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DEPARTMENT
OF
AUDITS
AND
ACCOUNTS
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270
Washington Street, S.W., Suite 4-114
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Atlanta,
Georgia 30334-8400
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RUSSELL W. HINTON |
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STATE
AUDITOR
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(404)
656-2174
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April
1, 2008
Honorable Chip Rogers,
Chairman
Senate Finance Committee
Paul D. Coverdell Office Building, Room 325-B
Atlanta, Georgia 30334
Senate Finance Committee
Paul D. Coverdell Office Building, Room 325-B
Atlanta, Georgia 30334
SUBJECT: Fiscal
Note
House
Bill 1244
Substitute
(LC 18 7547ERS)
(LC 18 7547ERS)
Dear
Chairman Rogers:
The
Georgia State University Fiscal Research Center provided the following
description of this bill and analysis of its fiscal impact:
This
legislation has two main provisions. First, it amends the existing tax credit
for telecommuting. Second, it proposes changes to Article 2 of Chapter 7 of
Title 48 of the Official Code of Georgia to amend the individual income tax.
This aspect would reduce the statutory tax rate for the first 5 tax brackets by
10 percent effective January 1, 2009. The top tax bracket would be phased down
to 5.4 percent by 2012.
The
revenue loss associated with these changes to income tax rates is a first year
loss of 2.65 percent of current law revenues (calendar year); 4.2 percent in the
second year, 5.9 percent in the third year, 7.6 percent in the fourth year, and
11.4 percent in the fifth year. Using a revenue base for FY 2010 of $9.8
billion, the revenue loss on a fiscal year basis is as follows (in millions of
dollars): FY 2010 $476, FY 2011 $526, FY 2012 $727, FY 2013 $1,061, and FY 2014
$1,313. This assumes all of the costs from calendar year (CY) 2009 occur in FY
2010 due to inflexibility of withholding, and then 50% of the CY 2010 costs also
fall in FY 2010.
These
estimates were obtained using the Georgia Individual Income Tax Microsimulation
Model.
The
second provision amends O.C.G.A. §48-7-29.11 to extend employer state
income tax credits for teleworking. Presently, credits are available only
through 2010; the proposed legislation will extend availability of credits to
2012. A feature of the existing program is a cap on the total amount of tax
credits available to qualified applicants in any given year. For 2008 and 2009
the total credits
available
are $2 million. The proposed legislation will expand the total credits
available to $2.5 million in 2010 and 2011.
The
fiscal impact of the legislation is limited by the tax expenditure caps. For
the years 2008 and 2009 the maximum impact is $2 million per year; tax
expenditure for these two years is already approved in current law. For 2010
and 2011 the maximum impact is $2.5 million per year. Based on experience in
2008 as noted by the Department of Revenue, the maximum available credit is
likely to be used in each year.
Sincerely,
/s/ Russell W.
Hinton
State Auditor
State Auditor
/s/ Trey Childress,
Director
Office of Planning and Budget
Office of Planning and Budget