Moderated by Tom Sabulis
As a committee of state legislators wraps up its report on transportation infrastructure funding, we hear from a trucking industry leader who breaks down what he calls the unfair local tax that hurts both freight haulers and the state’s coffers. Also, a Forsyth County commissioner writes how local voters approved a $200 millon transportation bond. Finally, a road builder urges Congress to fix the bleeding Highway Trust Fund — something U.S. Sen. Johnny Isakson pledged to help fix in last week’s column.
Costly truck fuel tax hurts Ga.
By Ed Crowell
Fuel tax is one of the simplest, most efficient and most cost-effective taxes imposed. It costs less than two percent to administer, audit and collect – with one glaring exception. The way Georgia taxes trucks in interstate commerce is not only inefficient, it actually costs the state money.
Commercial truck operators rightly pay thousands of dollars in fuel tax each year. But unlike cars, truck operators don’t simply pay at the pump. They are forced to track their purchases and their mileage for use in a system of debits and credits between state governments called the International Fuel Tax Agreement (IFTA). Payments flow to and from the states based on these reports. Its goal — to ensure states don’t compete on price — would be illegal in the private sector, but states have used it for decades.
In theory, each state gets paid for each mile traveled by a truck regardless of fuel purchases. But it doesn’t work out well for Georgia. According to the Department of Revenue, our state loses more than $1 million each quarter from participating in this program. In other words, if Georgia collects $100 million a year from interstate trucking under this program, it pays out about $105 million. This negative result is masked by the much larger overall total from all diesel sales to truck operators, but still it’s a lot of work for a net loss.
But it gets worse. The IFTA agreement controls how truck operators can get credit for taxes paid (so they don’t pay double) and it doesn’t allow local level sales taxes to be part of the equation. All states have adjusted to this after joining IFTA – all states except Georgia, which still allows local sales taxes on fuel sales. This actually penalizes truck operators for purchasing fuel in Georgia. If a truck operator purchases fuel at the pump and pays local tax, the operator can never receive credit for the tax paid, even if essentially all of the fuel is used in another state; so buy in Georgia and pay double tax.
Since truck operators often deal in tens of thousands of gallons a week, even a few cents that cannot be recovered has a huge financial impact to small and mid-size carriers. If the carrier purchases fuel in a surrounding state, it receives full credit under the IFTA system. If a carrier purchases fuel in Georgia, it leaves money on the table – effectively making the Georgia fuel tax more expensive than any other state around – but with no benefit to the truck operator, the DOT or the people of our state.
The practical result of this is a practice among many carriers to avoid purchasing fuel in Georgia, indeed many have company policies that direct drivers to cross out of the state before buying fuel – and may even penalize a driver for failing to do so. The practices are utilized by both Georgia-based carriers and those from other states who travel through the Peach State. Moreover, many border-area Georgia truck stops and convenience stores lose sales they would otherwise make, adding to the state’s revenue losses and hurting those border businesses and jobs.
There is a solution to this problem. As the legislature considers many changes to fuel taxation and infrastructure funding, our elected leaders should give full consideration to making two relatively straightforward changes in this area that could greatly increase revenue to the state and Department of Transportation.
First, diesel fuel should be taxed at the pump on an excise tax basis only, and local sales taxes should be banned from fuel so all the tax goes to the road system (setting the rate to account for all current state and local taxes as well as any planned increase).
Second, and admittedly a bit more “inside baseball,” the state should change how interstate trucking firms pay their fuel tax by setting the IFTA rate at zero, but using the same IFTA reporting process to assign an mpg rate and a calculated fuel tax owed.
If these changes were made, the result would bring additional millions per year into DOT, including recapturing the money being paid out to other states. It would also bring jobs and sales back to the state’s border areas as there would no longer be an incentive to shop just across the state line.
Ed Crowell is president of the Georgia Motor Trucking Association.
Forsyth takes initiative on road fixes
By Brian Tam
It is no secret that Forsyth County is a great place in which to live, work, play and retire. From its top-tier educational system, innovative park and recreation amenities, to its thriving health care marketplace, Forsyth County continues to maintain its position as one of the nation’s most desirable communities.
As we experience the opportunities associated with growth, we are not immune to the challenges. One of the first requirements of industry and one of the primary indicators of a high quality of life is an ability to travel without the threat of stifling traffic.
