Breaking Down the Numbers in the Transportation Funding Act

Michael CaldwellThere’s an old saying that a picture is worth 1,000 words. And, perhaps that’s what State Rep. Michael Caldwell thought as he prepared for the weekly Saturday morning coffee meeting with constituents he holds in downtown Woodstock. House Bill 170, the Transportation Funding Act, had dropped on Thursday afternoon, and he wanted to be able to explain it to those in attendance.

So, he took to the whiteboard, and drew a comparison showing how gasoline is currently taxed, and how it would be taxed should the TFA pass, going over the details and reasoning for each part.

While the whiteboard in the picture is a bit tough to read, Rep. Caldwell sent us the draft he prepared for the event, which you can see below.

How the current and proposed transportation tax plans compare.  Click to view a larger version in a new window.  Credit:  Michael Caldwell
How the current and proposed transportation tax plans compare. Click to view a larger version in a new window.
Credit: Michael Caldwell

Let me call attention to a few points. The $3.39 figure cited at the top of the chart is the average price of gasoline in Georgia over the last four years, inclusive of taxes. That figure, which was cited in the leadership press conference and in talking points, is the basis for the other numbers used in the left-hand side of the chart. The 18.4 cent per gallon federal excise tax, which is not under state control, remains constant.

In the current system, there is a 7.5 cent state excise tax and a 4% state sales tax, which amounts to 13.6 cents when the gas price is $3.39 per gallon. There’s also a local sales tax component, which can include LOST/HOST, SPLOST and ESPLOST levies. (MARTA and TSPLOST taxes in the counties that have them will remain as they are if the bill passes, so they aren’t mentioned here.) Since not every county has the same taxes, however, Caldwell had to deduce what the average percentage rate was used for local taxes, and came up with 2.4%. That’s because 29.2 – 7.5 – 13.6 = 8.1, and 0.81 is 2.4% of 3.39.

Those three items, excise tax, state sales tax and local sales tax total to 29.2 cents per gallon. Adding 29.2 cents to the 18.4 cent federal excise tax gets us to 47.6 cents tax per gallon drivers paid, on average, over the last four years. Under the TFA, the existing state excise tax, state sales tax and local sales taxes are converted to a 29.2 cent per gallon excise tax, and that conversion in how gasoline is taxed allows the state to claim it gets $900 million per year for transportation that it didn’t have before.

According to Rep. Caldwell, here’s how that $900 million breaks down:

$618 million from local sales taxes that become excise taxes
$206 million from the ‘fourth penny’ of the state sales tax that previously went to the general fund
$ 60 million from trucks purchasing fuel in Georgia rather than other states
$ 15 million from a new tax charged to owners of alternatively fueled vehicles

Add those numbers up, and you get $899 million. Close enough to $900 million, considering rounding. Add to that the state’s intention to use $100 million in bonding capacity to benefit transportation, and you get the $1 billion number that’s been widely cited. And if those numbers look a little different that what has been cited in the media (including here on Peach Pundit), Caldwell says that’s because before Wednesday, no one knew the state would use $3.39 as the average price of gas; many were using $3.00, which would mean less revenue and lower totals.

Rep. Caldwell’s analysis of the effects of moving from the current system to one based on excise taxes is based on the assumption that the switch is revenue neutral, and therefore, not a tax increase. All of the figures he uses are publicly known except for the effective percentage rate used to calculate the local sales tax, which he solved for using basic algebra. In order to be truly revenue neutral, that rate would have to be 2.4%.

While most Georgia counties have a 3% local sales tax–again ignoring MARTA and TSPLOST taxes–there are eight counties that have only 2% local taxes: Burke, Cherokee, Cobb, Fayette, Glynn, Greene, Gwinnett and Whitfield. Several are in metro Atlanta, and those that are generate a lot of sales tax collections. Enough to drag the overall percentage down to 2.4% from 3%? The $61.6 million in sales tax collected in these eight counties accounts for 12% of the $515.8 million collected by all counties.

