Since 2004, the auto dealers’ lobby has contributed $550,000, Delta about $230,000 and Wal-Mart about $125,000 to the campaigns of lawmakers and state officials as well as state political parties. The manufacturers’ association donated about $50,000 in the past two years, and the poultry and mining lobbies ponied up about $50,000 in the final few months leading up to the session.
Lobbyists for businesses supporting the package spent at least $173,000 wining and dining lawmakers last year, more than half after the 2011 session and leading up to this year’s session.
In the first two months of this year, lobbyists for the auto dealers, the Georgia Chamber of Commerce, Wal-Mart, Amazon.com and others with a stake in the bill spent $40,367 on meals and gifts for state officials.
All that money — all those dinners and campaign fundraisers and association meetings along the coast — helped build the kind of relationships that enabled industry to play a key role in developing the tax package. Those relationships are part of the reason some lobbyists knew what was in the package long before many lawmakers and the public did.
By the time the bill was introduced last week and swept through the General Assembly in four days, they were confident they had backed a winner.
“Pretty strong,” Morie remarked after the Senate sent the plan to Gov. Nathan Deal for his signature.
The longtime lobbyist was referring to the Senate vote, but he might as well have been talking about the lobbying muscle behind it.
“It’s all about winners and losers and who has the best lobbyist at the Capitol,” said former Republican Rep. Mitchell Kaye, R-Marietta. “The government shouldn’t be picking winners and losers.”
‘More of the same’
Analysts on the left and right argued that what the General Assembly did last week wasn’t true tax reform. While they praised parts of the package, they said it was more typical of what legislators have long done: grant special-interest exemptions while throwing an election-year tax cut to voters.
Alan Essig, a former state tax analyst who heads the Georgia Budget and Policy Institute, said, “It is more of the same ... we have passed tax breaks like this for decades.”
Georgia Public Policy Foundation President Kelly McCutchen, who has worked on tax reform efforts the past two years, called it a “hodgepodge.”
While admitting it’s not the kind of comprehensive remaking of the tax code some sought, backers say they’ve enacted a plan that’s fair and will create jobs.
“We have passed a pro-family, pro-jobs tax plan that will go a long way toard making Georgia the No. 1 place in the nation to do business,” said Brian Robinson, spokesman for Deal.
The tax plan:
● Removes the sales tax on energy for manufacturers and gives agribusiness and mining interests broad sales-tax exemptions. Airlines also would get a fuel-tax break.
● Replaces the sales and property taxes on cars you buy with a title fee. Car dealers have long complained that they have to charge sales tax, while person-to-person car sales are exempt from the tax, giving individuals an unfair edge over dealers.
● Gives Georgia stores two boosts. In a provision aimed at amazon.com, the bill would force some online retailers to start collecting sales taxes. It also would temporarily bring back sales tax holidays for back-to-school purchases and energy-efficient products.
● Increases the personal state income tax exemption for married people.
Not a public process
Traditionally, the General Assembly passes a bill each year with several special-interest tax breaks. But two years ago lawmakers set up a special council that was supposed to redesign taxation in Georgia by shifting the burden from income taxes to sales taxes, particularly on services.
The council wanted to eliminate many special interest breaks but also eliminate taxes on business inputs, such as the sales tax manufacturers pay on energy they need to produce goods.
Unlike the package lawmakers passed last week, development of the tax proposal in 2010 was intensely public. The special council created to write the plan held hearings around the state — heavily attended by lobbyists — produced a spirited public debate.
By the time the plan was released, there was little surprising about the proposal, and lobbyists of every stripe were ready to pick it apart. It eventually fell to Earth in the chaos of the final days of the 2011 legislative session.
Lobbying didn’t stop once the session ended. Retailers squired more than a dozen lawmakers to the King and Prince resort on St. Simons Island for three days last June for the Georgia Retail Association’s annual conference, spending thousands of dollars on lodging and meals.
The Georgia Chamber of Commerce booked the King and Prince for its meeting immediately after the retail association’s conference ended, bringing in more lawmakers. A number of them stayed for both, including Lt. Gov. Casey Cagle, House Majority Leader Larry O’Neal, Senate Majority Leader Chip Rogers and Balfour, chairman of the Senate Rules Committee.
