods of PAGE 14 State Taxation. 2 As I indicated earlier, this is another place where 3 there is some major change in the draft from what we have at 4 the present time because the state is given the broad 5 authority to tax for any purpose authorized by law. That's 6 what Paragraph I does. 7 Paragraph II is an editorial revision again of the 8 present provision, and it includes the present exception to 9 the general fund requirement relating to the promotion of 10 agricultural products. That provision has been modified, I11 has been shortened, but the substance of it has been retained e;i~ so that will continue to be an exception to the general fund requirement relating to prosecutorial officers' training 14 ~I aftd the collection of additional penalties and fees by local i I15 ~ ~ governments, the requirement that these be paid into a special 16 fund for prosecutorial officers' training has been retained 17 I in this section, but there is a recommendation that was 18 approved at the last meeting that in the final draft of the 19 constitution that this be Shifted to Article III because it's really an exception to the earmarking provision and is 21 misplaced here, but in order to assure that it is not lost 22 it's been retained at this point for the time being. The 23 Select Committee will understand it's to be moved to Article 24 III as part of the recommendation of this committee. 25 Paragraph III as I indicated earlier as well relates PAGE 15 to grants to local governments, and the present provision 2 authorizes grants to municipalities. The subcommittee 3 recommended and the full committee approved a change in this 4 provision to allow grants to local governments in general 5 as authorized by the General Assembly. 6 DR. o 'KELLEY: Mr. Hill, may I raise a question 7 there for my own understanding? What does the term "local 8 government" include? What agencies does this -- 9 MR. HILL: It was my understanding that the committeE 10 intended to mean counties and municipalities, and they did not z" 11 i= o..'".... @;I intend to include other political subdivisions. DR. O'KELLEY: Not the board of education? MR. HILL: No, sir. That was not the intention of ! 14 ... the committee . 'x" 15 Q SENATOR LESTER: You wouldn't classify a board of "'";;;) 16 ~... education as a governing, local government . az 17 :: DR. o 'KELLEY: I understand that, but I was 18 wondering if what we were trying to get at was a tax rebate 19 that we've had so much trouble with. It's a grant, but it 20 does not 21 MR. HILL: It's not intended to -- when the committeE 22 discussed this initially -- 23 Is there some sentiment that this should be 24 rephrased? 25 DR. o 'KELLEY: I do not know that much about the PAGE 16 terminology. I do know that the tax rebate has created quite 2 a problem at the local level because of the necessity for 3 sending it down the way it was sent down. I assume there's 4 no way to avoid that. 5 MR. HENRY: I think the state otherwise has the 6 ability to grant funds to local boards of education. I think 7 the tax rebate issue that came up a couple years ago and 8 I'm not sure, maybe Senator Lester could help me -- was the 9 state couldn't grant that money directly back to the citizens 10 because ad valorem tax relief was not a purpose for which the i~ 11 state could tax, so they granted it to the boards of education ... and had them make a commensurate rollback of the funds they @);':j would have otherwise needed to have raised by taxation. Is ~ 14! that -- t; -c % 15 011 SENATOR LESTER: I think you're correct. III Ill: ::I 16 I ~ DR. o 'KELLEY: Yes, that's right. g% 17 SENATOR LESTER: I think that was the hitch. It was 18 all right to do it for education, but not to individual 19 citizens. 20 CHAIRMAN THROWER: Mr. Martin? 21 MR. MARTIN: The debate in the subcommittee, both 22 the County Commissioners' Association and the Municipal 23 Association appeared -- the Municipal Association was in favor 24 of leaving the language as it originally appeared in the 25 constitution, and the County Commissioners were in favor of PAGE 17 expanding it. 2 At the fUll committee meeting last time Representativ~ 3 Castleberry made the proposal that the language be changed, so 4 the discussion at least at the subcommittee level was between 5 whether to include counties or not. 6 I don't remember what Representative Castleberry 7 said when he proposed his amendment to add that language. 8 MR. HILL: If there's some confusion, the draft 9 could be changed to state grants to counties and municipalities. 