Misused fees lead state to lose federal funds

By James Salzer
 and Aaron Gould Sheinin


The Atlanta Journal-Constitution

Every time someone in Georgia purchases a prepaid cellphone, a fee is tacked on to the purchase. Under state law, the money — more than $15 million raised thus far — is supposed to pay for improvements at 911 call centers around the state.

But not a penny has gone where it’s supposed to, and now the state has lost out on more than $1 million in federal funds because of it.

The fee is just one of hundreds the state collects on things including new tires, hunting and fishing licenses and surcharges on criminal fines.

In 2009 alone, the state took in more than $86.5 million from 14 fees collected by county civil and criminal courts. Tens of millions more come from other fees. But only a sliver of the total goes to the programs the fees were created to help fund.

Part of the problem is the state can’t say how much of the money goes where — a lack of accountability that state auditors have identified twice.

What is clear is that the state often uses the money to fill growing holes in the state budget, in some cases leaving county and city governments holding the bag.

“Right now, it is purely out of necessity,” said Rep. Ben Harbin (R-Evans), the chairman of the budget-writing House Appropriations Committee. “We have to balance our budget. Everything is being cut, even the revenues they would be getting have to be cut to keep us funding our priorities, which are education, health care, infrastructure and public safety.”

The Georgia state budget has been slashed about $3 billion in the past few years, and more cuts are expected when lawmakers return in January.

“Nobody likes it. But there really isn’t a choice right now,” Harbin said.

Barbara Payne, executive director of the Fulton County Taxpayers Association, isn’t satisfied with that explanation. Yes, she said, “we’re in a budget shortfall, it’s a horrible time. I get that.”

But “it seems to be the trend that taxpayers have to look over their shoulders to see if their money is going to the right places. It’s kind of misleading, it’s somewhat deceptive.”

Each of the fees and surcharges was created under state law. But a law creating a fee to fund a new program doesn’t mean lawmakers are bound to use the money that way. Unless the appropriation is memorialized in the state constitution, it is subject to the annual budgeting process.

It is not a new problem. In 2006, before the current budget crisis, the state Department of Audits looked at user fees and found they were not administered consistently, were often outdated, and sometimes had no bearing on the cost of the services they were intended to fund.

A follow-up audit, released last month, found little had changed.

Auditors looked at four agencies — Agriculture, Banking, Human Resources and Natural Resources — and found they were collecting $174 million from 347 user fees in the fiscal year that ended June 30, 2005. About 50 of those fees were set more than 20 years ago; nearly half were more than 10 years old. Six had not been evaluated in more than 50 years but were still being collected.

The 2006 audit found that no single state entity knew the number of user fees or the extent to which they fund state government. It suggested the Governor’s Office of Policy and Budget address the issue, but the follow-up audit said that still hasn’t happened.

“Given the state’s current budget situation, it is essential that budget officials have a comprehensive picture of the state’s actual potential revenue source,” auditors said.

Most of the fees discussed thus far are added onto state services or are tacked on to court fines. The problem of where the money goes, however, also extends to fees that users agree to pay, such as for specialized license plates. Drivers pay a $25 surcharge to get a license plate that supports a cause or team. But, Department of Revenue officials could not say how much money the state gets from the dozens of specialized plates it sells.

“That is a gross injustice to taxpayers,” said Payne, the Fulton County taxpayers advocate.

The extra $25 drivers pay to renew most of the plates goes into the state’s general fund, goes directly to specific state programs, or is shared by organizations that sponsor the plates.

Some organizations get $10 out of the $25. Local tag agents might get $1, the Revenue Department might get $2, and $12 goes into the general fund. In other cases, the state treasury gets a bigger share.

Many of the fees the state collects were intended to help local governments in a variety of ways. The 911 fee is a good example. It is supposed to help local governments improve their call centers, improve response times and pay for upgrades to “e-911,” which helps track 911 calls made over cellphones.

But because the state has redirected the $15 million, it became ineligible for a share of more than $40 million in federal grants for 911 improvements. Georgia was one of just a handful of states to miss out on the money.

The problem is not a surprise to Georgia’s city governments, said Amy Henderson, public information manager for the Georgia Municipal Association. Cities have come to question lawmakers’ word, she said.

“When you look at the past history of returning money to local governments, you can understand why some people are doubtful about that,” she said.

Another example, Henderson said, is promised help from the state to train police officers and prosecutors. Everyone convicted of a crime in the state pays a 10 percent fee tacked onto the total fine, up to a maximum of $50. That money goes to the Peace Officers and Prosecutors Training Fund, which in 2009 collected more than $25.65 million.

The money is intended to pay for state and local police officers and prosecutors to attend the state training facility. But Henderson said only a fraction of the money goes to local law enforcement.

Some of the fees were created to help protect the environment and protect the public from dangerous substances. But those, too, are in many cases being redirected. The Association of County Commissioners of Georgia points to the state’s Hazardous Waste Trust Fund as a prime example.

The fund, created in 1992, collects fines and fees that are supposed to help the state’s Environmental Protection Division create a hazardous site inventory; force cleanup of polluted sites by those responsible, or clean up “orphaned” sites.

Money for the fund comes from a per-ton fee charged to dump waste into landfills and a pair of hazardous waste fees.

In 2009, according to state records, the fund brought in almost $16 million, but in the 2010 state budget, only $3.2 million is going to the hazardous waste programs.

Lawmakers also created a Solid Waste Trust Fund in 1992 to clean up scrap tire dumps, improve and expand solid waste collection and recycling, and eliminate open dumps on roadsides and along streams. Georgians shell out an additional $1 for each new tire they buy to pay for that effort.

In 2009, the fees brought in more than $16.38 million, but only $1.4 million will go toward cleanups.

Glenn Dowling, executive director of the Georgia Wildlife Federation, said there needs to be some truth in legislating.

“We need to put the trust back in trust funds,” said Dowling, who was troubled that money intended to help the environment had been diverted. “If you’re not using trust fund dollars for their intended purposes, there is not a lot of trust in the trust fund. If they are charging tire fees and the money is not going to clean up tire piles, stop charging the fees.”

It’s not that simple, Harbin said.

“I know people are upset about it, but it’s not worth raising taxes over,” he said. “Even in good years, just because that’s the amount that fees raise, you still have to look at what is the amount of money they need to operate those programs. If you give them too much, they will find a way to spend it.”

And that neatly sums up the disconnect between the state and local governments, said Henderson of the municipal association.

Local governments in Georgia get a smaller portion of their money from the state than their counterparts in many other states, Henderson said. And, in general, that’s just as well.

“Because, when the state gets in trouble, that’s the first money that gets used to fix the problem,” she said.