The uncertainty regarding the future of Georgia’s fuels tax is having impact locally, as Oconee County officials try to estimate revenue available to balance next year’s budget.
The Georgia Senate and the House have passed differing versions of a Transportation Funding Act of 2015.
Each increases the fuels tax, though by different amounts, and each changes how local taxes on fuels are calculated, though in different ways.
A conference committee of the Senate and House is working on a compromise.
The issue should be resolved this week, as the General Assembly has two days left in its 40-day legislative session. The House calendar lists those two days as Tuesday and, tentatively, Thursday.
At the budget work session on Wednesday, Oconee County Finance Director Wes Geddings told the Board of Commissioners that his best projection at present is that the county will have a little less than $23.1 million in revenue in Fiscal Year 2015-2016, which starts on July 1.
The Board of Commissioners has to reconcile that amount with $25.8 million in requests from elected officials and department heads.
More than half of the county’s revenues comes from the 1 percent Local Option Sales Tax, and the county also relies on the 1 percent Special Purpose Local Option Sales Tax for capital projects. The Board of Education also has a 1 percent Education Local Option Sales Tax.
How these local taxes are to be computed on fuels is in play as the House and Senate try to reconcile their different approaches to raising revenue for the state’s transportation needs.
The Transportation Funding Act of 2015, called House Bill 170, 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 change would go into effect on July 1 of this year.
It also specifies that the excise tax will increase automatically annually as road construction costs increase and as fuel efficiency of vehicles increases.
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 fuels for transportation.
HB 170 removes the LOST tax from motor fuels on June 30, 2016, meaning there would be some drop in LOST revenue without some other change to LOST. To compensate, the law changes the tax rate for LOST from 1 percent to 1.25 percent. That change would become effective on July 1, 2016.
The Senate version of the bill also converts all of the state tax on motor fuels to an excise tax and sets that rate at 24 cents per gallon, regardless of the type of fuel.
That tax will be adjusted automatically each year to reflect changes in the Consumer Price Index.
The Senate bill changes the calculation of SPLOST, ELOST and LOST taxes but does not restrict their use and leave the LOST in place on motor fuels.
At present the local taxes are collected at the wholesale level by the distributors based on calculated costs of the motor fuel.
In the Senate bill, SPLOST, ELOST and LOST would be calculated at the retail level at the rate of 1 percent of the sale price of the motor fuel, with that fuel capped for calculation purposes at $3.39 per gallon.
The House bill would add 5.9 cents to the cost of a gallon of gasoline if the current wholesale price estimate stayed as it is now. At present, the local tax adds 8.8 cents to the gallon.
With gasoline selling at $2.10 per gallon, the Senate bill would add 6.3 cents per gallon. That would go up as the prince of gasoline goes up.
Difficult To Gauge Impact
Oconee County Finance Director Geddings, has said that it is difficult to estimate the impact of the proposed changes in the fuel tax.
The county does not receive data from the Georgia Department of Revenue that allows it to know how much tax any individual retailer or even any type of retailer–or, in this case, wholesaler–is paying.
Geddings told the BOC on Wednesday night that there are many uncertainties that come into play in projecting tax revenue for the coming year.
The uncertainty about the future of motor fuel taxes is just one of them.