Transportation bill could hurt BOE revenues

Published 7:53 pm Friday, January 30, 2015

Thursday, Georgia House leadership introduced legislation that, in its current state, will significantly change taxes on gasoline and other fuels.

House Bill 170, or the Transportation Funding Act of 2015, will generate $1 billion annually in state transportation funding, Speaker of the House David Ralston, R-Blue Ridge, said in a press conference Wednesday. That money will be generated by shifting state gas taxes.

“This is a quality of life issue. It is a public safety issue. And it is an economic development and job creation issue,” Ralston said. “This plan will provide more than $1 billion annually in new transportation dollars. It does not result in an increase of state taxes on Georgia.”

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Currently, motor fuel is taxed two ways by the state. There is a four percent sales tax, three percent of which goes to the Department of Transportation, with the remainder going to the state’s general fund budget. There is also a flat excise tax of 7.5 cents per gallon (cpg).

Currently, local governments can levy sales taxes on motor fuel, which is set at three percent in Decatur County. That three percent is split evenly between SPLOST, LOST and E-SPLOST funds, all of which have set expiration dates. According to Georgia Municipal Association data, Decatur County collected more than $1.9 million from the motor fuel sales tax between July 1, 2013 and June 30, 2014.

The proposed bill would eliminate all sales taxes on gas, including local ones when they hit their expiration dates, and raise the state excise tax to 29.2 cpg, all of which would go to the DoT. To offset that potential loss for local governments, the bill allows for a three-cpg tax to replace the sales tax.

The result would not be a tax raise at the state level, however both Decatur County and Bainbridge would have the option to add a three-cpg tax, a total of six cpg, that could only be used for transportation purposes.

“‘Transportation purposes’ means and includes roads, bridges, public transit, rails, airports, buses, seaports and all accompanying infrastructure and services necessary to provide access to these transportation facilities,” according to the bill.

Local impact

Local boards of education would take the biggest financial hit from the bill. From July 1, 2013 to June 30, 2014, the Decatur County Board of Education received more than $600,000 from the gas sales tax for E-SPLOST funds, which would equal about a 16 percent decrease in E-SPLOST revenue, according to the BOE’s calculations.

“That would be a little over $600,000 a year in E-SPLOST revenue that we would lose,” Decatur County Department of Education Superintendent Dr. Fred Rayfield said. “Over a five-year referendum, you’re looking at $3 million dollars of lost sales tax revenue.”

That loss would severely hinder the school system’s ability to complete larger projects, such as building new schools. One of the first responsibilities of E-SPLOST funds is to pay off debt bonds from those larger projects, such as the construction of Bainbridge High School and Jones-Wheat Elementary, Rayfield said.

If sales tax revenue continues the downward trend it has seen in recent years, the Board of Education would have to raise property taxes to make those debt bond payments.

“We’re still collecting enough to make the debt payments on Bainbridge High and Jones-Wheat,” Rayfield said, “but we won’t be able to do anything new. If the trend continues in terms of elimination of sales tax revenue, and we get a point where we don’t collect enough sales tax to pay that debt, the referendum says that results in an increase in property tax. That is the absolute last thing we want to do.”

The decreases in sales tax revenue has a lot to do with the multiple tax exemptions.

“It’s kind of a perfect storm,” Rayfield said. “It’s a combination of all the exemptions and changes in the sales tax mechanism in the past three-to-five years, and then you put this next one that’s proposed and it puts us at a 25-to-30 percent loss.”

Rayfield said that the Board of Education is pushing legislators to look for ways to recover or prevent that potential loss.

The current E-SPLOST referendum is set to expire in 2017, while SPLOST and LOST won’t expire until 2020 and 2021, respectively.

“The schools systems are affected way more than [the local governments] are,” said Bainbridge City Manager Chris Hobby.

Hobby said that upon initial calculations, he thinks that the three cent per gallon tax would generate a comparable amount to what the LOST and SPLOST gas tax generates.

“It could have a devastating effect on Decatur County,” said Decatur County Commissioner Butch Mosely. “We have to have so much to operate, and it has to come from somewhere. If you take it away from SPLOST dollars, it can only come from the local taxpayer. It has a negative impact both money-wise and politically.”