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Photo: Mandi Albright/The Atlanta Journal-Constitution
Photo: Mandi Albright/The Atlanta Journal-Constitution

Gwinnett and MARTA: Clearing up frequently asked financial questions

Early voting in Gwinnett County’s momentous MARTA referendum has begun — and so has the confusion among some residents.

The pending contract between Gwinnett and MARTA, and the plan that would guide transit expansion in the county should the March 19 referendum pass, are both complicated documents that are hard to explain. Most folks know there’s a rail extension to Norcross and a new 1 percent sales tax involved but little else.

That’s especially true for the financial aspects of the proposal. Here are some answers to frequently asked questions about the money:

Q: If we approve this, are we just giving MARTA a big pot of money?

A: No. Under the contract new 1 percent sales tax collections would start April 1. The state would remit all of the new sales tax revenue collected directly to Gwinnett County. Gwinnett would then write checks to MARTA for various obligations.

The contract also says tax money collected in Gwinnett must be used “for the benefit of Gwinnett.” That obviously leaves room for interpretation, but the contract includes clauses that prevent MARTA from borrowing money for Gwinnett projects without approval from the county commission. It also requires that all “fixed asset capital projects” be approved by the commission as well.

Funds not immediately spent would be kept by Gwinnett in a reserve account and saved for “capital outlays and implementation of high-capacity transit projects.”

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Q: I’ve also seen that 29 percent of Gwinnett’s pennies will be used just to pay for the current MARTA system. Is that true?

A: Not exactly. Under the contract, Gwinnett is obliged to hand over 29 percent of its sales tax proceeds to MARTA. That money will indeed include money contributed to MARTA in order to cover the county’s “fair share” of operating, maintenance and “state of good repair” costs for the entire MARTA system.

But part of that 29 percent will also be earmarked to cover the costs associated with MARTA taking over, running and expanding Gwinnett County’s current bus system. That currently costs the county about $13 million per year.

That money currently comes from the county’s general fund (which is fed by property taxes). The new sales tax would take it off the books.

The 29 percent figure would only be in place for the first six years of the contract between Gwinnett and MARTA. It would be renegotiated after that — and there’s also a “true up” provision allowing for the county and the agency to, after that first six-year period, figure out if the county overpaid or underpaid.

If it’s the former, MARTA would cut Gwinnett a check for the difference. If it’s the latter, Gwinnett would pay MARTA.

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Q: I’ve seen the projected sales tax collections listed as $5.5 billion and as high as $12 billion. Which is it?

A: Both. Sort of. County leaders estimate the collections from the first 30 years of a new transit sales tax to be about $5.5 billion. That’s in 2019 dollars.

The $12 billion figure, which some detractors have used to claim voters are being misled about the true cost of things, is a different animal.

The exact number — $11.963 billion or so — is pulled from a chart on page 160 of the county’s transit plan. It’s expressed in “year-of-expenditure dollars,” meaning the numbers are adjusted for inflation. And it also includes projected federal funding (around $3.1 billion), projected state funding (around $865 million) and projected fare box collections (about $442 million) tied to the build-out of the transit system.

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Q: What happens if financial projections don’t add up? Could they come after my property taxes?

A: It’s theoretically possible, but unlikely. Local gadfly Joe Newton has spent recent weeks warning potential Gwinnett voters that the county is going to raise property taxes to compensate when sales tax revenue falls short of projections or when costs overrun them.

The contract between Gwinnett and MARTA identifies the new sales tax, fare box proceeds, state and federal funds and borrowed money as potential revenue streams for the transit plan. It does allow for the use of “other funds” at the county’s discretion.

But county officials have described their revenue projections as “very conservative” and vowed to “manage to the budget,” something they’ve long done with road and other transportation projects funded by more traditional SPLOST programs. Commission Chairwoman Charlotte Nash said the county will operate on a pay-as-you-go basis when possible and will only borrow money when absolutely necessary for larger projects that are otherwise ready to go.

Per the contract, MARTA will create a separate account in which to keep payments from Gwinnett to cover debt service for projects in the county.

“Such account shall be the sole recourse for payment of either the full amount of interest and principal on debt incurred wholly on behalf of Gwinnett,” the contract says.

The county has had a AAA bond rating from all three major agencies for more than 20 years.

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