Extending A Tax Increase An Issue For Some in GOP

May 22, 2012 13:00 pm

by Charlie · 28 comments

Today’s Courier Herald Column:

Often, tax increases are passed as “temporary” measures to make a reluctant public slightly more willing to accept higher payments under the premise that the taxes will eventually go away.  They rarely do.

Local option sales taxes are a prime example.  Even the current regional T-SPLOST referendums include in the supporters talking points that the 10 year tax is temporary.  The 20 year toll on Georgia 400 in Atlanta was sold as temporary, yet will be collected through at least year 30 of operation, at which point it may well be extended again.

While much of the press from this weekend’s Georgia Republican Convention was on the battle over ethics reform, another legislative battle for the next session was more quietly added to the queue.  Hospital bed taxes, passed two years ago as a temporary measure to plug holes in a cash starved state budget, will be up for renewal.

It is not lost on some grassroots members that the tax was created and enacted by a Republican dominated legislature and signed by a Republican Governor.  Like the resolution over ethics reform, grassroots Republicans wanted to send an early message to those they helped elect that the principles espoused during campaigns need to be those they adhere to when governing.

The tax was designed to capture additional federal funds by adding a charge to hospital bed stays.  It raises about $200 Million at the state level and takes in roughly the same amount in federal tax dollars from matching payments.

Opponents of the tax wanted to use the convention to start the conversation regarding the tax renewal prior to the primaries to be held in July.  Qualifying for state and local offices is Wednesday through Friday this week.

When passed in 2010, the tax became one of the most controversial items of that pre-election session.  Grover Norquist of Americans for Tax Reform renewed his long running battle with then Governor Perdue, chiding him for not only proposing the bed tax, but reminding him of his earlier cigarette tax increase to plug holes in his first budget saying he “refused to restrain spending.”

The bed tax was originally passed in the wake of the financial and real estate collapse when furloughs were prevalent and spending was being slashed.  Because much of the cost of the tax was passed on to the federal Medicare system, supporters looked at the tax as a way to return more federal tax dollars to Georgia.

The current fiscal environment is much improved, however.  Tax receipts have increased at double digits for over a year.  Fiscal restraint also appears to be easing, as the most recent budget reflects roughly a billion dollars of additional spending over the previous one.

Georgians who noticed that budgets increased according to the amount of revenue available under the previous Governor and were only cut when revenues fell are looking at the new spending patterns with a bit of unease.  Revenues are increasing again, but so is spending.  Yet to handle “critical” upgrades in infrastructure, Georgians are asked to increase their own taxes through regional T-SPLOST referendums to transfer even more money into government coffers.

The Hospital Bed Tax stands as the opportunity for those who want to slow the amount of money going into state coffers as the way to restrain spending.  They believe the evidence shows that government spends all money available to them.  Thus, the only sure method to control government and its reach is to deny money available where possible.

The battle lines are drawn, but who will engage in the battle is less certain.  The number of incumbents who will receive primary challenges remains uncertain but appears to be somewhat limited.  As such, incumbents have little fear of the voters even when legislating against the stated campaign agenda.

Voting against ethics reform remains a nebulous concept to voters.  Voting for tax increases is another matter entirely.  Whether opponents of extending the tax can successfully make this an issue in the 2012 campaign remains the biggest variable in campaign calculus as we approach candidate qualifying.

benevolus May 22, 2012 at 1:39 pm

If I am reading this chart right, Georgia has the 4th lowest state government spending per capita.
http://www.usgovernmentspending.com/compare_state_spending_2012dF0s

And we have the lowest revenue per capita of all states:
http://www.usgovernmentrevenue.com/compare_state_revenue_2012dF0s

At some point you have to figure we have cut enough, don’t you?

David Staples May 22, 2012 at 4:58 pm

Does this also make adjustments for income per capita? You can’t just compare spending per capita unless you also adjust for income per capita. :-)

benevolus May 22, 2012 at 5:09 pm

I don’t know. I don’t hear anyone advocating cutting taxes saying we have among the lowest income per capita, why don’t you ask them about that.

David Staples May 22, 2012 at 5:18 pm

We don’t have the lowest income per capita, but from the first numbers I found we’re ranked 29th. My point was simply that you can’t look just at spending per capita when there are other factors that should be considered as well. :-)

Three Jack May 22, 2012 at 2:18 pm

Good column!