56 comments

  1. jpm says:

    Very effective presentation for Mr. Caldweld’s constituents. My questions are; a) the current price of gas is < $2/gallon and the push to make changes are based on the price rising ~ 70% higher to $3.39. So what is the plan in the interim until government can force the price higher to the magical $3.39/gallon level? What is government's plan when government forces the price of gas even higher than the $3.39/gallon? What is the financial benefit to my family for me to pay higher gas prices to fund the highway initiatives understanding 2/3rds of Georgians do not live in metro areas? Can someone direct me to the paragraph in the studies that shows how this is good for my family for government to force gas prices up? IF anyone thinks government does not directly control the price of gas go look at the supply side vs. the demand side of gas over the last same 4 years. I'll support if you can show me as a citizen how it benefits my family. If the supporters can't show how this benefits the majority of the Georgia tax payers then more work on their part is needed.

    • blakeage80 says:

      In the upper right hand corner of this site is a search bar. Go there and type in transportation. Read a handful of articles and scan the comments for extra facts. You will learn a lot.

      • jpm says:

        Blakeage80 – Thank you. I reread several of the items that had previously appeared in Peach Pundit , but still do not find answers to why this benefits 2/3rds of Georgians like me that do not live in metro areas to have government force gas prices up so government can tax more. The tax generation simply does not work to supply the revenue when gas is $1.89 in Ga. House District 7 so the gas prices have to rise – it is my belief that gas prices are based on supply & demand; with govt. regulation directly effecting supply. We can disagree about government’s direct bearing on gas prices, but that is my belief based on studying gas taxes in Ga./Fla./SC., etc. the supply from private lands vs. 4 years ago, and the impact of the Commerce Dept. & EPA.

        I did read the final report and take issue with Table 5 “Peer States” being California, Pa., Ohio, Fla., etc. with the exclusion of SC, Alabama, Mississippi within the “Peer Group” with their more typical rail/highway/port infrastructure. A peer group for me is a State that has a huge international port and rail distribution system as well as interstate & intrastate systems more similar to Georgia’s. Also, I noted the 23 page report concluded an ROI without sourcing the methods or the data. I like details – not summations that conclude for me when past studies utilized the economists at GSU to derive numbers [the legislature’s version of the CBO]. I’ve read and studied a lot of these types of reports [TSPLOST is an excellent example] where numbers were derived using the CBS method so the final report did not convince me of why this is good for me as one of 2/3rds of Georgians living outside the metro areas. I’m looking for things like; over the years the funded repairs and new systems will drive down my taxes vs. create the need for more taxation, or full filling this plan will improve education in Washington, Ga. or pay for a more medical research at MCG, or…Show me how this long term benefits me without creating more taxation to continually support the O&M of the created or existing systems. Show me the benefit that all taxed Georgians gain and we will support.

        I did note again the recent WSB poll shows 60% of polled Georgians remain weary [and probably wary] or more taxation when it comes to transportation. I believe the WSB poll reflects the mood 25 miles outside I-285.

        Lastly – let’s not lose sight of the great thing Mr. Caldweld did last Saturday just because I don’t see the answers to my question when Mr. Caldweld held a coffee for people to come and listen & to ask questions of the proposal. I commend him. I will not get answers to my questions unless people like Mr. Caldweld help me to understand the answers.

        • blakeage80 says:

          Not sure where your 2/3rds number is coming from. There are just under 10 million folks in Georgia and about 5.5 million living in the Atlanta MSA alone. Also, I’m sure Husqvarna, in McRae appreciates GA HWY 341 (nice, 4 lane divided hwy that runs through BFE to get goods produced there to elsewhere) as do many rural communities that have benefited from the GRIP program.

          Georgia’s need to fund transportation precedes the Saudis causing the current, only month’s old, oil price slide. I don’t want to compare Georgia to Mississippi. There are a lot more goods moving through CA, FL, PA & OH than MS, SC & AL. I want to plan for more goods to be moved more efficiently, not less. A better connected, more efficiently connect Georgia is better for the state’s economy as a whole. Will you argue that?

          This plan is about funding transportation that is clearly lagging. If you see problems with education funding or your tax rate being too high where you live, that is a different argument.

