• Georgia: Legislation Expected to Raise $900 Million for Transportation Infrastructure Spending
  • May 29, 2015 | Authors: David H. Godenswager; David M. Kall; Susan Millradt McGlone
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • Georgia Gov. Deal signed HB 179, the Transportation Funding Act of 2015 (the Act) into law in April. According to a summary prepared by the Georgia Chamber of Commerce (Chamber), the Act is expected to raise $900 million from new and existing transportation sources and create a dedicated, predictable, and sustainable stream of revenue for the repair and maintenance of the state’s roads and bridges. In addition, the Act contains a $200 billion bond package to contribute to transportation infrastructure improvements and transit system enhancements.

    The summary highlights key accomplishments of the Act:
    1. Addresses a $1 billion funding shortfall for maintenance and modernization of Georgia’s roads and bridges;
    2. Reduces the state’s maintenance backlog and 50-year repair and improvement cycle;
    3. Ensures that all state funding intended for transportation is directed toward transportation;
    4. Creates transparency, accountability, and oversight of state transportation expenditures; and
    5. Reduces funding instability caused by fluctuating gas prices and a depleted federal Highway Trust Fund.
    Here are the Act’s major provisions:
    1. Converts the funding mechanism from a combination motor fuel sales tax and excise tax model to an excise tax only model. This conversion eliminates the four percent state sales tax on the total pump price of gas, and replaces that and the 7.5 percent excise tax with a single 26 cents per gallon excise tax and 29 cents per gallon excise tax for diesel;
    2. Ensures that all drivers, including those of alternative fuel vehicles (like electric cars), pay their fair share of road and bridge maintenance by imposing annual fees of $200 for personal use vehicles and $300 for commercial use vehicles;
    3. Repeals the $5,000 tax credit on purchases of electric vehicles, and the $2,500 low-emission tax credit as of July 1, 2015;
    4. Imposes a highway impact fee on trucks of $50 or $100, depending on weight, to account for the vehicles’ additional wear and tear on the highways;
    5. Imposes a $5 per night fee on lodging accommodations, but it is not applicable to extended stay rentals over 30 days;
    6. Eliminates the one percent sales and use tax exemption for aviation fuel as of June 30, 2015; and
    7. Indexes the excise tax to fuel economy standards, and from July 1, 2016, to July 1, 2018, the excise tax is pegged to the Consumer Price Index.
    The Tax Foundation applauded the fact that the Act dedicates a greater share of Georgia’s fuel tax revenue to transportation. But it criticized the indexing scheme as lacking transparency, making it difficult for Georgians to understand what is likely to be an increased tax burden. The Tax Foundation asserts,

    [T]he tax will change with federal estimates of the costs of road construction and be adjusted to account for state estimates of increases in fuel economy. This differs markedly from most indexing methods, which key to the Consumer Price Index (CPI), and seem likely to facilitate increases in excess of the CPI inflation measure.

    On the other hand, the Chamber commended state lawmakers for their commitment to the future of the state, and for making the roads safer, alleviating congestion, and reducing Georgia’s reliance on the federal government. In early February, SustainAtlanta also approved of the plan for the way it funds transportation projects, but expressed concerns about the loss of revenue for local governments.