The real issue for primary voters should be overall reform of the entire state government revenue generation system. This past session we were sold a bill of goods by GOP legislators claiming they had passed ‘tax reform’ when HB386 was adopted. This issue has been used as an election tool by GOPers for years…it’s past time to actually do what they have been promising.

elfiii May 22, 2012 at 3:36 pm

“Thus, the only sure method to control government and its reach is to deny money available where possible.”

Bingo.

Jimmie May 22, 2012 at 7:55 pm

agreed. Too bad we can’t do that with Federal. They just print their own, loan it to the banks at .001%., and voila it’s money!

Rationallogic May 22, 2012 at 4:17 pm

How is it so hard to understand that the only way this tax gets renewed is for the voters to approve a project list of new projects in 2022?! The Tea Party is all about local control – this defines local control. Maybe not down to the county, but to what most residents of those counties actually use when they venture into the city for the airport, their jobs, or their entertainment. This is not too unlike the original settlers in South Carolina (some of the founders of the country), who voted to self-tax them selves to build a network of trails to help commerce flourish.

Anyone who wanted to be involved in the T-Splost initiative was welcome t0 – the ARC was wide open to an ‘all hands on deck’ approach as they hammered this out in a way to get leaders over multi-municiplaities to work together – something that has never occurred in the metro area. It is far easier to criticize than to be in the arena. I was not involved but I did attend many of the ARC meetings. Getting people with different agendas to agree is always a sausage making process and it would be the same with ANY ‘Plan B’. I cannot understand why the residents of Dallas, Charlotte, Nashville and others generally work together for the betterment of their cities yet Atlantans are always at their neighboring counties throats. Cobb County residents should be acutely aware how difficult this type of cooperation is just by the acrimony over the Johnson Ferry traffic light debacle and subsequent widening 10 years later – this is a landmark moment. Many Cobb County traverse county lines to residents work, ferry their children to their soccer games and to see sports events/concerts in other counties. Transit may not be widely used today but as the Atlanta region adds millions of news residents (and more and better jobs for those residents) transit will increasingly be a part of that mix. Our children will be much more open to transit and demanding of a transit system in any city that they choose to reside in. Already college graduates say that a transit system is a requirement in a city that they want to live in. This will only grow in importance in the coming decades. And transit AND proactive roadway expansions take decades to build. You don’t just build them in 5 years. Atlanta has one of the best backbones of a transit system of any metro area in the country (Dallas would have loved to have the heavy rail backbone when they started their system). If Cherokee residents had to pay tolls the way Dallas residents do, the toll from Cherokee would be similar as the toll from Frisco to Dallas, which is $4.90 PER TRIP (one way). For those Cherokee residents that work in central Cobb (Cumberland/Hwy 120 area), that toll would be in the $3.00 range. Point being is the money has to come from somewhere cause the gas tax is not generating enough to keep up with the required funds to keep up with our growth.

Don’t sacrifice the good in quest of the perfect. Perfect is the enemy of good. And our rival cities are praying that we fail to pass this so they can take more of our companies/jobs – Charlotte, Dallas and Nashville stand ready to welcome them with open arms.

Charlie May 22, 2012 at 4:28 pm

1) Rational People don’t usually have to begin by shouting.

2) While T-SPLOST is mentioned as part of the issue that surrounds the renewal of a separate tax, there are many other current threads specifically about T-SPLOST where this would be more appropriate.

Rationallogic May 22, 2012 at 5:55 pm

Sorry if my tone insinuated I was shouting. I’ve always thought that all caps was shouting in e-speak. I agree that this may not have been the best post to make this reply but it was the post that sparked my frustration when I saw your comment comparing the T-Splost to the GA 400 toll, which I found very misleading. The assembly failed us in extending the GA 400 toll whereas the T-Splost must gain voter approval (with a new project list) to go beyond the 10 year horizon. Clark Howard said this was the the difference in him opposing the T-Splost versus giving it his full endorsement.

Thank you for your blog – it’s always informative and entertaining.

David Staples May 22, 2012 at 5:14 pm

Perhaps since you mentioned cost of tolls, we should also look at the cost of transit systems. In San Francisco, you can pay almost $12 for a one way ticket on BART. I just got back from Europe this past Sunday where I paid 8 Euros for a ticket from FCO (Rome airport) to San Pietro (the transit stop closest to Vatican City), which is just over $10 USD. I believe the ticket from CDG in Paris to zone 1 was also 8.80 Euros. Ticket in Vienna, Austria on the CAT train? 12 Euros (just over $15 USD). Now, let’s compare that to a ticket from North Springs to Hartsfield in Atlanta… a measly $2.50. I’m willing to talk about increasing taxes for transit *after* other avenues (like raising fares) have been exhausted.

benevolus May 22, 2012 at 5:21 pm

That’s a cart/horse problem. Who would pay $8 to ride MARTA as it is? If we are going to charge $8, we need to make it worth it. Frequent trains, on time, that go where you want to go. Not sure TSPLOST really addresses that, but dramatically raising fares more is not a good option.