    • Personally, I like the planning done at a higher gas price than what exists now. With that said, I also like the idea that it’s a fixed excise tax, not a percentage.

      To point out something – this means that regardless of the gas price, revenues will still be collected consistently per gallon. So, it’s actually better for me, since I can expect the transportation planners to budget for the same amount of revenue, and therefore, be able to set expectations with my electeds about projects, areas of need, and priority.

      The part that Caldwell’s graph skims over is the local piece – you’ve just shifted a chunk from local to state. You would need to add on an additional local chunk – which is what makes it a tax increase.

      And I’m okay with the tax increase – it means an increase in a specific service level, which can’t be used for social reform projects or economic development shenanigans.

      My only feedback here is I’d like to see the local piece be excise taxe based, not sales tax based. Simply to help simplify the model. This is one area that gov’t is complicated on purpose – not acknowledging the whole tax / revenue picture when presenting a solution, and using a mix of taxes with different assumptions.

      Kudos to Caldwell for breaking it down a bit.

  2. John Konop says:

    I wonder if we had government workers in many jobs, government offices as well as the court system change working hours from 11 to 8 how much would that help the traffic problem. I would bet this could increase capacity by about 25 percent at least….by shifting traffic patters away from high commute time. And this idea cost us nothing.

    • I think the concept for gov’t workers has always been, “You should live in the same community you serve”. If you did that, most of the commute would be reduced as well.

      You know – the crazy notion that you should WORK near where you LIVE.

  3. debbie0040 says:

    It is a tax increase. New revenue is being generated. How is that NOT a tax increase ? Gas will rise 7.7 cents per gallon. There is a NEW tax on electric vehicles, truckers will pay more, motorists will pay more at the pump, etc . Rep. Caldwell is defending a tax increase and is deceiving Georgians by saying it doesn’t raise taxes but is a tax conversion that raises a billion dollars in new revenue.

    • jpm says:

      debbie0040 – Mr. Caldweld was not “defending a tax increase”, he was bringing the info to his constituents based on benefits to the District he represents. I’ve sat in on a lot of his Saturday coffees and it is not his way to advocate as characterized. He brings the info and allows the people in the coffee to discuss, ask questions, and form their opinions. Then, he uses the expressed opinions to decide how he will or not support an issue. I would never characterize Rep. Caldweld as a grow government or advocate for more taxation type of representative based on my 100’s of dealings with him since his first campaign.

      I agree this is a tax increase. I never supported the tax relief afforded electric vehicles as it ignored the fact that fuels are used to create the electricity to charge the batteries; I support removing the tax incentive given to electric vehicles regardless which means a tax increse by removal of the tax incentive afforded electric vehicles. I do not support taxing truckers or rails more as the tax gets passed off to us. I also understand every time govt. creates a new transportation system there is significant cost associated with O&M costs that usually comes out of the General Funds [MARTA was an exception in the old TSPLOST scheme, there are others]. The proposal does not address O&M going forward for capital outlay. O&M is paid for out of General Funds accrued from taxation except with tolls in general terms.

      I simply have not heard nor do I understand the argument that to raise the taxes benefits the 2/3rds of the State’s population outside the metro areas. Show me the benefit with numbers I can believe in and I will support.

      • Posner says:

        “I simply have not heard nor do I understand the argument that to raise the taxes benefits the 2/3rds of the State’s population outside the metro areas. Show me the benefit with numbers I can believe in and I will support.”

        First, the premise that this won’t directly benefit people outside metro areas is flawed, but addressing that flaw is unnecessary for understanding that metro roads help rural people.

        The argument is very simple–metro areas generate a disproportionate amount of economic activity, which allows more rural areas to exist in form they do. In other words, the strength of Atlanta’s economy (and Savannah, Albany, Macon, etc) directly impacts rural economies in the state. If Atlanta and the port of Savannah can’t grow, Georgia can’t grow.

        Simply look to Alabama–Birmingham/Montgomery/Mobile are significantly smaller than Atlanta/Savannah/(Macon/Augusta/etc). Because of that GDP per capita in Georgia is 6-7k higher than Alabama.

