House leaders announced a plan Wednesday to raise $1 billion a year for transportation. Here’s a look at what motorists currently pay in motor fuel taxes and what the new system might look like:
CURRENT TAXES ON GAS
18.4 cents per gallon federal tax.
7.5 cents per gallon state excise tax, which goes to the Department of Transportation.
4 percent state sales tax. Three percent goes to DOT, 1 percent to the state general fund.
Up to 3 percent local sales tax on gasoline that does not have to be dedicated to transportation.
PROPOSED PLAN
Convert the sales tax to an excise tax set at 29.2 cents per gallon. The rate would change based on federal fuel economy standards as well as inflation. This would include the existing excise tax of 7.5 cents per gallon.
Halt local option sales taxes on gasoline when they expire. Allow local governments to levy up to 3 cents per gallon in excise taxes by vote of a city council or county commission, with all money going to transportation. Additional pennies in excise tax would require a local referendum.
Create a user fee for drivers of alternative-fuel vehicles. This includes electric cars and those that run on natural gas or propane. The fee for personal cars would be $200 a year; commercial vehicles, $300. House leaders want to put that money toward transit.
Add a “significant” bond package to the upcoming state budget bill that would include money for critical road and bridge improvements plus $100 million for transit.
The 18.4 cents per gallon federal tax remains.
SALES VS. EXCISE
With state leaders advocating a shift from sales taxes to excise taxes, a common question is what’s the difference?
The most basic answer is: The state sales tax on gas is a percentage, currently 4 percent. It’s levied on the total amount you spend at the pump.
An excise tax is currently 7.5 cents per gallon. It’s not affected by the price of gas, but instead by how many gallons one buys.
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House leaders on Wednesday unveiled a plan to raise nearly $1 billion a year in new revenue for transportation, including a historic commitment to direct, ongoing state funding for transit.
House Speaker David Ralston, R-Blue Ridge, and Transportation Committee Chairman Jay Roberts, R-Ocilla, said their plan would help the state meet its current maintenance needs and ease a backlog of new projects.
The plan, which will be introduced as legislation Thursday, would shift the state away from sales taxes on gas and toward a 29.2 cents-per-gallon excise tax. It would eventually end the local sales tax on gas while allowing counties and cities to levy their own excise taxes.
In addition, electric and alternative-fuel vehicle owners would have to pay an annual $200 user fee ($300 for commercial vehicles), with that money being designated for transit.
Finally, House leaders intend to levy $100 million in bonds through the 2016 state budget for transit, plus more for critical road and bridge improvements, although details of how that money would be allocated has not been finalized.
The plan is a starting point, Ralston said, and is one that could change.
“I expect the bill to be thoroughly vetted,” he said. “We welcome constructive debate.”
Local government officials will likely join that debate and quick. The plan, as described Wednesday, would allow local governments to continue to collect local sales taxes on gasoline, which are levied through a SPLOST, E-SPLOST or LOST, but only until they expire. Those taxes generate $500 million to $700 million a year, and local governments use them for transportation, other capital projects, fire stations, police stations, libraries, parks and a laundry list of other needs.
Eliminating those taxes won’t save motorists pennies at the pump, however, because those existing taxes will be incorporated into the 29.2 cent excise tax. Also, local governments would then be allowed to levy an additional 3 cent excise tax but only use the money for transportation projects.
If the proposal allows local governments to hold referendums to replace the money they lose for nontransportation projects, that may make them whole financially, said Clint Mueller, the legislative director of the Association County Commissioners of Georgia.
But first they’d have to go through government votes and hope their residents vote for the taxes as well. “It’ll become a political issue locally that we’ll have to deal with,” Mueller said.
A legislative study committee reported last month that the state needs to come up with a minimum of $1 billion to $1.5 billion in new annual revenue just to maintain the state's current system of roads, bridges and transit.
Ralston, Lt. Gov. Casey Cagle and Gov. Nathan Deal have all publicly given support for raising revenue for transportation, but until Wednesday, none of them had offered specifics of where that new money would come from.
Deal on Wednesday said the bill is a “positive step forward.”
“There’s still a long way to go as the plan winds through the General Assembly, but we now have a starting point and something to build on,” he said. “We know what our challenges are — they are well documented — and we’re now working toward the solutions.”
The governor said he is committed to seeing legislation passed this year that “will provide for Georgia the transportation infrastructure it needs to keep our people and goods moving efficiently throughout the state for the next generation.”
In a joint statement, Georgia Chamber of Commerce President Chris Clark and Metro Altlanta Chamber President Hala Moddelmog said the plan outlined Wednesday ensures “that funding remains a high priority.”
“We also appreciate the attention that the governor, lieutenant governor and others continue to give this important issue,” they said. “We look forward to supporting their collective efforts throughout this legislative session to pass a measure that will provide the funding we need both today and in the future.”
Transit advocates were reluctant to come to conclusions without seeing a bill, but they have “intense” interest in the promise of an ongoing funding stream for mass transit.
The proposal to put $100 million in borrowed money toward transit cheered Lee Biola, the president of Citizens for Progressive Transit. But he cautioned that that would likely have to go toward capital projects, such as buying new buses or building new rail. That’s exciting, but it would have to be spread statewide, and it wouldn’t take care of ongoing operating expenses.
For ongoing expenses, Roberts said, the proposal would put money from a new fee on alternative-fuel vehicles toward transit, bringing in eventually $17 million or more per year. That, too, would be spread statewide. But what gave Biola pause is not the amount: It’s that Roberts said the bill couldn’t set in stone that it go toward mass transit. Without a constitutional amendment, Roberts said, the Legislature cannot mandate that in the future the money will go to transit.
The hitch with that is that the way to get transit construction money from the federal government is to show a solid commitment for 20 years’ worth of ongoing operating funding for the new project. If the state can’t do that in the law, Georgia doesn’t have the track record to convince the feds the money will be ongoing. “I think that’s troubling,” Biola said.
In general, though, he said, “I think the state has to learn to walk before it can run” with funding. “I don’t think it’s a bad thing to inch into the transit arena.”
Roberts was stalwart in defense of the state’s transit commitment, saying both he and his colleagues had had a change of heart.
“We’re putting a $100 million bond in the budget to go to transit,” he said. “We have never made any investment like that in transit before.”
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