David Staples May 22, 2012 at 5:42 pm

You’re right… that is a cart/horse problem. In order to take your cart and horse somewhere, there are costs involved with doing so. Someone has to pay to feed the horse and pay the cart driver to haul the passengers to whatever destination they so choose. ;-)

Who would pay $8 to ride MARTA as it is? Plenty of people in North Fulton / Forsyth who go back and forth to the airport every day. I don’t live up there anymore, but when I did, my wife would drop me at North Springs and I’d ride MARTA to the airport. It was a lot cheaper and easier than the $9 per day that I pay now to park at the airport. A one week trip would be $16 round trip on MARTA or $72 for parking at the airport. Granted, I just put it on my expense report anyways so it doesn’t directly come out of my pocket in the end, I’d still take MARTA if it was more convenient for that kind of price.

When you also consider the price of fuel and upkeep on a vehicle, taking MARTA downtown is also cheaper than driving… even at $8 one way. (Unless perhaps you have a very fuel efficient vehicle.)

The thing about those high fare prices, though… they’ve got graduated fare systems. You could go from one zone to another in Paris I believe for something like 1.25 Euros? It’s cheap if you’re riding a short distance and only gets expensive the further you ride. (You know, kind of like the farther you drive your car the more it costs you?)

sunkawakan May 22, 2012 at 7:49 pm

@David,

You’re right, Marta is a bargain, and when I travel into town, it’s my default mode of transportation. There is inadequate coverage with Marta at this time to increase fares to the $8 level you propose (although end-to-end it would still be a bargain). If we had, for instance, lines up into Cobb/Cherokee, up to Gwinnett, etc. we certainly could justify a zoned fee structure.

The problem is, there are still shrill voices in the ‘burbs that insist it will personally ruin them, their property, etc. And given some of the nastier reasons I’ve heard, it will take decades for those viewpoints to change.

The Last Democrat in Georgia May 23, 2012 at 4:00 am

“The problem is, there are still shrill voices in the ‘burbs that insist it will personally ruin them, their property, etc. And given some of the nastier reasons I’ve heard, it will take decades for those viewpoints to change.”

You are right that there is some pretty fierce opposition to the idea of extending MARTA to suburbs like Cobb/Cherokee and Gwinnett.

The thing is that MARTA heavy rail or light rail is not the best rail transit option for those sprawling suburbs.

Regional commuter rail on freight rail tracks that parallel busy Interstate spoke commuter routes is the best rail transit option for the suburbs and exurbs.

After years of worsening and increasingly severe rush hour traffic congestion on Interstates 575 & 75 in Cobb and Cherokee and on I-85 in Gwinnett, residents in those traditionally transit-averse suburban and exurban areas are much more receptive to the idea of rail transit in the form of commuter rail, especially when confronted with the revelation that the Interstates are pretty much built-out and are most likely to never again be substantially widened by adding untolled lanes like in the past.

Ironically, one of the most common refrains from residents in outlying counties like Cobb, Cherokee and Gwinnett is that they will not vote for the T-SPLOST because there is no commuter rail transit in the list for their areas.

While regional commuter rail on existing freight lines is the rail transit mode that should be up for priority implementation in the suburbs and exurbs of the Atlanta Region, MARTA needs to concentrate on dramatically increasing (and perfecting) its operational performance in Fulton and DeKalb counties before the agency can even think of improbably expanding into surrounding counties like Cobb and Gwinnett.

wishbone May 22, 2012 at 9:43 pm

thanks for the facts. I agree 100pct. why should I pay more taxes to support a transit system that I don’t care to use to keep fares low for those that do use the service. let’s face it, the cost and time to drive and park in Atlanta is way more than $2.50. if you value the benefits of transit you would happily pay $8.00. I personally love the trains in China, Chicago and New York. if you want that kind of transit pack your bags kids. what’s bus fare these days?

