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HB 170 as of 2/24/15
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).
Shelly
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HB 170 – Current Version is MUCH better for our community….
“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).
LOST IMPACT:
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)
SPLOST IMPACT:
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)
ESPLOST IMPACT
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.
Shelly Berryhill
Hawkinsville City Commission
shelly@hawkinsvillega.net
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Just the FACTS ma’am… just the facts!
The familiar phrase from Dragnet, “Just the facts, ma’am…just the facts,” is what Sergeant Joe Friday would say when he needed to get to the details he was looking for—and that is what Georgia’s cities are saying with the FACT Act. Georgia’s Department of Revenue (DOR) has worked hard to ensure sales tax compliance but needs legislative permission to offer local governments more detailed sales tax data—and that is just what the FACT Act will do.
FACT stands for Full Accountability in the Collection of Taxes. The proposed legislation would require DOR to collect and prepare sales tax data at the municipal level, as well as for the unincorporated areas of Georgia. Rep. Paul Battles (R-Cartersville), chair of the House Retirement Committee, has agreed to sponsor the legislation in the 2014 legislative session.
Sales tax data is a tool for both state and local governments and compliance has always been an important for both levels of government. The addition of detailed sales tax figures would allow local governments to be a better partner with DOR in policing retailers who side-step the law by avoiding payment or collections of sales taxes. Better compliance means that tax-paying business owners have greater certainty that they are on a level playing field with their peers.
Just as a business needs to know and understand where its revenues come from, state and local governments need the best data available in order for elected officials to make decisions on revenue streams, expenditures and balanced budgets. This has become more of a challenge with the implementation of 2012’s HB 386 tax reforms. In HB 386, the Georgia Agricultural Tax Exemption (GATE) was expanded to include a wider variety of agricultural inputs and broadened the number of types of businesses that qualify for the exemption—making illegal use of GATE certificates easier and more likely. Greater sales tax detail will help give local governments a better view to from which to forecast, while showing fluctuations that may be due to misuse of GATE certificates or other exemptions.
If commerce is the life-blood of a community, sales tax data is a measure of that community’s health. Data derived from sales tax figures at the local level could be used by local government officials, the Department of Economic Development and the Department of Community Affairs in accomplishing their missions. With this information available to local officials, public investments can be directed to foster areas of future growth or to shore-up areas of weakened retail commerce.
With sales tax figures currently compiled at the county level, there exists an unnecessary subjectivity in Local Option Sales Tax (LOST) negotiations. Since neither cities nor counties can actually say how much sales tax is raised in each jurisdiction, assumptions are made on both sides of the negotiations. Actual city and unincorporated areas’ sales tax figures will give much-needed objectivity in LOST negotiations, ultimately making improved LOST negotiations possible.
As a sitting member of the LPC of GMA (Legislative Policy Council of Georgia Municipal Association), I support this measure. Information is relevant.
Shelly
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Georgia Sales Tax Exemptions….
During the 2012 legislative session, the General Assembly approved sweeping tax reform in H.B. 386. The bill had overwhelming bipartisan support in both Houses, passing with a 54-0 vote in the Senate and 155-9 in the House. Originating from a larger set of recommendations unveiled in January 2011 by the Special Council on Tax Reform and Fairness, the tax reform package included a number of provisions that impact our community. Among the provisions: a new motor vehicle title fee (TAVT) to replace the ad valorem tax on automobiles; elimination of the sales tax on automobile purchases; elimination of the sales tax imposed on energy used in manufacturing; and broadening of exemptions for the agriculture industry including energy, equipment, and business inputs such as seed, fertilizers, feed, etc. The reduction of sales tax revenues is no surprise as the state fiscal analysis of H.B. 386 prepared prior to passage of the bill projected that elimination of sales tax on automobiles and the included sales tax exemptions would cost local communities $199.6 million from 2013 to 2015; however, the fiscal analysis could not have predicted that these losses would be unevenly distributed across the state, a fact which is evident now that the exemptions have been in place for 19 months.
The approval of H.B. 386 followed years of study and recommendations aimed at comprehensive tax reform. In 2012, Georgia, like most other states, was just beginning to emerge from the “Great Recession” and state leaders were eager to find ways to help Georgia compete for jobs and encourage economic development. The intended purpose of the exemptions included in H.B. 386 was to support some of Georgia’s most critical industries, including agriculture and manufacturing. However, since the provisions of H.B. 386 have been in place, it has become evident that there are unintended consequences of the bill that are having a significant impact on local government revenues since the law
went into effect in 2013.
Overview
Sales taxes are a primary source of revenue for Hawkinsville to provide critical services that protect the health and safety of our residents and maintain a vibrant quality of life for all taxpayers. SPLOST and ESPLOST have been approved by voters throughout the state as a means of funding capital projects for local governments and school systems. Since 2001, approximately 95% of SPLOST referenda have been approved by the voters. Every sales tax exemption whittles away at local revenues, even as costs to provide services and demand for services increase. Exemptions that are put in place after
approval of a SPLOST, ESPLOST, or bond referenda erode the revenues available to complete capital projects and to pay off debt.
The Georgia Municipal Association has collected data on sales tax distributions to all of Georgia’s 159 counties and 538 cities during a 19-month period from February 2012 to September 2014. Sales tax distribution data was obtained from the Georgia Department of Revenue website, and includes distributions of LOST, SPLOST, ESPLOST, MOST (City of Atlanta), HOST and MARTA sales taxes.
The picture above illustrates the percent change in sales tax distributions immediately PRIOR to the enactment of the exemptions to the period following implementation of the exemptions. Areas shaded in green have experienced increased distribution during these time frames; areas shaded in red have experienced decreased distributions.
Conclusions
As the maps indicate, a comparison of distributions from 2012 to 2013 (and beyond) shows:
– an immediate and disparate impact from region to region;
– as a direct result of the exemptions included in the 2012 tax reform package, areas of the state with a large agricultural industry base show a greater decline in sales tax revenues than areas with greater diversity of industry; and
– rural areas have seen greater reductions than urban and suburban counties in Georgia.
Pulaski County has seen sales tax reductions from -10% to -15% due to these changes in the law. This effects our LOST (Local Option Sales Tax – which we split 50/50 with the County), and SPLOST (Special Purpose Local Option Sales Tax – used to fund capital projects) and it also effects ESPLOST (Education Special Purpose Local Option Sales Tax – which goes to our school system, not the city). Hawkinsville is working hard to meet service demands, maintain infrastructure, and provide essential services, while cutting departmental budgets.
We need to take a hard look at what exemptions are WORKING to bring industry to our state and what exemptions are due to lobbying efforts by well-funded special interest groups!
Shelly Berryhill 