The Atlanta City Council isn’t happy with a state transportation funding proposal that they say harms local governments.
The council unanimously approved a resolution on Monday to urge state lawmakers to find a way to raise $1 billion for state transportation projects without eliminating local sales taxes on gas.
“I’m ecstatic that they have learned the word ‘transit,’ are using the ‘t-word’ and are looking at transportation funding,” said District 9 Councilwoman Felicia Moore, who introduced the resolution. “But I want them, as they are deliberating, to look at other mechanisms in funding it. Because the one they currently have is not workable for cities.”
House Bill 170, filed at the Gold Dome last week, switches the state from a series of local and state sales taxes on gas to a 29.2 cents-per-gallon excise tax. The move would effectively transfer more than $500 million a year that local governments have used for schools, transportation, sewers and more, to the state's coffers.
Atlanta stands to lose about $8.5 million annually under the proposal, according to estimates by the city’s finance department.
Mayor Kasim Reed has not taken a public position on the bill, sponsored by State Rep. Jay Roberts, R-Ocilla.
Asked about it last week, Reed said he hadn’t yet read the legislation. He declined comment on Monday.
Revenue gained from motor fuel purchases through special local option sales taxes, commonly known as SPLOSTs, would be phased out under the proposal. The bill would then allow cities and counties to levy their own excise taxes, up to 6 cents per gallon.
According to documents provided to the council by Chief Financial Officer Jim Beard, Atlanta would lose up to $8.5 million annually in motor fuel sale taxes when its current local option sales tax (LOST) and municipal option sales tax (MOST) expire.
Beard estimates that when the MOST expires in 2016, the city will lose roughly $4.7 million annually. He projects the city will lose roughly $3.8 million annually when the LOST expires in 2023.
Under the proposal, local governments can recoup those proceeds by passing a 3 cents per gallon motor fuel excise tax by a simple vote, and an additional 3 cents per gallon tax by referendum.
Beard, who called the proposal “problematic,” told the council that’s not enough to offset Atlanta’s losses. The city would need to tax at roughly 8 cents per gallon to make up the difference.
Reed, who has made holding taxes steady a priority in office, isn’t likely to support that move.
“These steps place the responsibility for increased taxes on the shoulders of local elected officials and the burden of additional taxes on the residents,” Beard wrote in a memo to the city council.
What’s more, the law would require local governments to use those proceeds solely on transportation costs. In Atlanta, the majority of LOST and MOST proceeds fund other expenditures.
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