Jimmie May 22, 2012 at 8:03 pm

“Transit may not be widely used today but as the Atlanta region adds millions of news residents (and more and better jobs for those residents) transit will increasingly be a part of that mix. Our children will be much more open to transit and demanding of a transit system in any city that they choose to reside in. Already college graduates say that a transit system is a requirement in a city that they want to live in. This will only grow in importance in the coming decades. And transit AND proactive roadway expansions take decades to build. You don’t just build them in 5 years. Atlanta has one of the best backbones of a transit system of any metro area in the country “……I wasn’t here in Atlanta when Marta was put in, but I’m guessing the same nonsense was said then too. No one wants to use marta. How much in the red is it currently operating in?

The Last Democrat in Georgia May 23, 2012 at 12:57 am

“No one wants to use marta.”

That’s not necessarily true. Even though MARTA’s ridership numbers have declined from their 2008 peak ridership of over 500,000 daily trips when tens-of-thousands of additional riders crowded into MARTA’s stations and trains to lessen the impact of that summer’s spike in gas prices, MARTA still averages 470,000 trips per day in the system, which makes it one of the top-10 used transit systems in the United States.

Despite MARTA’s more-than-obvious shortcomings, that daily ridership of 470,000 means that A LOT of single-occupant vehicle are taken off of the roads of a city that often greatly struggles to handle the hundreds-of-thousands of vehicles it already has on the roads at present.

And more people of different socioeconomic backgrounds across-the-board might actually choose to utilize MARTA if the overall service and product was better and made an actual effort to appeal to people and lure riders instead of seemingly simply operating as an option of last resort.

Scott65 May 23, 2012 at 12:09 pm

MARTA Facts
MARTA is the ninth largest transit system in the U.S. that provides bus, rail and paratransit service and the largest public transit system
in the southern U.S.
MARTA’s service population is 1.7 million in the City of Atlanta, Fulton and DeKalb Counties.
MARTA is funded by a one-cent sales tax collected in City of Atlanta, Fulton and DeKalb Counties.
The MARTA Board is composed of eleven voting members and one non-voting member. The voting members include representatives
from the City of Atlanta and Fulton and DeKalb Counties as well as the Georgia Department of Transportation commissioner. The
executive director of the Georgia Regional Transportation Authority is a non-voting member.
MARTA’s FY 2011 operating budget is $389.64 million and total capital budget is $320.8 million, which includes $132.8 million allocated
for debt service.
In FY 2010, MARTA’s trains, buses, paratransit vans and 5,000 dedicated employees provided service for approximately 146.2 million
passenger trips.
Since the beginning of MARTA rail service in 1979, MARTA has carried over 5 billion passenger trips, or more than 10 times the entire
population of the United States.
MARTA provides transportation for approximately 500,000 passenger boardings each weekday – moving more people than the entire
population of the City of Atlanta.
MARTA provides regional connectivity to local, regional and state transit providers with approximately 50 percent of their customers
transferring to MARTA each weekday.
Nearly half of all riders are between the ages of 16 and 34.
MARTA operates 505 full size buses on 91 bus routes covering approximately 1,000 route miles per day. MARTA has over 740 bus
shelters and benches.
MARTA operates 158 full size clean diesel buses and 347 “clean-fuel” Compressed Natural Gas (CNG) buses, which reduce carbon
monoxide by a full 95%.
MARTA’s Mobility service operates 173 Lift-vans.
MARTA operates 338 rail cars in 38 stations on 48.1 miles of rail.
Approximately 31.6 miles of the nearly 48-mile rail system are located in Fulton County, with 14.7 miles in DeKalb County and 0.7 miles
(to the Airport) in Clayton County.
The top 10 busiest MARTA stations are: Five Points, Airport, Lindbergh Center, College Park, West End, Kensington, Peachtree
Center, Arts Center, Hamilton E. Holmes and North Avenue.
MARTA provides direct access to Hartsfield-Jackson Atlanta International Airport with a rail station that drops off right inside the terminal.
In 2007, MARTA became the first transit system in North America to convert entirely to a “smart card” fare collection system. The system,
aptly named Breeze, uses convenient smart card technology, which enables customers to store a variety of fare products on one card,
offers easy tap-and-go entry and exiting and allows for the creation of a regional fare collection system with other transit providers.
MARTA operates an award-winning Transit Oriented Development program, which encourages commercial, residential and retail development
around rail stations to increase transit ridership. The program includes Lindbergh City Center – its nationally recognized TOD.
MARTA’s Police Department, consisting of over 300 sworn officers, is the eighth largest police department in the State of Georgia and
is one of only four transit police agencies in the U.S. to be nationally accredited by the Commission on Accreditation for Law Enforcement
Agencies (CALEA).
MARTA is a Tier 1 Homeland Security facility and receives federal assistance to help the MARTA Police Department function at its
highest level.
MARTA was the first ever transit system to be designated as the “Official Provider of Transportation” for the Olympic Games. During the 17
days of the 1996 Centennial Olympic Games in Atlanta, more than 25 million passengers (1.5 million passengers a day) utilized MARTA.

