Proposed law would hurt Georgia school systems’ revenue

Bainbridge City Council members and Decatur County Commissioners have both expressed concerns about a proposed Georgia law aimed at revamping how the state government gets money to fund transportation projects across the state.

The proposed law is Georgia House Bill 170, called the “Transportation Funding Act of 2015.” Georgia House leaders have stated the purpose of the bill is to generate about $1 billion a year in additional revenue to pay for transportation projects, particularly maintaining and improving roads and bridges.

The bill would have the following effect:

  • The state’s four-cent sales tax would no longer apply to fuel
  • Replace the current flat sales excise tax on fuel with a new one that will vary from year to year
    The new excise tax would be based on the average miles per gallon of all new vehicles registered in Georgia.

Here’s a summary graphic produced by State Representative Michael Caldwell of Woodstock, Ga., that helps explains the proposed tax changes:

A chart presented by Georgia House Representative Michael Caldwell
A chart presented by Georgia House Representative Michael Caldwell (CLICK TO ENLARGE), Note that this chart is unofficial and was created by Rep. Caldwell for explaining HB 170 to his constituents.


One important thing to note is that the “Proposed” side of the chart leaves out the potential for local gas taxes, which could be up to six cents in each county. Therefore, the actual total gas tax in Georgia could wind up increasing to 53.6 cents in most places.

Does shifting the extra six cents of gas tax to local governments constitute a “tax increase”? Many local government leaders say yes.

Groups currently opposing HB 170 include Georgia school boards and superintendents’ associations and the Georgia Municipal Association. In Southwest Georgia, the Dougherty County Board of Education and the Thomasville City Council have passed resolutions opposing the bill in its current state. While they didn’t pass a formal resolution, each of the Decatur County Commissioners made comments opposing HB 17o in its current form at their Feb. 9 meeting.

Part of local leaders’ opposition stems from the fact that currently, no mechanism has been proposed for replacing the money local school systems would lose, because they would no longer be able to collect sales tax from fuel purchases.

Decatur County Commissioner Butch Mosely, who also serves as the superintendent of Dougherty County Schools, is in a unique position to see how the Transportation Funding Act would affect local governments. The Dougherty County school system stands to lose about $2.2 million from its E-SPLOST collections on fuel.

Mosely said local governments will either have to raise property taxes or cut personnel to make up for the money that’s lost.

Local Sales Taxes Collected on Motor Fuel Sales, July 2013 through June 2014

Decatur County
Gasoline – $1,264,672.88
Diesel – $639,179.15
Aviation Fuel – $7,970.85
Total – $1,911,822.88

Currently, three cents in local sales tax is collected on taxable gallons of fuel – 1 cent for LOST (general fund expenses), 1 cent for SPLOST (special capital projects approved by voters) and 1 cent for ESPLOST (for education).

In other words, Decatur County Schools collected $637,274 from 2013-2014, on ESPLOST tax collected on fuel purchases. LOST, SPLOST and ESPLOST would still be collected, but not on fuel.

Fuel Taxes by State, 2014 | Source: using American Petroleum Institute figures
Fuel Taxes by State, 2014 | Source: using American Petroleum Institute figures CLICK TO ENLARGE

Decatur County commissioners and the city governments of Bainbridge, Attapulgus, Climax and Brinson would also stand to lose money, but this would be at least partially offset by the ability for each county to levy up to 6 cents in sales tax on fuel purchases. According to the current version of the bill, proceeds from the local sales tax on fuel 1) Would be distributed according to existing sales tax distribution formulas 2) Could only be spent for transportation projects.

One of the main problems of allowing the local sales tax on fuel to be distributed according to existing formulas is that many city and county governments across the state–including Bainbridge and Decatur County–have disagreements over who should get the biggest piece of the pie, so to speak. The City of Bainbridge and Decatur County are already having to meet with a mediator to resolve service delivery issues, which came about because of failed negotiations on how the one-cent LOST sales tax should be split up locally–both sides wanted two percent more of the total than they are currently getting.

So our take is that even the latest version of House Bill 170 would potentially cause more in-fighting between local governments, and still not solve the issue of helping school systems make up for the loss of gas tax money from their budgets.

Imagine what Decatur County Board of Education would have to cut to make up for the loss of $637,274? Decatur County School Superintendent Fred Rayfield, currently a significant portion of E-SPLOST is used to pay off bonds that funded large projects such as the construction of Bainbridge High School and Jones-Wheat Elementary. If the local school system were to lose part of its E-SPLOST collections from fuel purchases, and if sales tax receipts continue to fall or stay stagnant, the school system would have to raise property taxes to fund the bond payments.

“That is the absolute last thing we want to do,” Rayfield told The Bainbridge Post-Searchlight.

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