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Income tax cut fails to get final vote in Georgia Legislature

Lawmakers headed toward the end of the 2016 General Assembly session Thursday debating tax breaks to promote development of the Philips Arena area, help rural hospitals, and aid the mobile home industry, but they ignored a measure that would have reduced the top state income tax rate for Georgians.

The Senate had passed two pieces of legislation that, combined, could have cut the top state income tax rate by more than 10 percent, but the House never took up the measures, in part because Gov. Nathan Deal had made it clear he wasn’t on board.

Instead, legislators spent the 40th and final day of the session debating pretty much the same type of tax breaks they do every year: for select projects, businesses or individuals.

“We are very disappointed because it was a good opportunity that was lost,” said Kelly McCutchen, the president of the Georgia Public Policy Foundation and an advocate for the Senate income tax plan. “We are tired of seeing the special-interest tax breaks easily pass and the broad-based tax cuts go nowhere.”

However, Deal was concerned that cutting income taxes — the biggest revenue generator for the state — would prompt the lowering of the state’s AAA bond rating, which allows Georgia to get lower rates when it borrows money. Critics also said it could cost more than $400 million a year, money needed for schools, public health care and other expenses.

While the House never considered the measures, lawmakers were expected to give final approval to several other tax breaks before the final gavel fell.

Earlier in the day the Georgia Senate backed a tax break for developers planning to turn the area surrounding Philips Arena into a mixed-use entertainment district. However, the House took the financial bite out of the bill — as far as the state was concerned — before it got final passage.

Los Angeles-based CIM Group is considering spending hundreds of millions of dollars on the project, aimed at cementing the western edge of downtown as one of the Southeast’s biggest entertainment draws.

A sales tax break was amended onto House Bill 937, to extend a tax break for major business expansion projects, such as the Falcons stadium and Baxter International’s plant near Covington.

Critics said one of the problems with the tax break is that it is relatively open-ended. It didn’t come with a specific price tag.

State Sen. Bill Heath, R-Bremen, called it an illegal “gratuity” to developers, and thus unconstitutional under Georgia law. He said it guarantees the developer get a sales tax rebate on everything bought at the new development.

“This is a bad bill, and not only is it bad, but blatantly unconstitutional,” he said. “You owe it to the people of Georgia who pay taxes to spend the money that they pay in those taxes wisely.”

However, state Sen. Butch Miller, R-Gainesville, a supporter of the bill, said that part of the area being developed is currently largely unused.

“Would we rather have part of something or all of nothing?” he asked. “Right now we’re getting all of nothing. This area is right in the heart of the city, how can we turn a blind eye and say it is not worth developing? We can’t.”

The Hawks want to create a live-work-play destination in an area largely populated by workers and tourists. The team is contemplating a number of properties around the arena, including land within downtown’s “Gulch,” but additional property as well.

The sales tax break was stripped in the House, but the measure extended the local car rental tax to fund arena improvements or nearby infrastructure and not the privately funded development.

Lawmakers also approved tax credits for people who make contributions to nonprofit organizations that provide health care to rural Georgians.

The bill would offer millions of dollars in state tax credits in an attempt to encourage investments in rural areas where hospitals are closing or are under severe financial strain. Lawmakers have been looking for years for ways to keep rural hospitals open.

Early in the day the Senate shot down an effort to give buyers of mobile homes in certain poor, rural Georgia counties a sales tax break in an effort to spur sales.

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