This session, Republican leaders and lobbyists worked behind the scenes on the package. Over the course of a little more than two months leading up to its release, Balfour dined 11 times with lobbyists interested in the plan. O’Neal did so about a dozen times, including twice with the auto dealers’ Morie and once with his wife and Delta’s Bevis.
In the Senate, Balfour said, Republicans attending private party caucus meetings spent two months throwing around ideas.
Lobbyists talked openly about bits and pieces of the plan in the halls of the Capitol for weeks. But Sen. Steve Thompson, a Marietta Democrat and a member of the General Assembly’s joint tax committee, said he didn’t know what was in it until it was released last Monday.
While much of the General Assembly and the public were left in the dark, lobbyists and legislative leaders note that many of the package’s elements have been talked about for years.
Morie had been trying to get the state to tax “casual sales” of cars — sales between individuals — since the 1980s.
“What has concerned us is there has not been a level playing field,” Morie said.
With the state budget in the tank, then-Gov. Zell Miller imposed such a tax in the early 1990s, but the courts quickly threw it out. Car dealers didn’t give up.
As an individual bill, the idea couldn’t muster enough support, in part because legislators backed off after hearing objections from constituents. Putting the title tax into a larger package made the difference this time, Morie said.
Manufacturers have likewise sought the energy tax break for many years. The problem was always the cost. Exempting energy used by manufacturers from taxes could cost the state and local governments more than $250 million a year.
Gov. Sonny Perdue vetoed a bill in 2007 that included the exemption. But manufacturers have kept the pressure on lawmakers, arguing that nearby states either didn’t have the tax or charged lower rates.
Farmers, nurseries, timberland owners and mining companies have long sought and often received tax breaks.
Onetime House Ways & Means Chairman Richard Royal was the king of ag tax breaks while in office. Once he left the General Assembly, those businesses hired him to push their interests. He became a trusted adviser to lawmakers and state officials on the issue. He also contributed about $32,000 to their campaigns in the past two years, including $2,500 to Deal and $3,000 to House Speaker David Ralston.
In the end, the biggest complaint at the Capitol was that the package moved too quickly. It was made public on Monday — the 34th day of a 40-day legislative session — and passed the House on Tuesday and the Senate Thursday. Legislation almost never moves that fast, and some outside analysts complained they didn’t have time to examine it.
O’Neal has a hard time listening to such complaints.
“We have been meeting all over the state of Georgia on tax reform since 2010 — everywhere, every corner of the state,” said O’Neal, a tax attorney in private life.
But the 2012 package is a scaled-back version of last year’s proposal.
McCutchen, for instance, said he supports some of the provisions of the package. The way it was done, he added, doesn’t look good.
“The perception is terrible,” he said. “They can say these things were talked about ... but why wait until the very end? When trust in government is at an all-time low, we have to be very cognizant of appearances.”
O’Neal said, in retrospect, the 2011 plan was a “utopian, academic solution” to fix the state’s tax system. This plan favors business, he said, and intentionally so.
“Let’s get out of businesses’ way and let them achieve this wonderful thing that made America great, and that’s profit. There is nothing evil about profit,” he said. “When businesses are making profit, guess what they get to do? They get to hire more people to try and make more profit, and that’s where job creation starts.”
Told that he sounds like a spokesman for the Georgia Chamber of Commerce, O’Neal said, “I hope I do. I believe in the Chamber of Commerce, I believe in capitalism, I believe in free markets, and I believe doing whatever we can as a government to put the feeling of risk-taking back in our society.”
How we got the story
Staff writers James Salzer and Chris Joyner talked to lobbyists, lawmakers and others associated with the tax overhaul bill, staked out the Capitol as the bill made its way through the House and Senate, and pored over years of campaign contribution and lobbyist reports to paint a picture of how business interests shaped the legislation.
Salzer drew on years of experience covering the Capitol in writing this story. Joyner spent much of 2011 covering the ultimately unsuccessful attempt by Republicans to pass a comprehensive tax reform package.