Georgia residents could soon see prices surge at the pump, as lawmakers consider a bill that would significantly raise taxes on gas so the state can afford $1 billion in transportation needs.
Georgia’s Republican-led legislature generally agrees on two things: the need to raise a billion dollars to improve roads and bridges (which amounts to 1/20th of the state’s total budget), and the desire to do so without relying on Washington.
On principle, Republicans argue for lower taxes. But after a joint legislative study committee report on transportation concluded that Georgia’s roads and bridges were in dire need of repair, state lawmakers knew they had to raise money.
So increasing the gas tax seemed to be a logical solution. But how to do it is less clear.
The Divide
Georgia lawmakers are divided between those who argue the tax hike is a necessary evil, and those who warn the gas hike, as it is currently structured, is too high and will spur a whole range of tax increases in other sectors of the economy.
The proposed legislation, H.B. 170, would consolidate the state’s fixed gas tax of 7.5 cents per gallon and its variable sales tax of 8.8 cents per gallon into one fixed tax rate.
The result would be a tax of almost 30 cents per gallon of gas.
“It’s a big tax increase,” wrote Erick Erickson, a nationally-recognized political blogger who is from Georgia and lobbying against the measure. “Most amazingly, the House Republicans in Georgia are denying that it is an increase.”
Charlie Harper, a conservative who blogs at Peach Pundit and runs a nonprofit policy group that is advocating in favor of the tax hike, told The Daily Signal today via email that fixing Georgia’s roads and bridges “is not a want, it’s a need.” He said:
The backlog of maintenance alone requires $500 to $700 million additional spending per year. We almost quit deferred maintenance ten years ago and only expect to resurface less than one percent of our roads per year. We have literally thousands of bridges that need to be replaced and we did 60 last year.
The legislation, which is currently being debated in the House, would also transfer revenue from a separate gasoline sales tax that goes to localities — which normally funds a variety of non-transportation needs like education — to the state to strictly fund transportation needs.
While conservatives argue that gas taxes are efficient user fees and a sensible way to raise revenue to pay for infrastructure, some warn that in Georgia’s case, the legislation will force local counties to raise gas taxes even further to compensate for the loss.
Americans for Tax Reform, a conservative nonprofit advocacy group in Washington, D.C., opposes H.B. 170 for that reason.
“The total tax on gasoline in Georgia could range as high as 53.6 cents per gallon, well above the U.S. average of 48.29 cents per gallon, wrote Paul Blair, the organization’s state manager. “If implemented, H.B. 170 could make gasoline sold in Georgia the 9th highest taxed gasoline in the nation. Indexing the gas tax to inflation would make it worse.”
But Harper argues that under the gas tax bill, “local governments are not deprived of any existing revenue.” He said:
They are required on new Special Purpose Local Option Sales Taxes (SPLOSTs) going forward to use any sales taxes collected on gasoline to be used for transportation purposes. Every SPLOST in Georgia is ‘special’ because they are individual taxes set for special purposes for a specific period of time, and are not to be used for general county obligations. As such, local governments that claim they may have to raise taxes because they can’t in the future tax gasoline for non-transportation purposes are being disingenuous.
Emily Goff, a policy analyst in Transportation and Infrastructure at The Heritage Foundation, said Georgia’s efforts to gain fiscal independence from Washington is a “win” for federalism and limited government, but warned that those paying the gas tax seemingly for roads and bridges could end up paying for services they might not necessarily use.
“States can and should handle transportation decisions for all non-federal activities such as local and state roads and bridges, bus and subway systems, and bicycle trails and sidewalks,” she said. “But, states should adhere to a system in which users pay for the system they use, and not squander gas taxes on non-road projects such as transit, for example.”
But Harper sees no other solution.
“Georgia can’t continue to be one of the country’s fastest growing states with the lowest highway spending per capita,” he said. “That’s just not sustainable.”
