Late in the 2007 session the speaker introduced HR 900, which was originally the vehicle for his tax plan. He spent the months between the sessions traveling the state in an effort to drum up support for the plan, which originally proposed replacing all property taxes with a greatly expanded sales tax. However, the original version also included the notion that the state would collect all the money and then distribute it to counties, cities and school boards across the state according to a formula that would be adopted by the legislature.
It would be the understatement of the century to say that this idea was not nearly so warmly received as the speaker anticipated. This resulted in more revisions to the proposal than anyone can count, even to the point of it being pulled off the calendar, sent back to the rules committee to be adjusted, then put back on the calendar literally within hours of when the vote was taken.
During this journey the original proposal went from replacing all property taxes to replacing school property taxes to just dropping the ad valorem tax on personal vehicles. Likewise, the list of services that would become subject to the expanded sales tax was constantly in flux, finally settling in as a list of over 150 things, including everything from hair cuts to ATM fees, in addition to groceries and lottery tickets.
Despite all the changes, though, there was one constant throughout. Every version of the plan included some type of mechanism to control the revenue of local governments. SR 796 as brought to the floor included both a freeze on assessed values and a cap on the revenue of all local governments, including school boards.
Such a measure would have had catastrophic consequences on local governments, especially with regard to things like building new schools and making needed infrastructure improvements in growing areas like ours. Even if the cost of a needed project would fit under the cap, this could still have the effect of making such a project significantly more expensive.
That’s because this could cause a hit to the bond ratings of local governments, so that – even assuming they would still be able to sell bonds, which would not be a given – they could have to pay higher interest rates in order to do so. This increased cost would come from the pockets of you and me as local taxpayers.
Let me give you a hypothetical example that will help this make sense. Suppose a local government needs to build something like a school or water treatment plant that costs $12 million (that’s about the cost of the new Van Wert Elementary School). Even if it’s something that will be paid for in five years, such as a SPLOST project, an increase of just one percent in the interest rate on the bonds for that amount of money would result in additional interest costs of more than $300,000. Folks, that would be a local tax increase of $300,000 courtesy of the revenue cap, and that’s just for one project. I hope this helps you understand why I believe this revenue cap business, while it may sound appealing, would be a very bad idea.
Ironically, there is another unintended consequence of such a cap. I believe it would cause all local governments to raise taxes up to the cap every year, even if they didn’t need it, because they would be afraid of getting down the road and then having the need to pay for something that would cost more than the cap would allow them to raise in a single year.
At any rate, back to the vote. SR 796 as brought to the floor would have done three things. One was drop the ad valorem tax on personal vehicles, and the other two were about controlling the revenue of local governments.
The speaker knew before the vote that the revenue cap was a deal killer and that the bill would not pass in that form. Further, he knew that it would pass easily if the cap were dropped, since many of us (myself included) who voted no would have voted yes if that part of the bill were gone.
Sadly, he chose not to accept the easy passage of the tax cut that was in his grasp and insisted that the revenue cap not be dropped. Thus, SR 796 was defeated.
Folks, this is nothing but the petty, partisan politics of trying to manufacture a campaign issue. If you doubt that, how do you explain the mass automated call that the state Republican party sent into my district the day after this vote was taken trying to round up a Republican candidate to run against me in the next election?
I believe you deserve better than that, and trying to help raise our government above that level of petty politics was one of the main reasons I ran for this office. These are important issues that should be debated and decided on their own merits instead of trying to package them in such a way as to create partisan political advantage.
Fortunately, while it might be by the time you read this, as of this writing it is not too late. All it will take to get the car tax cut through the House is for the Republican leadership to let the House have a stand alone vote on the issue. It’s really very simple; they just have to decide whether they would rather try to create a campaign issue or give you the tax cut that would pass if they would let it. Whether they let the House have that stand alone vote will give us the answer to this question.
If you want your voice to be heard, contact Speaker Richardson’s office and tell him to let the House have this stand alone vote. His office number is 404-656-5020, and his email is glenn.richardson@house.ga.gov.
There were a number of other bills voted on last week, but trying to help you understand the full picture of SR 796 has taken all my space. As always, please feel free to contact me if you have questions or concerns. I can be reached by phone at 404-656-6372, by email at rick.crawford@house.ga.gov, or by mail at 511 CLOB, Atlanta, Georgia 30334. I sometimes fall behind in responding, but rest assured that I always consider the views of home folks when I cast a vote.
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