Analysis questions Georgia transportation plan’s impact on revenue

Legislation proposed in the state House to boost transportation funding would fall short of its goal by nearly $125 million in its first year, according to a copy of an official state estimate obtained by The Atlanta Journal-Constitution.

The estimate, however, shows that by 2020, House Bill 170 could generate slightly more than the $1 billion sponsors see as the minimum needed to address Georgia’s growing transportation infrastructure problems.

The so-called fiscal note, produced by the Georgia State University Fiscal Research Center, only addresses changes made to state taxes, not any proposed shift in how local governments tax motor fuel. It shows the bill could generate an additional $871.1 million in the fiscal year that begins July 1 and $1.053.6 billion by fiscal 2020.

The bill’s sponsor, Transportation Committee Chairman Jay Roberts, R-Ocilla, said Tuesday that the fiscal note is not a surprise.

“The fiscal note is about in line with what we expected,” Roberts said. “This is still a work in progress, and we are working to stabilize and modernize transportation funding in Georgia.”

Plan undergoing revisions

Some of that progress could be revealed Wednesday, when HB 170 is again before the full House Transportation Committee. Roberts said Tuesday that he will discuss revisions to his bill, but he declined to discuss them in advance.

As written, HB 170 would phase out the state’s sales tax on motor fuel and increase the state excise tax from 7.5 cents per gallon to 29.2 cents per gallon. It also would create a $200 annual registration fee for privately owned electric vehicles and a $300-per-year fee for commercial electric vehicles.

The fiscal note was written before the bill was changed to also include eliminating the state’s $5,000 tax credit for the purchase of electric cars. Roberts said last week that could produce $45 million the first year.

The fiscal note shows that HB 170 would raise less money at first than if lawmakers did nothing. In calendar 2016, for example, the state would raise $910.1 million under the current tax structure. But in later years the changes made in the bill would bear fruit. If nothing changed, for example, the state would bring in $927.4 million in 2020.

$1 billion to maintain current infrastructure

Lawmakers, business leaders and local officials spent much of the past summer studying ways to generate new revenue for roads, bridges and transit. Their report suggested the state needs an additional $1 billion to $1.5 billion a year just to adequately maintain current infrastructure.

Seth Millican, the executive director of the Georgia Transportation Alliance, an arm of the Georgia Chamber of Commerce, said work remains to be done on the bill.

“We applaud the leadership of the House and Chairman Roberts for their leadership on this critical issue,” he said. “We will continue our support of HB 170 as we work together toward accomplishing that goal.”

Several people with direct knowledge of the negotiations have told the AJC that bill supporters have said the proposed excise tax of 29.2 cents per gallon might have to increase to meet revenue goals. Gov. Nathan Deal last week hinted that lawmakers should look to raise more than $1 billion in new revenue.

Opponents seek change in funding formula

The fiscal note, however, shows the difficulty in raising that much new money in a way that is politically feasible.

How feasible the current version of the bill is remains in doubt. Local governments, especially cities and school districts, have complained that it would eat into their revenue.

In addition to the new state excise tax, the latest version of the bill would phase out local sales taxes on fuel. Those taxes, levied as part of a variety of special option sales taxes, would be replaced with up to 6 cents per gallon in excise taxes enacted by counties. Revenue from that local tax would be divvied up among cities and the county according to established state formulas.

The Georgia Municipal Association opposes that plan, saying the current formula is unfair and that it eliminates the flexibility they have to use current sales taxes for nontransportation projects. Instead, the GMA said, the state should raise the local sales tax rate from 1 percent to 1.15 percent and exempt motor fuel from the tax.

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