If all gas taxes had to be spent on roads and bridges, counties would be required to pour millions more dollars every year into transportation projects as long as they continued to collect an optional local sales tax. A report issued earlier this year by the Georgia Municipal Association tallied the amount of local sales taxes collected on motor fuel sales for each county. In metro Atlanta, the county revenues are as follows:
County/ motor fuel tax collection*
Clayton/ $18 million
Cobb/ $24 million
DeKalb/ $31 million
Fulton/ $43 million
Gwinnett/ $26 million
* Includes local tax revenue from gasoline, diesel fuel and aviation fuel sold from July 1, 2013, to June 30, 2014.
** Source: Georgia Municipal Association "Local Sales Taxes Collected on Motor Fuel Sales"
A class-action lawsuit filed by truckers this week seeks to ensure that all the taxes collected on motor fuel go toward road improvements.
Specifically, the plaintiffs — the Georgia Motor Trucking Association, F&W Transportation and Prolan Logistics, on behalf of all motor carriers in Georgia — say it’s unconstitutional for cities or counties to use their gas sales tax proceeds for anything besides transportation projects.
While it’s the trucking industry filing the complaint, the case affects nearly all Georgia drivers. Most local governments in Georgia have one or more local sales tax in place. And right now, the sales tax that drivers pay on gasoline doesn’t have to be used to improve their commute. It can go instead — and for many years has gone — to help build a local school or park, or to roll back property taxes.
Attorney W. Pitts Carr, who represents the truckers in the lawsuit in Fulton County Superior Court, says that violates the state Constitution.
He argues that all money collected from motor fuel sales must be plowed back into improving the transportation network.
“So if this taxing scheme is unconstitutional, as we believe it is, this money should be set aside to the benefit of everybody that buys motor fuel in Georgia,” Carr said Wednesday.
The state Revenue Department and its commissioner, Lynette T. Riley, are named as the defendants because the department collects and disburses all sales taxes in Georgia. Truckers are asking a judge to require that the money be set aside for roads and bridges. Or, if the state returns the money to local governments, that it do so with the stipulation that local governments use it for transportation.
Spokesman William Gaston said the Revenue Department would not comment on pending litigation.
Local governments have been using this sales tax revenue for many purposes for years. A portion of HB 170, the billion-dollar transportation bill passed this year, allows cities or counties to continue to impose a 1 percent sales tax at the pump.
Most counties levy three local-option sales taxes, which must be approved by voters in a referendum. One raises unrestricted revenue for local needs (LOST), one funds specific voter-approved projects like new roads, parks or government buildings (SPLOST) and another raises money for K-12 schools (ESPLOST or ELOST).
In fiscal year 2014, these optional local taxes raised between $514 and $520 million for municipal and county governments statewide.
Truckers say that because of this new law, they (and other drivers) are paying local sales taxes that total as much as 15 cents a gallon. That’s on top of the new statewide motor fuel sales tax of 26 cents per gallon (29 cents for diesel).
But it’s not the tax itself the truckers oppose, just the way it’s being spent, said Carr.
The local sales tax provision was controversial during the Legislature’s negotiations over HB 170. The landmark legislation also included measures to raise the statewide gas tax and imposed new fees on hotel and motel rentals, electric vehicles and heavy trucks.
Initially, the bill sponsors said they wanted all taxes collected at the pump to go toward roads and bridges, because the gas tax has historically been considered the purest form of a user fee for drivers. Cities and counties pushed back, however, arguing that such a requirement would take away from their ability to complete non-transportation projects that their communities want.
The final version of the bill had no requirement that local sales taxes on gasoline be spent on transportation improvements.
Amy Henderson, a spokeswoman for the Georgia Municipal Association, disagreed with truckers’ assertion that the law is unconstitutional.
“First, the Constitution allows the state to create special taxing districts for cities and counties, which is what special purpose local option sales taxes are,” Henderson said in an email. “And, second, the revenue from those taxes is not the state’s money.”
Henderson said the trucking industry tried to make a similar argument during the legislative session, but lawmakers rejected it.
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