Oconee County’s two representatives, both Republicans, cast conflicting votes on House Bill 170, which overhauls the state’s motor fuel tax, with Rep. Regina Quick joining the 43 Republicans in opposition and Rep. Chuck Williams voting as part of the 72 Republicans in favor.
The bill, approved on March 5, would have major impact on both local and state taxes on motor fuel if approved by the Senate in its present form.
The state tax on gasoline would increase from its current 19.3 cents per gallon to 29.2 cents per gallon (a 51.3 percent increase) and the tax on diesel would go from 21.3 to 33.0 cents per gallon (a 54.9 percent).
That new tax would be indexed and increase in the future as the costs of transportation construction increases and as fuel efficiency of vehicles increases.
The bill also increases the county’s 1 percent Local Option Sales Tax, approved by Oconee County voters in 1982, to 1.25 percent without any additional action by the electorate.
The Local Option Sales Tax would be removed from motor vehicle fuels as a compensation for the increases in the tax rate. How that would affect local residents and the county is unclear.
The bill passed the House 123-46, with 50 Democrats, including Clarke County’s Spencer Frye, joining the 72 Republicans and single House independent to make up the majority. Only three Democrats voted with the 43 Republicans in opposition.
Two Republicans and two Democrats did not vote, and two Republicans and five Democrats were excused from the vote. The House has 180 members.
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Williams, representing all of Oconee County excepting three precincts and parts of Clarke County, told me in an email message on March 6 that he considered HB 170 “to be a reasonable and sensible vehicle for funding Georgia’s transportation needs.”
Williams said the bill “will inevitably be modified by the Senate” and will come before the House again.
“Even if not, I believe the bill as passed yesterday to be the result of significant study and negotiation, and worthy of adoption.”
The Senate gave HB 170 its first reading on March 9 and assigned the bill to the Senate Transportation Committee.
Quick, representing Athens Academy, Malcom Bridge and Bogart precincts as well as parts of Barrow, Clarke and Jackson counties, has not responded to my requests for an explanation of her vote.
She told me in an email message on March 12 that “I am slammed this week” with legislative activities.
She did send me a copy of an analysis of the bill by the state Department of Audits with a hand-scrawled note labeling the bill as a $308 million tax increase.
Back in December, Quick had expressed skepticism about the need for additional funding for the Georgia Department of Transportation at a prelegislative session held at the Oconee County Chamber of Commerce.
Georgia’s motor fuel tax is very complex at present, made up of an excise tax of 7.5 cents per gallon plus both state and local sales taxes.
HB 170 as passed by the House on March 5 converts all of the state motor fuel tax to an excise tax and sets the current rate at 29.2 cents per gallon for gasoline and 33.0 cents per gallon for diesel fuel. The bill is to go into effect on July 1 of this year.
It also specifies that the excise tax will increase automatically as road construction costs increase and as fuel efficiency of vehicles increases.
In addition to these state taxes, a gallon of motor fuel includes a federal excise tax currently set at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel.
Local Tax Calculations
Both the current excise tax of 7.5 cents per gallon, which is fixed, and the sales taxes, which varies with the price of fuel, are collected at the wholesale, not the retail level, which is why they do not show up on a sales slip from a gas station.
The sales tax is applied not to the actual price of the fuel, but to a forecast of fuel costs, adopted every six months (on Jan. 1 and July 1). The forecast cost remains in effect for the six-month period unless the retail price changes by more than 25 percent.
Normally, the state and local fuel taxes are based on the same fuel cost forecast. At present, that is not the case.
Gov. Nathan Deal, by executive order, on Dec. 5, 2014, suspended any change in the sales tax component of the state fuel tax by “freezing” the calculation of the fuel cost forecast.
The governor’s executive order did not affect the calculation of the local tax, and the state and local taxes are now computed based on different fuel cost forecasts.
The 4 percent state calculation adds 11.8 cents to the cost of a gallon of gasoline and 13.8 cents to the cost of a gallon of diesel.
The 3 percent local tax adds 8.8 cents to a gallon of gasoline and 10.4 cents to a gallon of diesel fuel.
The wholesale distributor collects the local tax based on where fuel is shipped and applies the appropriate local taxes. Those taxes go to the state Department of Revenue, which distributes them to the local jurisdiction.
Local Tax Changes
Initially, HB 170 removed the local taxes from motor fuel completely, leaving a gap in local tax revenue, which local governments would have been allowed to fill by increasing taxes.
Oconee County Finance Director Wes Geddings told me in an email message that he did not know the impact of that initial version of the bill, since the state Department of Revenue does not identify tax sources in the monthly distribution of sales tax revenue and the county does not know how much sales tax it collects on motor fuels.
The version of the bill passed by the House on March 5 allows local governments to continue to collect tax on motor fuels through Special Purpose Local Option Sales Taxes and through Education Local Option Sales Taxes.
The law, however, restricts the use of SPLOST and ELOST tax revenue from motor fuel for transportation.
Oconee County has 1 percent SPLOST and 1 percent ELOST.
The county will have to show in the future that it is using that portion of its SPLOST revenue coming from motor fuel for capital projects involving transportation. The Oconee County Board of Education will have to document that it uses its ELOST revenue collected from motor fuel for moving students to and from educational facilities.
How that will be monitored is not specified in the bill.
Impact on LOST
HB 170’s impact on the county’s Local Option Sales Tax will be more severe.
Voters in Oconee County approved a 1 percent Local Option Sales Tax in 1982 to relieve pressure on the county’s property taxes. The revenue from that tax goes into the county’s general fund and now makes up 52 percent of county tax revenue.
HB 170 removes that tax from motor fuels on June 30, 2016, meaning there would be some drop in LOST revenue without some other change to LOST.
HB 170 unilaterally changes the tax rate for LOST from 1 percent to 1.25 percent to compensate. That change would become effective on July 2, 2016.
That new rate will be applied to all items purchased in the county previously covered by LOST excepting motor fuel.
HB 170 will increase the county’s overall sales tax rate from 3 percent to 3.25 percent.
That 3.25 percent local sales tax is on top of the 4 percent state sales tax, which will no longer be applied to motor fuels because of the switch to the excise tax.
Oconee County voters approved LOST in 1982 by a wide margin, but only after turning down the first request for the tax in 1980.
In November of 1980, only 49.6 percent of the voters approved of the new tax. In December of 1982, the vote in favor of the tax was 74.7 percent.
LOST does not apply to the sale of food, food ingredients and alcoholic beverages. SPLOST and ELOST do.
On Feb. 28, when the Georgia Department of Revenue released its most recent monthly distributions of sales tax revenue, Oconee County received $428,704 in LOST revenue and $485,946 from SPLOST, or a difference of $57,242.
The February distribution was for January sales.