As state lawmakers weigh a change in the sales tax system to fund transportation initiatives, cities and counties are starting to line up against it.
HB 170, the Transportation Funding Bill of 2015, hasn’t made it to the House floor for a vote. The proposal would change the motor fuel sales tax to an excise tax.
“This has been a hot topic across the state,” said Springfield City Manager Brett Bennett.
Springfield City Council members approved a resolution outlining their opposition to the bill. In the resolution, the losses expected for the city and other entities are spelled out, along with how much local governments spent on road projects.
“We need to show unified opposition to this,” council member Kenny Usher said. “I know cities and councils know what’s at stake.”
According to state Department of Revenue figures, Effingham County collected $1.94 million in motor fuel sales taxes on gasoline and diesel fuel from July 1, 2013-June 30, 2014. Those taxes are divided up among several other taxes, such as local option sales tax, special purpose local option sales tax and the education-special purpose local option sales tax.
Replacing the motor fuel sales tax with an excise tax could cost the city of
Rincon an estimated $213,000 annually, City Manager Wesley Corbitt estimated. Corbitt also recommended that Rincon City Council pass a resolution adamantly against the current legislation in the General Assembly.
“It’s going to be a real detriment to all of our cities and counties,” Corbitt said of HB 170. “I expressed displeasure with each of our legislators.”
Springfield Mayor Barton Alderman said his city could lose $76,000 in sales tax revenue. Making up that loss could result in higher property taxes, municipal leaders said.
“I feel this is sort of passing the buck,” he said.
Springfield’s resolution also states the loss to the school system would be nearly $650,000 a year.
Currently, state and local gas taxes total 27 cents per gallon. Of that total, 19.3 cents are collected for state sales and excise taxes. HB 170 proposes to assess a 29.2 cents per gallon excise tax on gasoline and 33 cents per gallon diesel fuel sold.
The state’s needs for road improvements outstrip its resources by a $1 billion.
“Something needs to be done on a statewide level on transportation,” Bennett said.
While SPLOSTs have sunsets applied, meaning they end after a set number of years unless they are re-approved through a public referendum, the excise taxes would remain in place.
“It allows you to implement an excise tax,” Bennett said of the proposed bill. “It would not affect current SPLOSTs.”
The revenue from local excise taxes would be applied solely to transportation projects, and the bill would fund the Georgia Transportation Infrastructure Bank. Created in 2009, the GTIB provides loans to local governments for eligible transportation projects. Among the projects to receive a GTIB grant is the diverging diamond interchange at the Ashford Dunwoody Road/I-85 interchange in Atlanta.
Cities and counties spent approximately $746 million in sales tax revenues on transportation projects in 2013.
Cities across the state have approved resolutions similar to Springfield’s. But the policy council of the Association of County Commissioners Georgia, the advocacy group for county governments, has endorsed HB 170.
In its current form, HB 170 would restrict the governor’s power to suspend motor fuel sales tax collection. Cities and counties will have the option to enact their own excise taxes on motor fuel sales. Cities and counties can levy an excise tax up to 3 cents per gallon through an ordinance. Any amount above that has to be approved through a referendum, and the total cannot exceed 6 cents per gallon.
Excise taxes, according to the ACCG, can be spent on capital and operations. SPLOST revenues must be spent on capital projects approved by referendums. The Local Maintenance Improvement Grant pool, used by cities and counties for such measures as resurfacing and restriping of local roads, is set at 10 percent of the state Department of Transportation’s annual budget. For fiscal year 2015, that total is $122 million.
The ACCG estimates the state would add $60-$70 million a year for LMIG.
State Rep. Jon Burns, who is a co-sponsor of the bill, told the Statesboro Herald the legislation remains a work in process. Of the sales taxes collected by the state, a quarter of the total goes to the state general fund. Only three-fourths is allocated to transportation.
“This will bring a consistency to the process so that DOT can do a better job of planning and implementation of a long-range plan and better serve us as citizens in making road improvements and resurfacing,” Burns said.