By Maggie Lee and John Fredericks

The big winners in the GOP controlled 2009 Georgia Assembly: tax cuts – if Gov. Sonny Perdue (R) actually signs them into law. And Secretary of State Karen Handel (R), whose bid for governor may get a boost – by simple omission.

The big losers: transportation funding – and maybe Lt. Gov. Casey Cagle’s (R) big poll lead in his run for governor. His campaign has staked much of his political future on solving the state’s transportation woes.

Cagle, the prohibitive early favorite to capture the GOP gubernatorial nomination in July 2010, failed once again to get a comprehensive transportation funding plan in front of voters. He succeeded in rendering the hapless GDOT irrelevant with his and Perdue’s “new governance” plan, but without the proper funding, it’s more cosmetic than anything else. This opens the door for Handel to wound Cagle as an “all show, no go” politician. She can run against him now as the reform conservative in the race who can “get things done.”

WHEN THE LIGHTS WENT OUT IN GEORGIA

When the dust settled around the no-holds-barred, 40-day contentious boxing tournament of the 2009 Georgia General Assembly, left standing is a new Georgia Department of Transportation run by an appointee of the governor, a controversial price hike on Georgia Power's small customers, a budget totaling some $35 billion in combined state and federal funds and some much needed tax incentives to spur the state economy.

Left bloodied on the ground are a flat tax on vehicles, a tobacco tax and more dollars for transportation. However, many of these bills, like a video-game with a reset button, will shortly reappear at full strength – and in the meantime, the gamers might build up enough skills to steer their champions to a win.

Transportation – and its management and funding – dominated the second half of the legislative session.

In the final hectic days, the House agreed to create a GDOT state-planning director to be appointed by the governor, but only on an amendment that lets the House Transportation Committee vet the appointee. The appointee will create a statewide transportation plan and the list of big-budget transport projects first in line for funding. Opponents fear the governor's legislative allies will muscle their opponents into deals in exchange for priority on their own projects. It could become politics as usual, with new players calling the shots.

"This [transportation] bill will be a fertility clinic of power politics," suggested Rep. Brian Thomas (D-Lilburn).

A name-naming power play followed on the next to last day in the Senate. During the last hour of debate, Sen. Preston Smith (R-Rome) alleged a GDOT board member text messaged him saying a project to widen US 411 near Rome would be derailed unless he, Smith, voted against the bill – thereby protecting the board member's job. Smith was indignant and much of the senate applauded his passionate denunciation of GDOT.

However, Sen. Steve Thompson (D-Marietta) immediately took the well and said the text was part of a fuller email conversation that presented the governor as a threat. Thompson affirmed the GDOT board member alleged the new bill would kill the SR411 widening – but because Gov. Perdue would veto it on behalf of his political friends who oppose it. Smith presented the GDOT note as a threat; Thompson said the note was a warning of an attack from the governor. Nonetheless, the Senate approved the bill on a party-line vote.

THE SAD SACK CALLED GDOT

Yet nearly everyone agreed that GDOT needs some sort of leadership renovation; legislators on both sides of the aisle and both houses used words like "dysfunctional" and "black hole" and "asphalt kingdom" to describe the agency and the time it takes to plan and complete projects.

But the new GDOT director of planning will set to work with no new funds. There were two plans for a tax hike for transport, but House Transportation Committee Chairman Vance Smith (R-Pine Mountain) read the obituaries of both at about 11 p.m. on the last day of the session, after unsuccessful conference committee meetings.

"We had a great plan. I'm disappointed for the second year in a row," said Smith. "I'm not going to blame anybody," he cavalierly said, then went on to defend the House plan, which sought a 1-percent statewide sales tax on transportation, designed to raise about $25 billion over ten years.

The Senate-approved plan would have let regions choose to band together in groups of their choice and raise the tax for regional projects, like a SPLOST.

Both plans would have required approval in a statewide referendum. Because there's no ballot until 2010, there's still time for a compromise next session. But it's a defeat for the business lobby, whose Get Georgia Moving coalition heavily lobbied the Assembly in its closing days for any plan to raise more money for transport. At least for now, they wasted their time.

MARTA NEEDS A HUG – AND ABOUT $25 MILLION

The death of transport funding pulled down MARTA with it in the Senate after they were hastily tacked onto another bill as riders on the last day of the session. The bill would have allowed the Atlanta rapid transit authority to draw on its capital reserves to pay for operations. Not allowed to touch their savings (half of their tax generated revenue must go to future capital improvements by state law) MARTA general manager Beverly Scott threatened to shut down one weekday per week, then asked Gov. Perdue to reconvene the Assembly for a special session to handle MARTA's unpaid bills. Scott says she gets no state money and isn't asking for any; she just needs to draw on savings. MARTA is funded by a DeKalb and Fulton County sales tax.

Fulton County Commissioner Lynne Riley (R-Johns Creek) blasted the plan to break open the capital funding piggy bank to pay for operating expenses. “If we allow MARTA to raid the capital funds account then we will never see Marta expand to North Fulton County or anywhere else”, the conservative commissioner said. “I challenge Marta to find better operating efficiencies and cut more non-essential costs.”

