Monthly Archives: February 2015
Well, it is changing again (and this is still in the House Version, we don’t have a clue what the Senate might do). BUT! I must say, the current version in the House is good for Hawkinsville. The School’s ESPLOST will now be unaffected! No losses for the school system in the current version. The only stipulation is that taxes that are received from Motor Fuels, MUST be spent in the area of Transportation, but the definition is pretty broad. The City and County’s SPLOST (and Future SPLOSTS) are unaffected, with only the same stipulation – Motor Fuel taxes must be spent on Transportation. The City and County’s LOST taxes will see an INCREASE in revenue. Although Motor Fuels are being removed, the rest of the sales tax base will be taxed at 1.25% rather than 1%, so it will be a NET gain to the combined CITY/COUNTY of almost $80,000.
Hotel/Motel Taxes are also being slightly adjusted upward in the current version. I don’t really understand why.
And as mentioned in an earlier post, the current version of this bill will also FORCE a larger state allocation of LMIG (road resurfacing money). Although we have to match (30%) of the LMIG allocation, this WILL allow us to resurface additional miles in the years to come.
So…. Although the fat lady has not even gotten up to sing yet, the current version IS good for Hawkinsville.
(I am NOT making any such overall statements about whether this bill is good for GEORGIANS or not. Any way you slice it, it IS a tax increase on gasoline purchases in Georgia).
“The Only Thing That Is Constant Is Change ” – Heraclitus
― That quote fits really well into the legislative process. HB 170 – the House version of the transportation bill, as introduced was very UNFRIENDLY to local governments. (Read my earlier post for full details). But city’s around the state complained to their respective representatives. Many cities and counties were passing resolutions asking their representatives to vote NO to House Bill 170. People were screaming, cussing, and complaining. But our representatives LISTENED to us, and the current version of this bill shows that.
As it stands now….
The House has made significant efforts to address the concerns expressed by local elected officials about the original bill’s impact on local revenues. HB 170 no longer includes language that would give a county governing sole authority to impose, or not impose, a 6¢ per gallon local excise tax. With the local excise tax option removed, so too is the local distribution formula based on DOT’s Local Maintenance & Improvement Grant (LMIG) program.
HB 170 as it passed the House Transportation Committee would do the following:
- beginning July 1, 2015, LOST, HOST and Atlanta’s MOST would no longer be collected on the sale of motor fuel;
- beginning July 1, 2015, the tax rate for LOST, HOST and MOST would be adjusted to 1.25% from the current 1% rate;
- current and future SPLOSTs and ESPLOSTs would continue to be imposed at a rate of 1%;
- current and future SPLOSTs and ESPLOSTs would continue to be collected on motor fuel except that diesel would no longer be taxed beginningJuly 1, 2015;
- for future SPLOSTs and EPLOSTS, any revenue collected from the sale of motor fuel would be required to be spent on transportation needs, which for cities and counties is defined broadly to include transit, rail and airports, and for schools includes the purchase of fuel and buses.
The House Transportation Committee version of HB 170 is a good faith attempt to make cities, counties and schools whole and to use current sales tax agreements for the distribution of revenue. While House leaders are looking for ways to reach the goal of making local governments whole in the aggregate, as with any significant change in what can be taxed as well as tax rates, some jurisdictions would see increases in tax revenue while others would experience a decrease.
In our community, the breakdown is as follows. (assuming future sales of motor fuels and other taxable products in our community remain somewhat stable with what 2014 saw).
City of Hawkinsville – Current = $421,455 Under HB170 = $444,800 (Net increase of $23,345)
County – Current =$421,455 Under HB170 = $444,800 (Net Increase of $23,345)
City of Hawkinsville – Current = $421,455 Under HB170 = $411,200 (Net decrease of $23,345)
County – Current =$421,455 Under HB170 = $411,200 (Net decrease of $23,345)
Pulaski County School System – Current = $842,911 Under HB170 = $822,400 (Net decrease of $20,510)
Total Community Impact is a net increase of revenue of a little over $5,600
Another benefit to us locally is that the GDOT is legally mandated to re-distribute at least 10% of its budget allocation for LOCAL improvements (know as LMIG – Local Maintenance and Improvement Grants. Last year the county received some $200,000 while the city received some $45,000 (to be matched 30%). Since the GDOT budget will rise SIGNIFICANTLY due to this HB170, our city and county should be receiving somewhere between a 50% and 100% increase in our LMIG allocations. This should result in many more miles of roads within our city that will be repaved during the 2016 fiscal year!
