Valdosta resolution against GA HB 170 sales-to-excise transportation tax switch

While the Lowndes County Commission has no position, the City of Valdosta already voted to oppose the legislature’s HB 170 proposed stealth tax hike that would convert a local sales tax into a state excise tax, forcing local governments to raise property taxes.

Valdosta PR Resolution to Oppose the State of Georgia’s Transportation Funding Act of 2015,

Click here to view the Resolution to Oppose the State of Georgia’s Transportation Funding Act of 2015.

Click here to view the Local Sales Taxes Collected on Motor Fuel Sales by county.

The Valdosta Mayor and City Council unanimously approved a Resolution at the Feb. 5 City Council meeting opposing the State of Georgia’s proposed plan to divert over $500 million in local taxes from local governments and divert it to the State Government.

The new Transportation Revenue Plan, unveiled as House Bill 170 on Jan. 29, proposes to raise about $1 billion a year for transportation funding. This legislation addresses Georgia’s critical transportation infrastructure needs and provides more than $1 billion in new transportation funding without a state tax increase. The plan would shift the State completely away from a sales tax on gas to a 29.2 cents per gallon excise tax. It would eventually end the local sales tax on gas, while allowing counties and cities to levy their own excise tax. In addition, electric and alternative-fuel vehicle owners will have to pay an annual $200 user fee ($300 for commercial vehicles) with that money being designated for transit. Finally, the 2016 State budget, which will take effect July 1, 2015, will include a significant bond package to pay for critical road and bridge improvements as well as $100 million for transit, although details of how that money will be allocated are not yet decided.

The Transportation Funding Act of 2015 is a comprehensive package of measures. Provisions of the bill are as follows:

(1) The Act will convert the sales tax on motor fuel to an excise tax. This excise tax will be set at 29.2 cents per gallon which approximates the sales tax rate which has been imposed on gasoline using a weighted average of the price of gasoline over the previous four years ($3.39 per gallon total price at pump). This excise tax will be indexed to Corporate Average Fuel Economy (CAFÉ) standards as well as CPI and adjusted annually to ensure that it keeps pace with the ever-increasing fuel efficiency of vehicles. This provides a reliable, predictable funding source dedicated to transportation.

(2) Converting the sales tax on motor fuel to an excise tax adjusts Georgia’s participation in, and advantage of, the International Fuel Tax Agreement (IFTA). Doing so will result in an additional $60 million to the state.

(3) Converting to an excise tax dedicated to transportation will have the effect of moving the “fourth penny” revenue previously collected on motor fuel from the state’s general fund to funding for transportation needs. This will result in an additional $175 million in transportation funding per year.

(4) Any special purpose local option sales taxes on motor fuel currently authorized by the voters will be honored. Those SPLOST collections, which would be over and above the state’s excise tax, would cease after their expiration dates as originally approved by local voters. Motor fuel would be exempt from any future SPLOST.

(5) Local governments will be able to charge an additional excise tax of up to 6 cents per gallon (up to 3 cents for counties and up to 3 cents for cities) for local transportation projects by a vote of their county commission and/or city council. Any additional excise taxes local governments wish to levy on motor fuel beyond the limit would require a referendum offered to the residents of that jurisdiction.

(6) Alternative fueled vehicles will pay a user fee of $200 for noncommercial and $300 for commercial vehicles each year. As these vehicles do not use gasoline, their owners do not currently pay their share of taxes devoted to the maintenance of the roads they use. This will provide equity among those who drive on our roads and ensure everyone pays their fair share. This fee will not be imposed on hybrid vehicles which require purchase of gasoline. This revenue is intended to be used for transit systems.

(7) Recapitalize the Georgia Transportation Infrastructure Bank so that a revolving, self-sustaining, loan/grant fund is created to incentivize governments, authorities, CIDs and other entities to provide matching funds for local construction of projects. The Transportation Infrastructure Bank will be directed to assist tier 1 and tier 2 counties and encourage investment in every region of our state.

(8) A significant bond package will provide for critical bridge maintenance, transit system funding and other transportation projects across the State. This is a prudent way to provide more immediate funding for our transportation needs while leveraging the state’s high credit-rating to borrow at little cost to the state.

(9) Increase funding for Local Maintenance and Improvement Grants (LMIG).

The Bill will now go through the Committee process and may be amended prior to reaching the House floor for a vote. If approved, it would then go to the State Senate for consideration.

This Bill (HB 170) would remove all State and local sales taxes (4% State and up to 3% local) on the sale of motor fuel and would raise the State’s current 7.5¢ per gallon excise tax to 29.2¢ per gallon. The State excise tax would be adjusted annually based on the Construction Price Index and the average miles per gallon usage by vehicles registered in Georgia.

SPLOST and ESPLOST taxes currently in place will be allowed to be collected on motor fuel sales until they expire, but once expired, any new SPLOST or ESPLOST would not be collected on motor fuel sales. The collection of LOST on motor fuel sales would end once a new certificate is filed with the Department of Revenue (usually when the LOST distribution formula is renegotiated after the decennial Census).

The proposed 29.2¢ per gallon excise tax would roughly keep what consumers currently pay in combined State and local taxes (State motor fuel tax, State sales tax and local sales taxes) the same. Cities, counties and schools, however, would no longer collect approximately $500 million per year (see attachment) from local sales taxes on motor fuel sales used to fund local priorities.

With regard to local excise taxes, HB 170 would allow cities and counties to each implement a 3¢ per gallon local excise tax by action of the governing authority and an additional 3¢ per gallon local excise tax if approved by voters in a referendum. Revenues raised by a local excise tax would be limited to being spent only for transportation purposes. A county excise tax would be implemented on all sales within the county, to include sales within a city. A city excise tax would be implemented on top of the county excise tax on sales within the city limits.

In the effort not to “raise taxes” at the State level, HB 170 would create substantial funding shortfalls for cities, counties and schools, and would shift the burden to raise taxes to local elected officials.

Cities, counties, and school boards are encouraged to read HB 170 and determine what the impact will be to your local government and community. Meetings should be held with officials from school systems, counties and neighboring cities to discuss the negative fiscal impact the passage of this bill would have on the ability of your community to fund local priorities in the future.

Click here to view to Oppose the State of Georgia’s Transportation Funding Act of 2015.

Click here to view the Local Sales Taxes Collected on Motor Fuel Sales by county.