Republican Transportation Bill Would Divert Revenue from Localities
(APN) ATLANTA — State Rep. Jay Roberts (R-Ocilla) recently introduced HB 170, a bill to increase state funding for transportation projects by one billion dollars, a measure that might seem, on its face, to be a step in the right direction.
But in order to come up with the money, the State of Georgia would divert millions of dollars from already cash-strapped cities, counties, and school districts.
It would also siphon 180 million from the State’s General Fund, which would result in reduced spending on other services.
And for all the damage this could cause, it is not clear that Georgia’s transportation systems would be much better off.
“They are shifting funds from other resources and robbing Peter to pay Paul. It’s solving one problem by creating another,” Alan Essig, Executive Director of Georgia Budget and Policy Institute (GBPI), said at a recent hearing held by the House Democratic Caucus.
HB 170, The Transportation Funding Act, would shift funds by changing the way gasoline is taxed.
At the state level, it would eliminate a four percent sales tax levied on gas, along with a 7.5 cent-per-gallon excise tax. Currently, one percent of the sales tax goes to the General Fund and the rest goes to the Transportation Fund.
At the county and municipal levels, the bill would exempt gas from local sales taxes.
In place of all the cuts, the bill would create a flat excise tax of 29.2 cents per gallon, with all the revenue going to the State Transportation Fund.
“We are opposed to the bill as it currently stands. We agree that transportation funding is crucial to the state, it’s not that we don’t need it. But local governments are already outspending the state when it comes to transportation, so don’t take the money from them,” Amy Henderson, Communications Director for the Georgia Municipal Association (GMA), told Atlanta Progressive News.
According to the GMA, cities, counties and school districts would lose 513 million dollars under the proposed rules per year.
Local governments would have the option to recoup this money by instating a local excise tax on gas at three cents per gallon.
An additional three cents per gallon could be added through a voter referendum. But
Henderson says that in most municipalities, a six-cent excise tax will not produce enough revenue to cover the loss of the sales tax.
Furthermore, the bill limits how funding from local excise taxes could be spent, stipulating that it could only only go toward transportation. But many counties and cities currently use local sales taxes to fund a range of services.
Under these restrictions, school boards would not be able to recoup lost revenue, which the Georgia School Board Association estimates would cost school districts 172 million dollars per year.
The Governor’s state budget for the next fiscal year increases K-12 education funding by 280 million dollars, the minimum increase needed to keep schools open for a full 180 days and fund teacher salaries without furlough.
Losing more than half that amount, at the same time, as a result of the tax restructuring would ensure that schools remain desperately underfunded.
For the City of Atlanta, the stakes are high.
Jim Beard, the city’s Chief Financial Officer estimates Atlanta would lose, at minimum, 8.5 million dollars when its Local Option Sales Tax (LOST) and Municipal Option Sales Tax (MOST) expire.
That would impact essential city services. In Atlanta, MOST funds go toward improving and maintaining the city’s water and sewer systems, while LOST proceeds pay for police and fire departments.
If the City Council imposed a three percent excise tax and succeeded in increasing it to six percent through a voter referendum, Beard estimates the revenue would total only 6.8 million dollars––not enough to cover the 8.5 million dollar shortfall.
This week, the Council unanimously passed a resolution encouraging the legislature to add one billion dollars to the State Transportation Fund without, exempting gasoline from local sales taxes.
“I’m glad that [state lawmakers] are focusing on transit, but their funding mechanism would shift the burden onto local municipalities. I understand that this bill is just being proposed and there will be a lot of amendments and discussion, and so we’re hoping they will listen to us and make the necessary changes,” Councilwoman Felicia Moore (District 9) told APN.
Besides the question of where the money will come from, there’s a looming question that HB 170 raises: Where will the money go?
Will it pay for better public transit that can meet the needs of working class families and reduce Georgia’s carbon footprint? Or will it perpetuate Georgians’ reliance on cars with more traffic lanes?
The answer is not in the bill itself, but in comparing the legislation with the study that spawned it, and the answer becomes clear.
HB 170 is based on the December 2014 recommendations of a task force created during the 2014 legislative session.
The task force found that Georgia currently ranks 49th in the nation for transportation spending and that the Georgia Department Of Transportation (GDOT) is so underfunded that, at the current rate, Georgia’s roads are on a fifty-year re-pavement cycle, instead of the normal fourteen to sixteen years.
The task force consulted HNTB, an engineering firm, which concluded that “in order to merely preserve the current transportation system, namely the maintenance of roads and bridges at acceptable levels, the state has a funding gap of $1 billion to $1.5 billion annually.”
So the one billion dollar increase HB 170 proposes may not even cover what it will take to maintain Georgia’s inadequate system.
To actually improve upon it would require up to an additional 2.9 dollars billion per year. And if Georgia were to join the 21st century and fund what HNTB calls the “full universe of transportation needs in the state, including establishment of passenger rail systems,” the Legislature would need to come up with and extra 3.9 billion to 5.4 billion dollars annually.
Sound impossible? Alan Essig with GBPI does not think so.
“There are other solutions. There are tax exemptions [lawmakers] could look at, special tax breaks they could eliminate. There’s a whole menu of options,” Essig said.
GBPI recently published a fact sheet showing that Georgia gives up eight billion dollars in tax breaks that by and large benefit private industries. For example, film producers get income tax credits worth 273 million dollars, and life insurance companies write off 139 million.
“How do we create new money in a smart way? That’s the next step in the conversation,” Essig said.