David Staples May 23, 2012 at 6:49 pm

“Transit may not be widely used today but as the Atlanta region adds millions of news residents (and more and better jobs for those residents) transit will increasingly be a part of that mix. Our children will be much more open to transit and demanding of a transit system in any city that they choose to reside in. Already college graduates say that a transit system is a requirement in a city that they want to live in.”

Then perhaps if we don’t add any more transit, Atlanta’s growth will level off some. There are plenty of other issues at stake here as well. Water / sewer capacity for instance. At what point do we say we’re full? Do we really need to grow any further?

saltycracker May 22, 2012 at 5:04 pm

Ditto to TJ, the entire tax code needs overhaul.

The hospital bed tax and motel tax are good examples that:
Taxing OPM (other people’s money) has been a politically clever move.
Florida is a national leader in this area. If you are not a homesteader or local voter, get braced.

The number of tax variations is directly proportional to expanding bureaucracy and is in inverse proportion to the efficiency of enforcement. (modern Greek)

rrrrr May 22, 2012 at 6:39 pm

“The tax was designed to capture additional federal funds by adding a charge to hospital bed stays. It raises about $200 Million at the state level and takes in roughly the same amount in federal tax dollars from matching payments.” “Because much of the cost of the tax was passed on to the federal Medicare system, supporters looked at the tax as a way to return more federal tax dollars to Georgia. “

“Earmarks” by another name, how quaint…

So with this we admit to “legally” DEFRAUDING Medicare? Nice, no wonder we can’t live without the Federal Nanny.
Yes sir, no ethics need enhancement here…
We have OUTDONE Tom Murpy RIP

seekingtounderstand May 22, 2012 at 6:53 pm

My Ga state rep tells me the goal is to be like TN and Texas with our taxes. They want to keep raising the consumption taxes.
So lets see……..let in cheaper workers to drive wages down and raise the costs of everything a family needs just to live then turn around and give our corporate friends hugh tax adavantages.
Does anyone old enough to remember the commercial with the native indian man is looking at the trash on the highway and he has one depressed solemn look with one tear coming down his face as he looks out over a trashed america………………..thats how this georgia native feels about my state.
There is money to do good things for citizens its just getting milked by corruption at all levels of government. The roads in my corrupt county look like a third world country while millions went to friends with benefits and self interests of elected officals.

elfiii May 22, 2012 at 7:27 pm

“There is money to do good things for citizens its just getting milked by corruption at all levels of government.”

All the more reason to reduce both the size and scope of government at all levels. Since they refuse to stick to the things that are important in favor of largesse and corruption they are nothing but a money consuming impediment to the people.

The Last Democrat in Georgia May 23, 2012 at 12:39 am

“My Ga state rep tells me the goal is to be like TN and Texas with our taxes. They want to keep raising the consumption taxes.”

Right now, that seems to be nothing more than lip service as what will likely happen is that the legislature will keep raising the consumption taxes (sales taxes) while refusing to let go of the state income tax.

Like they did this past session when they had a chance to lower the state income tax, but instead only got rid of the energy tax on manufacting while still keeping the state income tax.

I also wouldn’t be in the least bit surprised if they sneakily found a way to offset the loss of revenue from phasing out the Ad Valorem Tax (Birthday Tax) by raising tag fees or some other kind of sneaky backdoor tax increase.

sunkawakan May 22, 2012 at 7:53 pm

Let ‘em enact the FairTax. If it were to happen, I will be filing lawsuit after lawsuit demanding that corporations – who will pay nothing under this scheme – be stripped of their metaphysical personhood, and that they be forbidden access to the political arena.

Jimmie May 22, 2012 at 8:06 pm

Hey! That’s the Chosen one you are talking about. Corporations are people my friends! One thing is certain, the GA GOP chooses Party over Principle.

sunkawakan May 23, 2012 at 9:27 am

Metaphysical person = ghost. Need to call a priest to perform an exorcism?

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