So, originally, the bill was BAD….. We complained as did others….. Our representatives listened and the current version of the bill is palatable.
Now lets wait and see what the Senate version of the bill looks like.
Hawkinsville City Commission
As of today (Valentine’s Day), HB170, the Transportation Bill is in the full transportation committee of the House. Basically, this bill is changing the current SALES tax on motor fuel (Gas & Diesel) to an excise tax. The advantage is that this will level out the fluctuating taxes raised by a sales tax which is dependent upon the price of gas which changes daily. By changing to an excise tax, which is charged PER GALLON rather than PER DOLLAR, it should level out the income received by the state. The trucking industry also receives larger tax benefits on an excise tax over a sales tax, so the trucking industry will see a huge benefit of this change. And we all want to help out industries in Georgia.
The State of Georgia is attempting to raise an additional $750 million + (annually) for the Georgia Department of Transportation (GDOT). However, THEY (our state elected officials) don’t want to “raise taxes.” So they are promoting this bill as a “revenue neutral” bill. Yeah, right! If they are bringing in an additional almost 1 BILLION dollars, it’s got to come from SOMEWHERE!
That somewhere apparently is going to be from your LOCAL governments (County, City, and School System). You see, our local governments currently receive 3 cents of every SALES TAX dollar raised. 1 cent goes to LOST (Local Option Sales Tax). 1 cent goes to SPLOST (Special Purpose Local Option Sales Tax). And 1 cent goes to ESPLOST (Educational Special Purpose Local Option Sales Tax).
When you remove MOTOR FUELS from these sales taxes, this 3 cents will disappear from the local coffers of your local governments. We will still receive LOST, SPLOST, and ESPLOST taxes, but not on Motor Fuel Sales. In Pulaski County, Motor Fuel sales account for almost 16% of the total sales taxes collected in Pulaski County. Therefore, your school system’s next ESPLOST will be reduced by almost 16% which will amount to a LOSS of income to the Pulaski County School system of approximately $131,410 per year. Constitutionally, the school system CAN receive sales taxes, but CANNOT receive excise taxes. And there are no plans by the state to supplement this loss. There are no plans by the state to help reduce expenses or other requirements. No, this will be a LOSS each and every year. ESPLOST is used for capital purchases (Buses, buildings, technology, etc.). Apparently, the state thinks the school can simply “absorb” this loss of income. No big deal. (yeah, right!).
The loss of the 1 cent on SPLOST will effect both the city and the county. Currently we have a negotiated agreement that we split SPLOST revenues 50/50. So this loss will effect each of us the same amount. SPLOST income currently amounts to about $842,911 per year. By removing Motor Fuels from the calculation, this number will reduce each year to $711,501. A loss of about $131,410 per year. This money is going away. So the county and the city will each face lower SPLOST revenue on the next SPLOST of almost $65,705 EACH! Like the school’s ESPLOST, SPLOST is used for capital expenditures like Road Equipment, Tractors, Recreation Department improvements, Sheriff Department Vehicles, etc. This loss of $131,409 per year amounts to a loss to the city and county of $788,460 on the next 6 year SPLOST! The tractors are STILL going to wear out. The deputies are STILL going to need vehicles. Water Meters are STILL going to go bad. Our option? We can only raise property taxes or fees to take care of the shortfall.
The loss of the 1 cents on LOST will also effect both the city and the county. Currently we have a negotiated agreement that we split LOST revenues 50/50. So this loss will effect each of us the same amount. LOST income ON MOTOR FUELS current amounts to about $393,690 per year. So this is ANOTHER $400K that the state is pulling away from local coffers.
