Transportation Funding Act of 2015

Rep Jason Spencer tells it all. "SPECIAL REPORT" "GEORGIA" February 1, 2015 Following are comments from State Representative Jason Spencer. He provides additional information and thoughts on the Transportation Funding Act of 2015.

 

Week Three Legislative Update:  Transportation Plan Unveiled

 

There has been much talk about the state's transportation funding needs both immediate and long term.  Georgia is a growing state, and we are now the nation's 8th largest

state.  With increasing population, and expanding of the Savannah port as well as other inland sea ports, it is necessary to begin planning for the state's future and review our transportation policy.  There are a variety of intermodal transportation uses such as the use of airports, rail, highways and sea ports.  In addition, there is also the factor of increased fuel efficiency of vehicles and various sales tax

exemptions on jet fuel that affect revenue that apply towards transportation needs.

 Our states transportation funding issue is very complex, and I anticipate that  this issue will consume most of the General Assembly's time this session. After  much study, the Transportation Funding Act of 2015 (House Bill 170) has been filed with the House Clerk's office to start the legislative debate on what is the best course of action to address a variety of the state's transportation needs.  Below is a summary of the proposal.  I have included some of my thoughts on points of  interest, but I would also encourage you to read the entire text of the bill to  grasp a full understanding. As of right now, this is the first proposal that has been presented to the full General Assembly for debate.  I do expect there will be multiple renditions produced before a final product is voted on.

 

HB 170 includes the following provisions:

 

1. The act will convert the sales tax on motor fuel to an excise tax.  This excise tax will be set at 29.2 cents per gallon which approximates the sales tax rate which has been imposed on gasoline using a weighted average of the price of gasoline over the previous four years ($3.39 per gallon total price at pump).  This excise tax will be indexed to Corporate Average Fuel Economy (CAFÉ) standards as well as Consumer Price Index and adjusted annually to ensure that it keeps pace with the ever-increasing fuel efficiency of vehicles.  It has been stated that this conversion method provides a reliable, predictable funding source dedicated to transportation.  The bill also imposes an excise tax of 33 cents on diesel fuel, which is also converted using  the same methodology as applied to gasoline.

 

* THOUGHTS:  I do not oppose a straight conversion of the sales tax on gas to an excise tax.  Hold your horses...this might get complicated.  By my calculations, the existing excise tax at 7.5 cents per gallon of gas is added to the converted 4% motor fuel sales tax (0.04 x $3.39/gal gas = 13.5 cents), which results in a 21 cent excise conversion (7.5 cents + 13.5 = 21 cents).  The remainder 8. 2 cents (29.2 minus 21 = 8.2 cents) appears to be derived from capturing local sales tax on motor fuel and incorporating it into the overall excise tax (8.2 cents = 2.4% state wide local sales tax average on motor fuel recaptured x $3.39 gal/gas).  The

2.4% local sales tax is the statewide average.  Some communities have 3%, so the bill's authors used a state wide average to determine that factor.  By my calculations,

this is a true conversion of sales tax to an excise tax.  More simply put, (6.4%[total of state sales tax 4% + statewide average of 2.4% local sales tax] x $3.39) + 7.5 cents = 29.2 cents.

 

* The proposed 33 cent excise tax on diesel follows a similar mathematical conversion. However, the four year look back average of the price of diesel is $3.99 per gallon. So, here is the math on that calculation:  (0.064 x $3.99) + 0.075 = 0.33.

 

2. Converting the sales tax on motor fuel to an excise tax adjusts Georgia's participation in, and advantage of, the International Fuel Tax Agreement (IFTA).  Doing so will

result in an additional $60 million to the state.

 

* THOUGHTS:  Reserve thoughts until I know more about this "agreement."

 

3. Converting to an excise tax dedicated to transportation will have the effect  of moving the "fourth penny" revenue previously collected on motor fuel from the state's general fund to funding for transportation needs.  This will result in

an additional $175 million in transportation funding per year.