BAIL ME OUT, BABY

MARTA then got their bail out – this time by the Atlanta Regional Commission. Their board recommended that ARC use up to $25 million in stimulus funds to help MARTA pay for its operating expense shortfall. The money had been intended for other long-needed metro Atlanta transportation projects. MARTA will still need to find cost savings, like ending service at midnight. Trains now run till 1 a.m. during the week and 12:30 a.m. on weekends.

The ARC stimulus money is a stopgap, one-time fix, and the same problem will rear its ugly head again next year. At the ARC meeting on Thursday, committee members were in a sour mood; blaming the Legislature’s inability to act as costing they’re respective region’s much needed stimulus dollars for their own pressing transportation needs.

FURLOUGH FRENZY

All around, the state is working with less money; the FY 2010 budget is about $5 billion smaller than 2009, mostly on lower tax receipts.

Most state departments have had to navigate their way through an eight percent cut, according to Rep. Ben Harbin (R-Evans), House Appropriations Committee chair. Job furloughs – taking forced unpaid vacation days – was all the rage.

But the budget "maintained priorities of education, healthcare and public safety," he explained.

Indeed, the Department of Education's total appropriation is only about one percent smaller than last year – propped up in part by federal stimulus package funds.

And Medicaid providers like doctors and hospitals won't have to take a rate cut. A cut proposed by the governor might drive providers out of the Medicaid business, Harbin said.

CAP TAX AXED

Another successful bill will add to the state coffers by 2012 by cutting taxes on long-term capital gains, according to its sponsor, Sen. Chip Rogers (R-Woodstock).

"The focus is to create jobs," says Rogers, which the bill will do by drawing more money into the economy. Under the bill, half of individuals' and corporations' long-term capital gains become state tax exempt after 2011.

Rogers suggested the removal of the "threat" of long-term capital gains tax would drive people to invest in real estate, for example, and that it's a benefit for the vast majority of Georgians because they are part of an "investor class society" through 401(k) s or other stockholdings.

But Atlanta Senator Nan Orrock (D-Atlanta) says the cut will actually dig a $1 billion hole in Georgia's 2012 budget, the first year its fiscal effect will be felt.

"This threatens our ability as a state to deliver services," claimed Orrock.

She calculates the act might create 22,000 jobs – at a cost of $265,000 per job.

She called it the "same old trickle-down theory,” and lambasted it as a tired “benefit the rich” program. “The wealthiest 5 percent in Georgia will get 92 percent of the tax relief,” she added.

Another tax cut failed – the so-called "Lexus loophole” – sponsored by Rep. Harry Geisinger (R-Roswell) would have replaced annual ad valorem car taxes with a one-time, 7-percent levy at the time of purchase. That fee would be capped at $2,000 – meaning the fee rises with the price of the vehicle until about $30,000. After that, the fee would have stayed at $2,000, whether the car costs $30,000 or $130,000. It passed the House but never made it to the Senate floor.

A pair of sin taxes failed: on adult entertainment and tobacco. The so-called "pole dance tax" failed to make it to House or Senate vote. It would have required a $3 to $5 surcharge for entry to strip clubs and the like.

GEORGIA POWER GETS THE BIG ENCHALADA

But perhaps the most controversial winner this year was Senate Bill 31, considered by some a fixed match. The bill allows Georgia Power in 2011 to start charging its small customers – homes and small businesses – to finance the construction of two nuclear reactors that won't come online until 2016 at the earliest.

It was controversial because usually Georgia Power has to go to its regulator for small customers – the elected Public Service Commission – to request rate increases. And the PSC has only allowed Georgia Power to collect capital construction finance charges after a plant comes online, so only customers who use a plant have to pay for it. The bill also carves out some large business and industrial customers.

Yet both the House and Senate voted for the bill, in roughly 3-2 margins on Georgia Power's argument that the pre-collection will save on construction costs in the long run. It was arguably the most heavily lobbied bill in the session; Georgia Power CEO Michael D. Garrett registered as a lobbyist in time for the vote.

Gov. Perdue has yet to sign any of the successful legislation. He has until May 13 to review and sign or veto. The governor's office policy is to decline comment about any legislation on his desk. They followed protocol.

CAN HANDEL CAPITILIZE?

Handel now has the political opening she needs to become a serious contender in the GOP race. She can rail against the failure of the Republican dominated legislature to solve some of the state’s most pressing problems, and tie Cagle to it. She can blast the power grabs, and position herself as the true conservative champion of limited government while advocating more local control, not less. She needs to do it before Insurance Commissioner John Oxendine does it for her, and before either Cobb County Chairman Sam Olens, or House Speaker Pro-Tem Mark Burkhalter (R-Johns Creek) – or both – get in the race. But she has been very measured and reticent so far. The next sixty days will be a litmus test for the Handel campaign. Is she truly ready for prime time?