        Another way to look at it: almost all goods consumed in this state come through Savannah or Atlanta. The cost of those goods include a portion of the transportation cost. If it’s more efficient (thus cheaper) for a good to transport through ATL/Savannah, then it’s cheaper for everyone in the state to consume that good. Thus, ATL roads/transit = lower cost of goods statewide.

        Another example that people use–“I never drive on that road.” No, you might not, but the chicken you’re eating for dinner might have. Or the repairman coming to your house might have to, or any other person you have economic interaction with may. And you never know when you might have to travel that road. I personally don’t travel between Albany and Columbus. That doesn’t mean that on the random day that I do travel that road that it’s not in my benefit for the road to be paved instead of dirt. Claiming that “I don’t use that road” shows an incredible misunderstanding (willful or otherwise) of how basic commerce works.

      • debbie0040 says:

        Rep. Caldwell is promoting the House plan without saying he supported it. He claims it is revenue neutral and it isn’t and he is trying to convince his constituents it isn’t raising taxes.. Did he mention in his presentation that gas prices would increase 7.7 cents per gallon ? Did he talk about the slush fund – Georgia Transportation Infrastructure Bank and the fact CIDs, Development authorities ,etal could draw tax -payer money from it?

        Rep. Caldwell’s presentation left out important facts. He and others like Rep. Jason Spencer are trying to find ways they can justify voting for it by using numbers so they can please House Leadership and the Georgia Chamber of Commerce.

        • Posner says:

          “He claims it is revenue neutral and it isn’t and he is trying to convince his constituents it isn’t raising taxes. Did he mention in his presentation that gas prices would increase 7.7 cents per gallon ”

          Show your work. Rep. Caldwell did.

          He’s currently passing 8th grade math. You’re failing.

        • Debbie- You’re making claims based on a handwritten sheet of paper about a presentation you did not attend regarding an individual (me) you did not bother to reach out to regarding the proposal. I’d challenge you that no where on the sheet of paper does it use the phrase “revenue neutral”, “promote” or “justify”. My endeavor was to educate, not advocate- but I do plan to continue to advocate within my caucus for meaningful transportation funding reform without an added burden to the taxpayers. Thanks for your feedback.

          • John Konop says:

            In all due respect, your math is correct in my opinion…….yet, how about considering changing times state agencies are open? If we shifted the times from 11-8 verse 8-6 we would shift I would guess about 25% of traffic patterns away from high commute times. It would win/win to shift the times….for courts, licenses……. easier commute for workers, and more non work time to serve the people who pay for it ie tax payers….I realize this is not a 100% fix…but it cost us nothing….and would help the problem….

            BTW Michael Caldwell is my rep, and a very hard working smart guy…..

            • TheEiger says:

              I’m sure state employees would love missing dinner with their families, tee ball games, PTA meetings and generally everything else in their lives because they have to stay at work until 8PM. They are people too. With lives. I think allowing folks to work from home on a rotating schedule would be a better strategy.

              Also, I’ve got jury duty next week and I can assure you no one wants to stay at the Fulton County court house until 8pm.

              • John Konop says:

                In the business world we try to think of customers first…..I guess having to make customer happy to make money is sobering…in government I guess we tax payers are not the customers….Only people in the real world have to worry about customer service before being home at 6…..I take calls 7 days a week…and at all hours….I have employees that serve east to west coast….I am in the private sector that pays the bills….sorry if I dare intrude on government workers lifestyle to help give better service. and save money for us guys paying for this…

                • TheEiger says:

                  But your solution wasn’t to make customers happy John. It was to segment out one group of voters and telling them when they can work. Working 11-8 would not help customers (taxpayers) in any way. Working in shifts from 7am-8pm would offer better customer services, but would be more expensive. But your a businessman you can figure out how that would be more expensive.

                  Again, being open until 8pm doesn’t not help the lady working at DEFACS calling the Medicare office because they aren’t open at 8pm. It doesn’t help the anti-fraud division of AG’s office because the business they are calling back isn’t open from 6-8pm. So what you would have is state employees getting paid the same amount and working less. How is that a good use of the taxpayers dollars John?

