Funding report calls for new taxes and tax cuts for transportation

A long-awaited blueprint for meeting Georgia’s future transportation needs suggests a mix of tax increases, tax cuts and a historic commitment to the growth of transit, according to an advance copy of the report obtained by The Atlanta Journal-Constitution.

The final report of the Joint Study Committee on Critical Transportation Infrastructure Funding, landing in lawmakers’ in-boxes today, does not make specific recommendations on raising the minimum $1 billion to $1.5 billion in new money the state needs to fix a system facing a “growing crisis.”

Instead, it offers a buffet of options, from creating a new 1-cent statewide sales tax, with half the proceeds going to cut the state income tax, to combining the state’s two existing fuel taxes to dedicating the “fourth penny” of the sales tax on gas to transportation.

The report, the result of months of hearings and testimony, will be likely drive much of the conversation at the Gold Dome when lawmakers return to work Jan. 12. The report represents the most ambitious plan for improving the state’s transportation system since the 2012 failure of TSPLOST referendums in Metro Atlanta and much of the state.

And the need for improvement is great.

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House Transportation Committee Chairman Jay Roberts, R-Oscilla, co-chairman of the study committee, said lawmakers have a choice to make.

“Do we want to try and solve transportation for the next 20 to 30 years or do what we’re doing now, which is not meeting the current needs of the state?” Roberts said.

Michael Sullivan, chairman of the Georgia Transportation Alliance, said the report proves “there is no silver bullet.”

“When you’re looking at a funding challenge of this magnitude, the idea that there is one solution that is going to solve that problem in one fell swoop is unreasonable,” said Sullivan, who is also president of the Georgia chapter of the American Council of Engineering Companies.

Lawmakers will need to consider several of the options in the report to meet the state’s needs, Sullivan said.

Lt. Gov. Casey Cagle said the General Assembly and the governor clearly have much work to do.

Lawmakers, he said, will “use these findings as a guide while we work to solve our transportation challenges and take advantage of the great opportunities that await us.”

Gov. Nathan Deal’s spokesman said Tuesday the governor is willing to work with lawmakers, but warned solutions must not threaten the state’s AAA bond rating.

Spokesman Brian Robinson said the governor “knows that we need new investment in transportation to keep traffic moving through Georgia and that gridlock threatens our economic development. The governor appreciates the leadership and work that has gone into this report, which appears to take a serious look at changes in policy without sugar-coating the challenges we face.”

But, already, the report has critics.

Lamar Norton, executive director of the Georgia Municipality Association, was a member of the transportation study committee. But Norton refused to sign off on the final report.

In recent months, local governments were concerned lawmakers would seek to take away tax money local governments levy on gas and send it to the state DOT.

In a letter to municipal leaders Tuesday, Norton said one of the the report’s options is to make sure local governments are “weaned” from spending sales taxes on gasoline on non-transportation projects.

“It was made abundantly clear in the Joint Study Committee meetings and conference calls that moving these funds to the Department of Transportation would ensure that they would be spent on transportation projects,” Norton wrote. “The suggestion that Georgia’s local governments are not making substantial investments on transportation projects is inaccurate.”

Local governments, Norton said, collect $516 million in sales tax on gasoline each year yet spend more than $1.3 billion a year on transportation.

Cities and counties are a powerful voice at the Capitol, and getting them back on board will be an important element of any effort to pass transportation legislation in 2015.

Georgia, home to the 10th largest road system in the nation, ranks 49th in state spending per capita on roads.

The Statewide Strategic Transportation Plan for 2005-2035 calls for $160 billion in spending on transportation infrastructure, while projections based on current spending identify only $86 billion over that same time frame, leaving a $74 billion gap.

Consultants hired by the committee estimates the state faces an annual funding gap of $1 billion to $1.5 billion for maintenance alone. Deteriorating infrastructure and the failure to expand existing road and transit systems would lead to increased congestion, loss of jobs and reduction in quality of life.

The flip side, however, is that the report estimates that every dollar invested in transportation results in between $4 and $7.80 in economic benefit to the state.

The committee found that a minimum $1 billion to $1.5 billion in new revenue is needed to, among other things, improve the state’s interstate capacity to accommodate growth at the Savannah Harbor, to ensure safety of the state’s bridges and roads and provide multi-modal transportation options.

House Speaker David Ralston, R-Blue Ridge, said the reports offers “factual evidence and convincingly illustrates the importance of addressing Georgia’s transportation needs.”

“Our growing state is now home to more than 10 million residents who expect a transportation system that serves them well – now and in the future,” Ralston said.

Pointedly, the report also makes a strong case for investing in transit and public transportation.

The report says lawmakers should “acknowledge the need for additional investments in transit systems around the state” and that it is critical Georgia “increase its commitment to the development of responsible, well-funded and coordinated public transportation in metropolitan areas.”

The report also suggests lawmakers consider permanently lifting the requirement that MARTA spend 50 percent of its money on maintenance. It concludes annual funding is needed “for investment in transit systems around the state.”

“It is in the state of Georgia’s and numerous transit systems’ best interests to establish a separate, permanent funding stream for those interests,” the report states.

MARTA receives no ongoing state funding for regular operations. Instead, it relies on a 1-cent sales tax collected in Fulton and DeKalb counties, plus passenger fares for revenue.

This section is important, as state lawmakers, particularly the Republican majority, have historically balked at expanding rail and at providing state dollars for MARTA.

The state Department of Transportation was budgeted to collect a little more than $1 billion in state motor fuel taxes this past fiscal year. The department also received an additional $1.2 billion in federal funds, or about 54 percent of its total budget. By comparison, federal dollars comprised only 27 percent of Florida’s road budget.

Worse, the committee said, federal funds are increasing unreliable and are only available for grants after work is completed.

The “reliance on motor fuel taxes levied at both the state and federal levels, creates numerous and serious challenges in meeting Georgia’s transportation needs,” the report says.

Studies have shown Americans are driving fewer miles each year in cars that are increasingly fuel efficient, which results in decreased fuel tax collections.

As Congress has not increased the federal motor fuel tax since 1993, the purchasing power of federal, state and local fuel taxes dropped by 37 percent from 1993 to 2012, a trend that will only continue.

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