What Senate got right on transportation
The Georgia House and Senate disagree about how to pay for additional transportation infrastructure, setting up negotiations between the two chambers. The Senate’s version of House Bill 170 is markedly different from the House text.
When lawmakers get together to hash out their differences, they should keep in mind which Senate changes are worthwhile. Here are some of them:
1. Shifting $250 million a year of future revenue growth to transportation. The state Department of Transportation needs a predictable stream of dedicated revenue, up to a point. There's also value in leaving some new funding up to legislators each year, to hold the agency accountable.
While it’s probably impossible to fund more transportation sufficiently without some kind of tax increase, we can use existing taxes to an extent. It’s reasonable to expect transportation, as a high priority of this state, to get a slice of the pie when it grows.
2. Dropping the shift of local tax revenues to the state DOT. It is right in principle to require all motor-fuel tax revenues to go toward transportation infrastructure. But when local governments cried foul to the way HB 170 originally did that, the solutions added to the bill made it worse.
At one point, an analysis of the House version showed county governments alone would end up, in aggregate, with an extra $58 million in tax revenues. That would have been the result of removing the local sales tax on motor fuel but raising the rate on everything else to 1.25 percent. That would have meant a substantial tax increase in many places, money that wouldn’t go to transportation.
3. Getting rid of the biannual sales-tax holiday. This holiday is a clunker of a tax policy. It shifts more than stimulates consumption, and it doesn't generate the kind of economic activity other tax measures could. This year, the holiday is expected to keep $40 million out of state coffers. That money would be better used for transportation infrastructure.
4. Lowering the rate of automatic increases in the motor-fuel tax. Once the gas tax is converted to an excise tax, it will remain flat unless it is indexed to some kind of inflationary measure. The House version tied it to both inflation and gains in fuel efficiency. But it didn't cap the annual increases.
The Senate version includes a de facto cap by tying the index only to the Consumer Price Index. CPI inflation generally amounts to 2 percent to 3 percent a year. At the tax rate of 24 cents per gallon the Senate version sets, over 10 years, the rate would grow by 5 to 8 cents per gallon.
So a motorist who drives 12,000 miles a year with a vehicle that gets 20 miles per gallon could expect to pay $30 to $50 more each year in gas tax by 2025. But if he trades up to a vehicle that gets 24 mpg by the end of that decade, he would be paying only $2 to $17 more each year. If he's driving a 28 mpg vehicle by the end of that decade, he would be paying less in gas tax.
That’s how much changes in fuel efficiency affect gas taxes. Indexing helps keep funding on a flatter trajectory. Limiting the index protects taxpayers.
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