                  I know you are a business man. You don’t have to say the same crap every time you make a post.

                  • John Konop says:

                    Chill out…..In some departments it may not work….overall many it would be more convenient for tax payers….Or we could do staggered hours like done in the business world for departments that have issues you brought up…..One worker comes in at 7 to 3…next worker 10 to 8….ie same coverage less people on road….happy customers….:)

                    • TheEiger says:

                      I get pissed when you constantly bring up “the business world” and then dismiss others as not having a clue what they are talking about. That is all.

                    • John Konop says:

                      I am sorry if you are offended….It is rather frustrating to us poor schmucks hustling everyday to make a buck….and we have to think customer first, and how to do it in an efficient manner or we are out our money….And it is even more scary when you have people relying on your success, so they have jobs….it is clear to us on the outside that is not the priority of many people in the government world….I do think you are a bright person…not sure of sex….just giving my 10 cents…

                    • TheEiger says:

                      Hard work is important no matter what business you are in. My phone is never turned off either. I’m on 7 days a week too. You aren’t the only one that works hard for living. Or the only person that has customers that have to be made happy.

                      Again, what makes me mad is when you get cornered in a argument you immediately say, “hey, I am business man. I know what I’m talking about. You don’t.” That is not winning anyone to your side. That is all I’m saying.

                    • John Konop says:

                      …….what makes me mad is when you get cornered in a argument you immediately……..

                      The irony is you never countered my points LOL…..Still like you…:)

                    • TheEiger says:

                      “One worker comes in at 7 to 3…next worker 10 to 8” I suggested “Working in shifts from 7am-8pm would offer better customer services” in the previous post. So, that was my idea.

                      “If we shifted the times from 11-8 verse 8-6 we would shift I would guess about 25% of traffic patterns away from high commute times.” I responded with “Again, being open until 8pm doesn’t not help the lady working at DEFACS calling the Medicare office because they aren’t open at 8pm. It doesn’t help the anti-fraud division of AG’s office because the business they are calling back isn’t open from 6-8pm.”

                      So, yeah I did counter you points. you refused to notice it. Just keeping you straight.

                    • John Konop says:

                      And I said ………..…..In some departments it may not work….overall many it would be more convenient for tax payers….Or we could do staggered hours like done in the business world for departments that have issues you brought up…..One worker comes in at 7 to 3…next worker 10 to 8….ie same coverage less people on road….happy customers….:)…….

    • Posner says:

      Debbie, you need to be more clear in your argument. You say “new revenue is being generated.” How? Are you arguing that it’s “new” revenue because gas prices are currently lower than 3.39 and thus the excise tax is based on a number higher than current gas prices? Or are you saying that “new revenue is being generated” because the state is “taking” the taxes currently used at the local level and imposing them at the state level?

      This two positions have very different implications for the source of your disagreement, and the merits of whatever you’re arguing could be explored. Until you explain your point though, it’s just empty rhetoric that means nothing.

  4. Ellynn says:

    I would like to know how this affects counties like Candler County, for their local option taxes. They have the majority of their sales tax coming from the I-16 exit area. Alot of people stop their for fuel and/or food. Candler would not be getting any major ‘nessacary’ transportation money that I can see, but they would lose a large amount of Special option funds if they voted to renew it.

    Also what about counties that do not all the special local tax options in place or who are not planning on renewing them?

  5. Jon Richards says:

    I’m going to jump in here and say Rep. Caldwell specifically said he was not advocating for or against the Transportation Funding Act. Instead he was trying to explain the bill as best he could based on the information he had been provided in the bill and by leadership.

    It is irresponsible to suggest otherwise.

    • Al Gray says:

      The chart says otherwise to me.

      What is determinant is what Caldwell said about the looting of the local tax and how they are supposed to be recouped by the cities and counties.

      I think ” he was trying to explain the bill as best he could” based on the information he had been provided in the bill and by leadership doesn’t exactly reassure me.

