Flexibility Needed For Local SPLOSTs

February 6, 2013 13:00 pm

by Charlie · 9 comments

Today’s Courier Herald Column:

This past summer, voters across Georgia went to the polls to answer the question if they would like to see an additional one percent sales tax on their purchases to fund transportation projects within their regions.  Much of the state turned out with a resounding answer of “no”.

Extra penny sales taxes, known officially as Special Purpose Local Option Sales Taxes (SPLOSTs), have become a common fixture of local government finance over the past couple of decades.  Politicians are reluctant to vote to raise taxes but are quite happy to allow voters to decide if additional projects and initiatives are worth paying a bit more.

Many taxpayers, however, have recognized that these “special” – meant to read as temporary – taxes are not special at all.  Rather, in many counties, they are taxes that are renewed every five years to fund projects that are no longer unique needs, but a wish list dreamed up with a goal to spend the amount of tax revenue that is projected to be raised under the tax.

Resistance to renewal of these taxes is growing, especially in light of a population that has significant portions banding together under the banner of being “Taxed Enough Already”.  Opponents point to the ongoing maintenance and staffing needs of many of these projects that increase the burden of the city or county’s general budgets long after the “special” taxes are gone.  A recent SPLOST renewal in my home county of Cobb featured new facilities that would require staffing and maintenance, even as existing county facilities were being closed as budget cuts required the elimination of operating funds to operate them.

As the public grows weary of government spending at the level with which it is allowed to tax, a bill to reform how SPLOSTs are levied has been introduced in the Georgia House of Representatives this session.  House Bill 153 proposes to allow SPLOSTs to be less than 1% as is currently required by Georgia law, so long as the taxes are levied in .05% increments and that the total of all SPLOSTs effective at any one time do not exceed the 1% SPLOST that is the maximum currently allowed by law.

The effect of this law would allow counties to build project lists based on current need and specific desire, and then levy a tax to raise the amount of money needed just for those priority projects.  This would help taxpayers feel they are getting the projects that are most desired, while counties would feel better about having the option to place another initiative before voters should new priorities arise during the five year time horizon of most SPLOSTs.

As the country deals with fiscal issues at the national level, it is time we turn the bigger conversation about how government operates to one of determining the priorities we have as a people and taxing for that amount.  This concept needs to be brought home to SPLOSTs, and HB 153 is a good start.

Instead of looking at the revenues that can be raised with a 1% additional tax and then producing a wish list with a matching price tag, governments need to begin to organize initiatives most desired by their residents, and then levy only the amount of tax needed for those that are justifiable priorities, not nice to have luxuries.

All politics is said to be local, and the politics of the day is about balancing budgets and fiscal responsibility.  Georgia should take the lead in restoring these principles to local government initiatives, by allowing the flexibility to tax less for special local projects, but extend that flexibility to have more than one initiative ongoing at any time.

It’s past time we return government spending to a process based on priorities and not existing revenue.  HB 153 can be a small part of this process.

jamesdillard February 6, 2013 at 2:01 pm

Do you think this would have materially changed the T-SPLOST referendum?

From my perspective, it feels like most voters didn’t want to pay an additional tax for transportation at all, not that they would have preferred a better list of projects or feared that the tax would remain permanent, but I don’t have data to support that.

David Staples February 7, 2013 at 9:36 am

I don’t think this would have affected the T-SPLOST referendum. Charlie probably mentioned the T-SPLOST as an example of what a SPLOST is, but this particular bill I *believe* only affects county SPLOSTs.

Kilkenny Kid February 6, 2013 at 5:09 pm

Agree Charlie – why not allow the county that doesn’t need a whole cent to make a proposal to voters for less than one cent. Sometimes it seems that counties build projects that are marginal just to make the project list add up to a whole cent. Building only what’s necessary is looking after taxpayers money.

David Staples February 7, 2013 at 9:39 am

Thanks for covering this Charlie! I fully support this bill. It’s all about allowing more local control and flexibility for county governments who are currently restricted from levying taxation as they see fit by existing state laws.

Jackster February 7, 2013 at 2:45 pm

Charlie, whenever I see “flexibility” combined with taxes, my first thought is the entity would like to use it for purposes other than what it was collected for. I guess it’s just the ESPLOSTS currently, who want to divert splost $ to both Operation funds, not just Capital funds.

This to me would be a backdoor tax increase; if this one passes, I can see various entities looking @ SPLOSTS to be a combination of project and operational costs in the future.

Charlie February 7, 2013 at 5:00 pm

Currently, they are limited to a one cent tax.

If this passes, the are limited to a cumulative total of one cent tax.

I’m not sure how giving them an option of taxing at less than currently allowed by law but no more than is currently allowed by law is a back door tax increase.

David Staples February 7, 2013 at 6:40 pm

Jackster – this bill doesn’t change the fact that they’re still supposed to go by the project list that voters vote on. All it does is say that instead of requiring the county to install a 1% tax, that they’re allowed to ask for 0.35% instead (or any other multiple of 0.05% up to a total combined 1%). The ability to divert SPLOST $ to the general budget would not be impacted by this bill. (There’s a few other ways I’d like to see the SPLOST law modified, but putting them in this bill would likely kill it IMO.)

jamesdillard February 8, 2013 at 2:06 pm

I see jackster’s point though; mandating tax increases be at least of a certain size makes them harder to pass.

GG February 8, 2013 at 9:41 am

Also like Jan Tankersley’s bill to allow a portion of M&O to be paid out of SPLOST.

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