Ever since details of the Transportation Funding Act of 2015 became public late Wednesday afternoon, journalists, pundits, and others have tried to explain and interpret what the act does, and how Georgians will be affected by it. As someone who was briefed beforehand on what the bill might contain, attended the press conference where the bill was announced, read the talking points given to legislators about the bill, and actually have read the bill, I won’t claim to know everything about how it works. But, reading some of the press coverage and spin following the announcement, there is clearly some confusion over what the bill does or does not do.
Much of the incorrect information I’ve heard about the bill deals with converting the state and local sales taxes to a fixed excise tax of 29.2 cents per gallon. For example, an editorial in the Columbus Ledger Enquirer mentions the possibility that counties’ bond ratings could be hurt if they can’t pay off bonds issued against anticipated SPLOST revenue. However, because existing SPLOSTS will continue for the rest of their term, this shouldn’t be an issue.
Then, there’s this post in the RenewATL blog. Writing about how cities and counties can levy a three cent excise tax on gasoline, the author laments that proceeds couldn’t be used for transit. However, the bill specifically includes buses and public transit as permissible uses for a local excise tax.
That local excise tax is also causing confusion — it does not replace SPLOSTS, which could be renewed as they always have been, except that new SPLOSTS would not tax gas purposes. And the potential 6 cent excise tax (3 cents from counties and another 3 cents from cities) would not be subject to a public vote.
Then, there’s exaggeration, as seen in this tweet:
While it’s true that the estimated $7.5 million that would be raised from the larger tag fee charged to alternative fuel vehicles is going to the general fund, that amount, at least in my mind, is nowhere near a “great portion” of the estimated $1 billion funding plan. In any case, the AFV fee is supposed to go to transit, which is part of the transportation equation.
And then there is the misleading claim that a potential increase in the price of gas by 7.7 cents represents a tax increase. While it’s true that talking points distributed by House leadership say that current fuel prices would increase by that amount, the reason is an artifact of the switch between the current sales tax to the proposed excise tax. Because the amount collected with a sales tax varies based on the price of gas, lawmakers had to pick the gas price they would use to calculate the amount of excise tax to charge. They settled on $3.39, which is the average price of gas in Georgia over the last four years.
As a result, if the price of gas was $3.39 when the excise tax went into effect, the price would not be affected by the change. Because gas currently sells for around $2.00 per gallon, the sales tax paid is less than the excise tax, so the price increases when the excise tax is applied. If gas were selling above $4.00 per gallon, the conversion to the excise tax would mean a reduction in the pump price, because the sales tax would be more than the excise tax.
Trying to figure out the meaning and implications of the Transportation Funding Act is a challenge, especially early on, when one hasn’t seen the actual bill, which was finally released late Thursday afternoon. While some of the information put out about the bill is the result of misunderstanding what it does, there have also been attempts to muddy the waters by those who don’t like part or all of what’s being proposed. (For those supporting the bill, there’s a real need to be precise when talking about whether tax increases are involved.) And, I don’t want to sound like I know everything, because I’ve made mistakes too. But, as I tweeted this morning, “There’s a ton of misinformation out there about Georgia’s new transportation funding plan. Don’t believe all you hear.”