Budget drives policy— and vice versa

 

As the legislative session winds to a close, many have focused on what did not pass this year, including two of the most controversial pieces of legislation: casino gambling and Certificate of Need reform. Both will likely return for legislative consideration next year, and both have been, rightly or wrongly, linked to the most important bill of every year, the budget. Every year, Georgia legislators pass two budgets or appropriations acts: the “big budget” for the next fiscal year and the “little budget,” which consists of the appropriations for the remainder of the current fiscal year, which ends on June 30. It is often repeated that passing a budget is the General Assembly’s only constitutional obligation. In many ways, it is also its most important for several reasons.

First, unlike the federal government and states that are near bankruptcy like Illinois and California, Georgia is one of many states that has a balanced budget amendment. This means that Georgia cannot run a deficit, and should revenues fall short of what was anticipated in the Governor’s revenue estimate, the Governor is empowered to withold however much of each appropriation necessary to be sure that the state does not fall into the red. During the economic downturn of 2008-2010, this practice was frequently utilized, as the State spent anywhere from 4% to 6% less than the General Assembly appropriated in some of the years.

Second, depending on one’s perspective, the budget to drive policy or policy decisions can drive the budget. This is particularly true when budgets are down, but it is also true when revenues are up and there is more money to spend in general. In good times, legislators will be pressured to “restore” funding to previous levels or “invest” in new strategies that range from specific classroom tools to salaries for state employees. In either environment, policymakers must choose between deciding the best policy first, and using the budget as a means to execute or achieve those policy goals, or deciding what to spend and then adapting policy around those preferences. Throw into this mix potentially different budget priorities between the Governor, the House, and the Senate, and the debate can become quite contentious.

Third, the budget provides a weapon to boost or destroy other seemingly unrelated legislative efforts. For example, when the Lottery is bringing in record amounts of money, the “need” for casino gambling to “save HOPE” seems less compelling. This may explain why the final versions of the 2017 casino legislation split money between HOPE and other constituencies, including rural healthcare. Similarly, some in the hospital community used the budget as a means of attacking the Certificate of Need reform efforts. Having just secured over $250 million in state dollars by passing the provider fee again, some hospitals claimed that passing a law to make it easier for them to expand and compete without government permission would impact their ability to serve all Georgians and, therefore, have an impact on state coffers. Nevermind that the legislation considered in the House impacted only one hospital, Cancer Treatment Centers of America, or really only hospital-on-hospital competition, the budget and potential fiscal impact of legislation – real or imagined – is a powerful sword in a balanced budget state.

Unless something significant passes in the waning days of the 2017 session, at least Certificate of Need reform will return during the 2018 legislative session. There is no doubt that the same arguments will be used in favor and in opposition to what can only be described as freeing up the marketplace from the administrative state. And, there can be no doubt that opponents and proponents alike may use the budget in the rhetorical arsenal to advance or defeat reforms like Certificate of Need, casino gambling, or a myriad of other issues that will face legislators next year.

The author practices litigation and regulatory law at Robbins Ross Alloy Belinfante and Littlefield in Atlanta.

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