  6. jpm says:

    Posner – “Another way to look at it: almost all goods consumed in this state come through Savannah or Atlanta. The cost of those goods include a portion of the transportation cost. If it’s more efficient (thus cheaper) for a good to transport through ATL/Savannah, then it’s cheaper for everyone in the state to consume that good. Thus, ATL roads/transit = lower cost of goods statewide” is the strongest argument anyone has made to me on how increasing taxes will help all of Georgia. I support that process without any qualification on my part. Unfortunately, I believe the transportation plan costs grow exponentially as the plan goes beyond your excellent point. To be clear – I support the argument regarding consumer goods lowering costs statewide through better transportation – I do not support the pork we found in the TSPLOST published plans.

    blakeage80 – the 2/3rds number is based on the 2010 Census when Georgia registered just over 9.3 million residents. Your number of 5.5 million living in Atlanta and MSA is from a separate source that I am not familiar with – which is ok. I suspect if we poll the residents of Lyons or Attapulgus, or Blue Ridge they might consider themselves part of a greater metro area.

    I support solutions to transportation to increase commerce. I do not support solutions that grow side walks in Cobb County, or widening Robert Toombs St in Washington, Ga., etc with tax money derived from Gilmer County. I do support Gilmer County $ to be gathered and used to improve transportation to increase commerce. I also understand that O&M is a part of this conversation and I want to understand how we would pay for the O&M 20 years from now on a bridge or tunnel or highway constructed under the proposal. We don’t even have to go out 20 years – do the proponents propose O&M coming from the existing tax base or do the proponents propose O&M coming from new or increased taxation? I personally have designed and constructed roads, bridges, and railroads – so when someone tells me what a projected cost is and they believe that costs I know for a fact they do not know the subject – so I am always skeptical at front end estimates based on actual experience. If you want a really great example look at asphalt material cost the last quarter vs asphalt material cost 4 years ago, then factor the impact on the material cost once the gas tax formula is changed so the State can buy that same asphalt.

    Anyway – Posner makes a strong case to me with his logic.

    • Al Gray says:

      Widening Robert Toombs Street in Washington would be within the purview of TSPLOST as Wilkes County is in a TSPLOST region.

      My objection is the opposite. We have $millions in enacted SPLOSTS which include transportation projects and we are subject to TSPLOST. Now the legislature wants us to pay a new statewide tax that overlaps TSPLOST.

      • Jon Richards says:

        Al, Is the Toombs Street project on the TSPLOST list in your region? In reality, the revenue this is going to generate will pay for maintenance of the state road system (think numbered roads). There will be a little extra after basic maintenance (paving, bridge repair) to take care of replacement projects in lieu of maintenance where that makes sense. Somehow, I don’t think this widening falls into that category.

        • Al Gray says:

          Yes, it is a blended project, meaning that it relies on previously appropriated DOT funds in part.

          Once again, the 25% discretionary fund of TSPLOST goes almost exclusively to maintenance.

    • Posner says:

      jpm – Nobody knows how the money is going to be spent, specifically. This isn’t TSPLOST, there is no project list, there are no local officials making wish lists for their own constituents.

      Instead, the money goes to GDOT, who then decides where to spend it. GDOT is currently run by three engineers, not career politicians. Personally, I trust engineers over politicians to make decisions on what roads are most important for improving/expanding and what bridges are most in need of safety updates. Are they subject to political influence? Maybe, but less so that our House Reps or local mayor and City Council.

  7. chefdavid says:

    I kind of like this bill. One it will reel in School Board unlimited splost spending. Two It will realy cut, the lost, and all the other ost s that don’t end after they were initially voted in. Local government feels intitled to this money. How bout they scale back? At least this will make the locals have to do a little more song and dance for the money.

  8. Raleigh says:

    Interesting chart since yes a picture is worth 1000 words. It did help me clear up the local sales tax question. I have a few more questions and forgive me if it has been covered before.

    In order to remove sales tax doesn’t it require a change to the state constitution?

    Local governments are not required to use their proportion of the current sales tax for transportation. Since under the proposed plan they lose 2.4% what is to stop them from increasing other taxes to make up for their shortfall in revenue?

    With the local government shortfall in mind under the new revenue plan the state general fund will lose 1% in gasoline sales tax going to the general fund. What keeps the state legislature from raising other taxes to make up for the shortfall to revenue in the general fund?

