Transportation, tax reform on Deal agenda

Gov. Nathan Deal this morning will go all-in on the upcoming transportation tax vote and on a tax reform package that includes business-friendly cuts but not a reduction in individual income taxes.

The governor, marking the start of his second year in office, will speak this morning to the Georgia Chamber of Commerce's annual Eggs & Issues breakfast where he will detail his vision for spurring Georgia's economy.

Included will be a call for support of July's regional transportation referendums and the unveiling of a three-pronged effort at tax reform, Deal said in an interview Monday. Voters in the 10-county metro Atlanta region will decide whether to raise sales taxes by a penny to fund $6.14 billion worth of road and public transportation projects.

"I'll talk about the importance of the T-SPLOST and passage of that if at all possible," Deal said.

As Deal prepared for a day bookended by major speeches, he said he senses the beginning of something important. When he took office a year ago, the city was socked-in by a brutal snow and ice storm. After taking the oath of office, Deal immediately faced a crisis in HOPE funding, a budget in need of deep cuts and a tax reform effort that dominated the session but that had begun under the previous governor.

This week, then, largely marks his full-throated entrance into agenda setting at the Capitol.

According to an advance copy of his speech to business leaders, Deal will call the T-SPLOST votes "imperative to Georgia's medium- and long-range economic development prospects" and urge Georgians to "to vote and to help get out the word to your friends and family."

On tax reform, however, Deal told the AJC his Competitiveness Initiative Task Force, a committee of business and academic leaders, developed a set of tax proposals that will make Georgia more attractive to investment. It is there, Deal said, where he will focus tax reform efforts. While significant, the package does not include cuts to the state's individual income tax rate or an effort to move the state from an income-based tax system to one based more on sales taxes, ideas that some Republican leaders in the House and Senate have embraced.

Instead, the governor said he will push the state to eliminate the sales tax manufacturers pay for energy, for a sales tax exemption on construction materials used to build or expand facilities "of regional importance" and a series of changes to a state jobs tax credit plan to improve Georgia's posture with other states.

The cost to the state of the three initiatives is not immediately clear, although eliminating the manufacturing energy tax would take an estimated $170 million out of the state's coffers. Deal said he will most likely advocate that tax be eliminated over three years.

Deal said paying for tax cuts is difficult, which is why he chose to focus on cuts he thinks will translate quickly into job growth. Despite the calls from some lawmakers to cut individual income taxes, Deal thinks the Legislature will go along with his vision.

"I don't think there's going to be a big appetite from what I gather for major tax reform from members of the General Assembly," Deal said. "This is the main parameters we will see."

Deal today will also:

  • Pledge $46.7 million in bond money for deepening of the Port of Savannah, which is in addition to more than $136 million already invested over the past three years.
  • Commit $45.7 million in the 2013 budget for water supply projects, part of the $300 million he last year pledged to invest over four years.

Later tonight Deal will speak to a joint session of the House and Senate to deliver the annual State of the State address. Deal said Monday that the 7 p.m. speech will focus largely on education.  The governor said his budget for the fiscal year beginning July 1, which he will release Wednesday, will reflect a commitment to providing K-12 education the resources available in budget that continues to be strained.

Deal said the budget "constrains our ability to do everything we want to do, but we think within the revenue available to us we're going to make some strategic changes that will be important."

Those changes include:

  • Restoring 10 days to the HOPE-funded pre-K program, which would bring the system back to 170 days.
  • Increased funding for K-12. Deal said the state will "fund all the growth" in K-12, including the Quality Basic Education formula and grants to help Georgia's poorest systems.
  • Increased funding for higher education. Technical colleges and the University System of Georgia would see $111 million to also accommodate growth.

Deal's colleagues in the House and Senate said they are ready to work with him.

Speaker David Ralston, R-Blue Ridge, a key ally for Deal, said he expects to hear the governor's ideas but said lawmakers will have their own, too.

"We'll take his proposals up [with] other things we'll be talking about," he said.

Rep. Allen Peake, the Republican caucus secretary, called Deal "a smart guy," smart enough to seek lawmakers' counsel on his vision before releasing it.

"I'm fully expecting what he presents us is going to be some pretty good legislation," Peake said.

Democrats, too, are willing to work with Deal, as they did last year to solve HOPE's troubles, House Minority Leader Stacey Abrams, D-Atlanta said. But they also stand ready as the voice of opposition.

"As always," she said, "I want to collaborate when we can and compete with them if we think we can."

Exclusive coverage: Gov. Nathan Deal sat down one-on-one with Atlanta Journal-Constitution staff writer Aaron Gould-Sheinin to discuss Deal's priorities. It is part of the unmatched coverage the AJC will provide this legislative session.