 

* THOUGHTS:  See number 1.

 

4. Any special purpose local option sales taxes on motor fuel currently authorized by the voters will be honored.  Those SPLOST collections, which would be over and above the state's excise tax, would cease after their expiration dates as originally approved by local voters.

 

* THOUGHTS:  See number 5.

 

5. Local governments will be able to charge an additional excise tax of up to 6 cents per gallon (up to 3 cents for counties and up to 3 cents for cities) for local transportation projects by a vote of their county commission and/or city council.

 Any additional excise taxes local governments wish to levy on motor fuel beyond the limit would require a referendum offered to the residents of that jurisdiction.

 

* THOUGHTS:  Points 4 and 5 do cause me to pause. This will have a significant impact on our local governments and in particular our school system.  Specifically, poor rural county school systems with a low property tax digest and a low retail sales tax base will have a difficult time adjusting to this part of the proposal. I expect there will be a significant debate on this portion of the bill.  If this language stays in the bill, I would like to see that all levies of additional excise taxes be approved only by voter referendum.

 

6. Alternative fueled vehicles will pay a user fee of $200 for non-commercial and $300 for commercial vehicles each year.  As these vehicles do not use gasoline,  their owners do not currently pay their share of taxes devoted to the maintenance of the roads they use.  This fee will not be imposed on hybrid vehicles which require purchase of gasoline.  This revenue is intended to be used for transit systems.

 

* THOUGHTS:  I think what is more reasonable thing to do in the place of this policy is to remove the current $5000 subsidy per alternative fuel vehicle that owners receive.  I think this proposed fee would yield about $7 million per year to the states, and we are talking about 20,000 affected vehicles across the state.  Repealing the subsidy makes better sense to me.

 

7. Recapitalize the Georgia Transportation Infrastructure Bank so that a revolving, self-sustaining, loan/grant fund is created to incentivize governments, authorities, CIDs and other entities to provide matching funds for local construction of projects. The Transportation Infrastructure Bank will be directed to assist tier 1 and tier 2 counties and encourage investment in every region of our state.

 

* THOUGHTS:  I will need to research what is the true purpose of this "bank".  The bill states that it will provide assistance to poor counties with eligible infrastructure

projects that have a Department of Community Affairs designation of Tier 1 or Tier 2.

 

8. A significant bond package will provide for critical bridge maintenance, transit system funding and other transportation projects across the state.  This proposal is trying to leverage the state's high credit-rating to borrow at little cost to the state.

 

* THOUGHTS:  I am concerned about the debt that could be accumulated.  If the General Assembly moves in this direction to finance with bonds, then I would recommend that

we look at the Board of Regents bond package and consider redirecting bonds from there to meet this need.  They seem to have dropping enrollment numbers and scantly used monuments to education. More on drops in enrollment numbers.

 

9. Increase funding for Local Maintenance and Improvement Grants (LMIG).

 

* THOUGHTS:  I think local government should be empowered to fund most of their own transportation projects, while the state should be focused on state roads, interstate

highways, and bridges.  If we eliminated this program, then the LMIG penalty applied on regions who voted against the T-SPLOST two years ago would be eliminated.  That

would solve the unfairness of that penalty upon local governments and truly uphold the principle of local control.

 

This is only the first draft of this proposal. I expect this proposal will change multiple times before a final bill that is ready to vote on is produced. No one ever said governing was easy, so I am open to any other suggestions you all may have about how to solve are transportation issues.  As we move forward with this debate, please do not hesitate to contact me to share your concerns.  I can be reached at

 

Source:Jason.spencer@house.ga.gov or at spencer4hirega@gmail.com.  You may call me at my capitol office at 404-656-0177. GOD BLESS AMERICA

Emailed by: Liberty Group Tea Party Ellijay, Ga.

"Working to preserve our Constitution"

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