BUT WAIT! NO WORRIES! The state is going to “come to our rescue.” They are going to “allow” the county to vote an additional 6 cents excise tax to be added to motor fuel in addition the the excise tax that the state is accessing. And to hear them talk, “that solves the problem.” But does it?
In Pulaski County, we sold 4,224,231 gallons of gas in fiscal year 2014. So the 6 cents would increase the COUNTY coffers by $253,454 each year. Now last time I used my calculator, $253,454 does not bring back the lose of $140K (in LOST dollars) and $131K (in SPLOST dollars) and $131K (in ESPLOST dollars). Nope, by my calculations when you combine the decreases in LOST, SPLOST, and ESPLOST, our citizens are being short changed by about $403,000 PER YEAR! And that is AFTER our sole commissioner implements the 6 cents excise tax. If he should choose NOT to implement this tax, then the citizens will lose some $650K per year. Thanks Legislators!
But wait! There’s more!
Even if our sole commissioner DOES implement the 6 cents of excise tax (taking the heat of a “tax increase” rather than the state taking that heat!), the STATE is telling us HOW he has to split it with the city. Previously, our LOST and SPLOST splits were NEGOTIATED LOCALLY. Now, they are giving us a formula based on road miles in the city/county and population in each. The result will be on both LOST AND SPLOST rather than splitting 50/50 as we have for years, the STATE is telling us the motor fuel excise tax will be split 73/27. The county will get 73% and the city will be reduced to 27%. OUCH!
SO…. Not only are they reducing our monies, but they are TELLING US how to split the reduced amount they plan on giving us!
Based on 2014 figures, and assuming the county DOES implement the 6 cents, then the COUNTY will still lose $78,000, the school system will lose $131,000, and the city will lose $194,000 PER YEAR! And this is AFTER the 6 cents excise tax which the county may or may not implement. “Revenue Neutral huh?”. The city will bear 48% of the reduction. The school system will bear 33% and the county 19%. To replace this money, the county could be forced to raise their millage by almost a half mill. The school system could be forced to raise their millage by almost half a mill. And the city (who is hit the hardest) could be faced with over a 2 mill increase. (and we haven’t raised the millage since 1987).
THERE’S EVEN MORE! With LOST, the revenues go into the general fund. Your elected leaders can spend this money how they see fit (and answer to their local constituents). With SPLOST and ESPLOST, while the money has to go to capital projects, your local officials decide (by voter referendum) the projects that our citizens need. But with the coming changes, all the money from the motor fuel EXCISE tax MUST be spend on Transportation. We will have no choice. The State again TELLING us how to spend our money!
Hope is not yet lost. The bill is still in committee. The final has not been seen. And then regardless of what the house comes up with, the State Senate will still have their input and revisions. So ultimately it might be better. It might be worse. No one knows at this point.
My fear is that the final version won’t be significantly different that I have presented. I encourage you to contact our local state representatives and tell them NOT to pass this bill in its current state. Do we need more transportation dollars in Georgia? Yes! Do we need to collect those dollars by pulling them from the local economy? No!
The alternatives are many. They can leave our local 3 cents sales tax on gas and go on about their merry way. Or they can convert the 3 cents to an excise tax but LET LOCAL ENTITIES decide how to spend and how to divide the money. They can simply ADD to the state’s portion of the excise tax and fund the transportation needs. But no, that would mean THEY would be seen as raising taxes rather than forcing us LOCALLY to raise taxes.
Representative Buddy Harden is Pulaski County’s legislature in the State House. Senator Ross Tolleson is our Senator. Please contact these gentlemen and tell them to fund the state needs from state coffers. Not by pulling money away from our local governments. Their contact information is below:
504-G Coverdell Legislative Office
Atlanta, Ga. 30334
121-F State Capital
Atlanta, Ga. 30334
Please let me know your thoughts. Reply to this post or email me at email@example.com
I look forward to hearing from you!
Hawkinsville City Commission