    In times of challenged revenue collection such as what we have just gone through, what will keep the state from reinstituting the sale tax on motor vehicle fuels in the future?

    How I see this is while you may not be raising the transportation tax rate with this bill but it puts pressure to raise taxes in other places.

    • jbsimpson81 says:

      The state constitution requires gas excise taxes go to transportation, by moving the sales tax to an excise tax, you essentially constitutionally mandate that the 4th penny (which has now become an excise tax) go to transportation.

      But yes, the the 4th penny needs to be replaced in the budget. To that end, see Chuck Martin’s legislation to end the $5,000 tax incentive on electric vehicles. That pays for a significant chunk (may 1/3) or so of the 4th penny shortfall. It makes sense to assume this bill is an essential part of the transportation equation, because why give a $5000 tax break for electric vehicles and then charge them $200 per year?

      • Dave Bearse says:

        Gas taxes are constitutionally limited to highway and bridges, not “transportation”, thus gas excise taxes may not be used for transit, rail, or airports. Hence the proposal to use bond funds and the alternative fuel vehicle (AFV) taxes for transit.

  9. jbsimpson81 says:

    There is something left out of this presentation that is quite important. On the left side of the equation, we have a total combined sales and excise tax that equates 29.2 cents. On the right side, we have a new entirely excise tax of 29.2 cents. Everything balances to a nice 29.2 cent excise, right?

    Well, if you look more closely at left side of the equation you’ll notice that the current 2.4% sales tax (which equates to an 8.1 excise tax) goes to the state and locals. On the right hand side of the equation, we have 8.1 cents that now just goes to the state. Things are getting more interesting.

    What isn’t discussed here, is that bill then allows municipalities to raise an additional 3-6 cents by apply their own excise tax to gasoline. That new local option is intended to compensate municipalities for the revenue the state reallocates to itself in this bill. So, while a 2.4% sales tax increase previously equaled a 8.1 cent excise tax, in reality now it equals an 11.1-14.1 cent excise tax.

    Don’t get me wrong, I am 100% in favor of increasing funds available for transportation, and if that requires a tax raise, I can support that. However, I think we just need to be a little more honest about where the revenue is coming from. The bill may be revenue neutral from a state legislators perspective, as he/she is not explicitly voting to raise your taxes, but it is (or will be) a tax increase from a taxpayer perspective since local governments will be FORCED to raise taxes to make up for the revenue they are losing as a result of this legislation.

  10. chefdavid says:

    I don’t think locals will be forced to raise taxes. Why are they entitled to that money? Isn’t easier to control the spending of locals if they have to raise taxes themselves? If your business revenues went down 10% wouldn’t you cut spending? Maybe the locals need to think along those lines. I just hope they add a line in the bill that “vehicles over two axles will have to drive in the right hand lane on I-24”. Now that would be some traffic relief.

    • Raleigh says:

      Locals may not be “forced” to raise taxes but they are not forced to use the current sales tax revenue for transportation projects and many don’t. Besides it’s “sales Tax” and they ARE entitled to their cut regardless of the source. Take that revenue away and they must either cut services or raise taxes. Most will not tell their citizens they will cut police or emergency services. They will simply raise taxes and blame it on the state. Now if you want to force local governments to spend revenue a certain way then you must past laws or constitutional amendments to make that happen. It is the same problem at the state level for the Tire recycling fee, 911 tax, Joshua’s Law, etc. There are no laws mandating these funds be use for what the voter intended, so the funds are put in the general funds and used for anything else like go fish museums.

      Until we take care of state and local spending problem I don’t think I can support this bill. Too bad to, it has merits.

      • Jon Richards says:

        Raleigh, if you believe the legislators when they talk about the intent of the bill, that’s what is going to happen. What was previously a mix of excise tax (must go to transportation) and sales tax (goes to general fund) will become a 100% excise tax. Locals can also add an excise tax which would have to go towards transportation (which in theory for them means it could include forms of transit — not so much for the state excise tax).

        One of the main things the study committee heard was that any gas taxes should go towards transportation, and that appears to be the goal of this bill.

