June 29, 2010

Georgia Engineer Magazine
Aug/Sept 2010
Thomas C. Leslie
Georgia Engineering Alliance
Director of External Affairs 

Legislative Proposals from 2010 General Assembly Become Law 

There were “big” bills and “little” bills that passed the 2010 General Assembly and that were signed by the Governor.  And then there was the bill to restructure the Engineer/Surveyor licensing board (HB 1117), which passed the House but failed to clear the Senate.  This article concerns some bills of interest that have become law.  There will be more on the licensing board legislation on another occasion.   

Here are a few of the “top” issues, so classified because of their broad impact and/or short fuse for decision-making.   

Transportation Funding.  After several years of heart-breakingly close votes, or lack thereof on the final day of the session, HB 277, the Transportation Funding proposal, passed handily on the evening of the next to the last day of the session.  In short, this is a “big” bill – long in the making, affecting every person in Georgia, and engendering strong sentiment in many.  It authorizes referenda in November 2012 in 12 special districts (corresponding to preexisting Regional Commissions) on a 1% sales tax for a 10-year period to pay for a specific list of transportation projects.  A “Regional Transportation Roundtable” selects the projects.  It is composed of the County Commission Chair of each county in the region plus one mayor from each county.  The Director of Planning for DOT (who is appointed by the Governor) “facilitates” the selection of projects for the referenda by working with the Roundtables on project selection criteria and by preparing a “list of example investments”, both of which they may amended and ultimately must adopt to hold a referendum.   Unlike the current gas tax, this new revenue source may be spent for transit purposes, with the exception of MARTA’s current system.  It is estimated that the tax, if approved, represents new funding of $7-7.5 billion over the 10-year period for the 10-county Atlanta Region, and perhaps that much again for the other 11 regions.  As in most “big” bills, the details are abundant, and some are significant, but beyond the scope of a legislative summary.   

Special Council on Tax Reform and Fairness.  In the midst of extraordinary economic times and dramatically declining state revenue, HB 1405 creates a Council to conduct a “systematic study of the State’s revenue structure”.  The Council consists of Governor Perdue, four economist (one each from Georgia State, Georgia, Mercer, and Georgia Tech), two persons appointed each by the Speaker and Lt. Governor, and the chairs of the Georgia Chamber of Commerce and the National Federation of Independent Business.  The Council will report to the General Assembly by January 2011.  Legislation resulting from the study will be considered by a special, 12-member committee composed of the leadership from the House and Senate.  The joint committee’s recommended legislation will be considered on the floor of both chambers without amendment for an up or down vote.  HB 1405 does not direct the Council to examine any specific tax.  Almost any reform of the “tax structure”, however, would at least consider extending sales taxes to services, as did the former Speaker’s proposal several years ago to replacement property taxes (state and local level) with a high and more broadly based sales tax (including a tax on services…engineering, legal, barbers, CPAs, etc.).  While a study of “tax reform and fairness” sounds perfectly sensible, it is clear that some things will get taxed at a higher rate and others at a lower rate.  A person’s view of this Council’s findings may largely be determined by how many “things” he/she has, or does, that are subject to higher taxes or lower taxes. 

Multi-Year Contracting for DOT.  SR 821 calls for a referendum on November 2, 2010, to amend the state constitution to allow Georgia DOT to enter into multi-year “construction contracts” (which also includes engineering).  The current Constitution requires that a state agency must have in-hand the full value of a contract before it may be executed.  DOT frequently enters into contracts where the payout occurs over several years (7-8 years is not unusual for engineering contracts).  DOT usually contracts for a firm to conduct environmental studies, hold public hearings, adjust alignment as a result of this work, coordinate with right-of way acquisition, and then prepare final design for bidding.  Even though only 5-10% of the contract may be spent in year one, DOT must retain 90-95% of the full contract value in their account to cover future invoices years into the future.  Most other state DOTs manage their cash flow so that they have enough money in any given year to fully meet their contract obligations, without, in effect, escrowing the full amount of all their contracts.  No business would operate in this fashion.  During 2008-09 there was a huge dispute over this matter.  It was frequently couched in terms of whether DOT should use cash accounting or accrual accounting; whether is was an arbitrary decision by the Commissioner or required by the Georgia Constitution.  Regardless of this debate, approval of the constitutional amendment in SR 821 makes it clear that DOT may enter into multi-year contracts without escrowing the contract value in year one.   

State Construction Manual and Preferences in Contracting. SB 447 makes the policies and procedures for vertical design/construction in the State Construction Manual mandatory for all state agencies.  The current State Construction Manual is being revised by a collaborative Editorial Board composed of senior agency officials and private sector stakeholders.  The “mandatory” requirement for state agencies gives great significance to the revisions to the Manual.  It has been agreed that the Manual would incorporate “best practices” and would be updated as conditions change.  In some ways the process for alterations to the Manual is analogous to code changes for buildings.   The bill also defines a Georgia-based company and gives a reciprocal preference to these companies when competing with out-of-state companies, where that state gives a geographic preference to their instate firms.  If a state does not give preference to companies resident in that state, then Georgia does not give preference to Georgia-based companies.  Finally, an immigration amendment was added late in the session, which would impose on design and construction companies a requirement to provide assurances that no employees working on a public project are illegal immigrants.  This is already required on federal projects and compliance can be achieved through the federal “e-verify” system that has been in place for a few years. 

There are other bills that have become law, which may be of interest: 

Sale of GEFA receivables.  HB 244 renames GEFA to become the Georgia Environmental Finance Authority.  It also allows money from GEFA to be transferred to the General Fund.  The FY 11 state budget includes $288 million in anticipated revenue from the sale of future loan payments due GEFA. This money would be transferred to the state general fund and would not be available to be “recycled” into new loans for water and sewer improvements by local governments.

Water Conservation.  SB 370 creates a “culture of water conservation”.  This is the Governor’s bill, proposed, in part, to respond to the adverse ruling by a federal judge in the tri-state water dispute.  It is very aggressive and includes, among other things, mandatory leak detection studies by utilities, prohibits most outdoor watering statewide between 10 am and 4 pm, terminates some inactive agricultural water permits, requires sub-metering for multi-unit buildings, and requires high efficiency plumbing fixtures.

Fee Disclosure.  HB 1284 requires all state agencies (or “budget units”) to disclose annually the fees they charge and the “goods and services associated with the user fee and the estimated cost of such…”.  This information must be reported to the Office of Planning and Budget, which will publish an annual report on their web site. This could be very useful information as it relates the cost of professional license renewal and the perception of the quality of services received.

Design-Build at DOT.  SB 305 increases the maximum value of work by DOT that may be let by Design-Build from 15% to 30% of the value of the previous fiscal year construction projects.

Emergency Water Supply Plan for Metro Atlanta.  SB 380 requires that GEFA issue an RFP by September 1, 2010 for an engineering study of an emergency water supply plan for the Metropolitan North Georgia Water Planning District.  The study would, among other things, consider water system interconnections among the jurisdictions in the District.  A technical panel is created to help develop the scope of work and review the work.  It is composed of a water manager appointed by each of the Governor, Lt. Governor, and Speaker, and a representative of each of these three last named officials.  GEFA is also authorized to make loans, if money is available, to expand existing water supply reservoirs. 

All bills and their legislative history are available at www.legis.state.ga.us. 

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