10 If that was the intention of the committee, and I believe it Czl @;;11 i= ..o~.... was, perhaps that would be a proper revision or change. CHAIRMAN THROWER: Any further expressions on that? SENATOR LESTER: Would that clarify it, Mr. Chairman? ! 14 lon CHAIRMAN THROWER: I believe so. :I: 15 .: SENATOR LESTER: I wouldn't want to vote on it until Cl ~ ::;) 16 .~.. az Mr. Castleberry is present, though . 17 ::; CHAIRMAN THROWER: Let's do hold that then for him. 18 I think that would be an appropriate subject for a motion 19 when he joins us. 20 All right. Mel, do you want to proceed? 21 MR. HILL: All right. The present Paragraph V of 22 Section III relating to industrial development commissions 23 was deleted. It was determined by the committee that this 24 provision was never implemented and was no longer necessary, 25 and therefore it was deleted from the proposed draft. PAGE 18 Any questions on Section III as I've summarized it? 2 All right. Section IV on State Debt was -- this 3 section was subject to close scrutiny by Marcus Collins' 4 subcommittee and a small number of bond counsel that worked 5 with us on this, and it too is an editorial revision for the 6 most part with the following substantive changes which I 7 pointed out earlier but I'll review them again. 8 First of all, the present 15 percent debt limitation 9 that's on the state was reduced to ten percent. 10 Secondly, a forty-year limit was imposed on the term I! 11 of the state debt; and 12 = Thirdly, the state was authorized to assume the debt @ r l of local governments upon the affirmative vote of two-thirds 14 ~I of the members of each house if it decided that that was ~ 15 ~ i16 I necessary. I have spoken to Mr. Nixon and he indicated that he i 17 intends to send a copy of this provision on state debt to 18 Standard and Poore's and Moody's once it is finally approved 19 by this committee to have their reaction to it, and the Select Committee will be very interested in hearing what the 21 response of those services are, because it was determined by 22 the committee that these were very carefully drawn provisions 23 and may have quite a bit to do with their high bond rating, 24 so they didn't intend to affect the substantive protections 25 that are here, but only to restate and reorganize these PAGE 19 provisions. 2 Now, under the circumstances I can go through these 3 specific changes in each of these paragraphs, but I'm not sure 4 the committee feels that is necessary. It is a very tecnnical 5 area of the law, and because Mr. Nixon is going to be sending 6 this to Standard and Poore's and Moody's I hesitate to go 7 through this. 8 What is your feeling? 9 CHAIRMAN THROWER: Any desire on the part of any to 10 ..CzI 11 j: o... 12 ~ ~~ F~ ~ 14 ~ I'<"l( :J: ..15 ~ CI ;;;) 16 .~.. Q Z 16 .~.. Czl 17 ~ Do I hear a motion that we adjourn? SENATOR LESTER: Move that we adjourn, Mr. Chairman. CHAIRMAN THROWER: Seconded. We will stand adjourned. Thank you all. (Whereupon, at 12:15 p.m. the conunittee meeting was ad j ourned ) +++ + -I+ 18 19 20 21 22 23 24 25 j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j J INDEX Committee to Revise Article VII Full Committee Meeting Held on Nov. 13, 1980 j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j I FULL COMMITTEE MEETING, 11-13-80 Proceedings. pp. 3-9 SECTION I: POWER OF TAXATION Paragraph I: Taxation; limitations on grants of tax power. p. 9 Paragraph II: Taxing power limited. p. 9 Paragraph III: Uniformity; classification of property; assessment of agricultural land; utilities. pp. 9-10 SECTION II: EXEMPTIONS FROM AD VALOREM TAXATION Paragraph I: Unauthorized tax exemptions void. p. 12 Paragraph II: Exemptions from taxation of property. pp. 12-13 Paragraph III: Exemptions which may be authorized locally. p. 13 Paragraph IV: Current property tax exemptions preserved. p. 13 SECTION III: PURPOSES AND METHOD OF STATE TAXATION Paragraph I: Taxation; purposes for which powers may be exercised. p. 14 Paragraph II: Revenue to be paid into general fund. p. 14 Paragraph III: Grants to counties and municipalities. pp. 14-17, 27-28, 33-35 SECTION IV: STATE DEBT General discussion. pp. 18-19 Paragraph X: Assumption of debts forbidden; exceptions. pp. 19-22, 28-29 Article III, Section IX, Paragraph VI(c): Appropriations for specific sums (and earmarkings). pp. 22-25 ARTICLE XI: MISCELLANEOUS PROVISIONS SECTION I: MISCELLANEOUS PROVISIONS Paragraph IV: Continuation of certain constitutional amendments for a period of four years. pp. 26-27, 29-33 (local constitutional amendments) I j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j j