        • Raleigh says:

          Mr. Richards I believe what is being said but it is what’s not being said that should be part of this dialog. Sure the desire to change the current sales tax to 100% excise tax forces all of it to be spent on transportation BUT the loss of sales tax at the local and state level will indirectly cause a tax increase. Local governments that use those funds for other things will be looking for ways to replace the revenue. The state will also be looking to replace the 4th penny. Nowhere in this bill is anything whatsoever that keeps any government entity from trying to replace the revenue that is repurposed under this bill with tax increases. If this bill is passed there will be tax increases.

          Our state legislature has proven time and time again they have no fiscal discipline at all. Funds collected for Joshua’s law and many other things would be funding what those referendums intended if they did. However little to none of the funds collected is ever allocated by the legislature for the intended purpose.

          No Thanks…..

  11. rzg0020 says:

    Forgive me if this is a stupid question…

    The 1% of the state sales tax that went to the general fund is no longer represented in the new bill, as I understand it. Does that take away from other state funded programs like education? Or was that money generally used in transportation projects anyway? How does that 1% play out in the new bill?

    As a college senior hoping to live and work in Atlanta, I am thrilled about the increased state interest in transportation funding. For millennials and young professionals, this is long overdue. I just want to understand the bill as well as possible.

    Thanks! Keep it up, Peach Pundit.

    • Jon Richards says:

      rzg, welcome. The 1% that previously went into the general fund was spent on other programs, although it wasn’t dedicated to any specific program. So, the state budget will have to be adjusted to reflect the loss of that money. There is no way to tell right now what might be cut to do that.

      As part of the new excise tax, that 1% will be constitutionally dedicated to transportation.

      • Al Gray says:

        Returning that 1% to transportation, from whence it is sourced, is something I think the entire state agrees upon.

        • rzg0020 says:

          I totally agree. I just wanted to make sure I understood it correctly.

          I think if we prioritize the transportation budget the right way, it could be a remarkable spur for economic expansion. At least, examples like Cleveland, Denver, and Dallas seem to illustrate that. I am keeping my fingers crossed.

      • Al Gray says:

        Revise this deal to eliminate the possibility of a 3 to 6% local excise tax in a TSPLOST county, then we can talk. When I write of TSPLOST county, I mean a county in a region in which TSPLOST passed. In an earlier comment I was taken to task over this distinction, but I will stick to “TSPLOST County” as TIA/TSPLOST taxes are collected on a county level and not on a regional level. Thanks in advance for your understanding.

        • jbsimpson81 says:

          Al,

          This is an interesting bit of side politics in the bill. The counties that passed TSPLOST may not need additional transportation dollars (since they have TSPLOT money) and therefore may not need to add the 3-6 cent excise tax. But, those areas may have been using the 2.4% (average) sales tax revenue for something other than transportation. That money no longer exists so their only real option to replace that revenue would be an ad valorem tax increase.

          Of course, the Fulton County Commission is in a real pickle, because any non transportation projects they were funding via the motor fuels sales tax can’t be made up by the new excise tax or an ad valorem tax increase, because the legislature outlawed the latter in 2014.

  12. Al Gray says:

    Columbia County is rushing to get a ELOST passed early this year and will be able to feast upon motor fuels in the tax base for 4 more years. There are no transportation projects in the recently passed SPLOST. TSPLOST does not tax motor fuels. Richmond County continues to collect SPLOST 6 in perpetuity (as I understand it, consolodated government SPLOSTs don’t sunset until designated projects are funded) on motor fuels although we activists pulled a stunning defeat of SPLOST 7 in Augusta. Augusta’s wild spending city commission will almost certainly pass the 3 cent transportation excise tax as motor fuels won’t be in the new SPLOST 7 base.

    154 counties have LOST which does not sunset and thus will continue to apply to motor fuels, if I am understanding this bill correctly.

    For probably the first 2 years, this deal is a HUGE tax increase, because BOTH the 29.2 cents fuel tax and the LOST, ELOST, and SPLOST 1% taxes will be collected on sales of motor fuels!

Comments are closed.