While many communities struggle with the issue of traffic, Forsyth County is emerging as a model for local transportation improvements that embrace innovative partnerships with both the state and federal government through taxpayer-approved bonds and matching funds.
On election day last month, voters in Forsyth County delivered a strong message by passing a $200 million transportation bond, with a 63 percent majority.
That message: we will work to keep our tax dollars at home, where they belong.
The road to realizing a successful bond measure was paved with hard work, determination and a strong commitment to finding solutions that fostered unity among leaders, business owners, homeowners and other key stakeholders.
In collaboration withState Rep. Mark Hamilton, (R-Cumming), Georgia Department of Transportation member Rudy Bowen and other leaders, the leadership of the Forsyth County commissioners worked for more than a year to identify priority projects aimed at reducing gridlock and fostering continued economic development. In total, the $200 million bond includes more than $90 million in additional matching funds from the state and federal governments.
Through the more than yearlong process of conceptualization to passage, several key lessons were learned, including:
- Voters must feel trust. Offering one of the lowest millage rates in the region and boasting a AAA bond rating, the Forsyth County government has worked to earn the trust of taxpayers. This was integral to the passage of Forsyth County’s transportation bond. The approval by voters echoed their desire to keep tax dollars local.
- Leaders must show confidence. As a three-term member of the Forsyth County Board of Commissioners, I can affirm that it is difficult to achieve unity. However, as a board we strived to work with local community leaders, homeowners and state leadership to develop a project list that was ultimately approved by the board of commissioners in a landmark unanimous vote. In order for voters to have confidence in a bond measure, those they trust must demonstrate confidence also.
- Transportation improvements lead to economic prosperity. Every day, Forsyth County and Georgia compete with surrounding communities and states in attracting new, high-quality, high-paying jobs that provide critical employment opportunities and help balance the tax digest. In order for us to remain competitive, we must continue working toward reaching common-sense solutions to the problems plaguing our transportation infrastructure.
As Forsyth County homeowners continued to feel the pressures associated with residential development, some opposed to the bond believed it would only lead to additional residential growth. Therefore, the bond needed to offer something more: the promise of a thriving economy that would help balance our local tax digest and ease the tax burden placed on homeowners. By widening Georgia 400, adding a $43 million extension of Ronald Reagan Boulevard and constructing an interchange at McGinnis Ferry Road and Georgia 400, the bond offered voters a fast track to perpetual economic prosperity.
To our governor’s credit, he did not tax us out of the recession. But with the failure of the T-SPLOST, communities and regions must begin to think critically about how to improve our roads for families and businesses. In Forsyth County, the solution is widening Georgia 400 and making numerous other critical improvements — all through a voter-approved bond and matching funds that may have otherwise gone to other regions.
Whatever the solution, the issue of transportation must be solved in order for our state to reach its full potential.
Brian Tam is a Forsyth County commissioner.
Highway funding top priority
By Nick Ivanoff
It’s time for members of Congress to make good on their campaign promises by tackling some of the real problems facing our country. At the top of the list of policy issues that present the greatest opportunity for bipartisan cooperation: addressing America’s transportation infrastructure challenges.
Few matters have a greater direct impact on Georgia. The federal Highway Trust Fund (HTF) has been the source of, on average, 62 percent of Georgia’s capital investment in highways and bridges over the last 10 years. And just like many of our nation’s roads and bridges, it’s in bad shape. The HTF has been teetering on the financial brink because revenues flowing into it have not kept pace with the increased transportation investment levels approved by Congress. The federal gasoline tax has not been raised since 1993, and inflation and rising materials costs have eroded its purchasing power by nearly 40 percent.
Imagine if you had not received a raise in more than 20 years. Could you support today’s cost of living with 1993 dollars?
On five separate occasions since 2008, Congress has consciously ignored the core problem underlying the federal transportation programs, and instead, has bailed out the HTF with budgetary “smoke and mirrors” that have cost taxpayers nearly $65 billion. These short-term funding patches are fiscally irresponsible and contrary to the principle established in 1956 when President Eisenhower signed the law creating the Interstate Highway System that assured those who benefit from this system would support its upkeep.
Seven years of congressional highway funding hijinks have caused many state transportation departments to consider canceling or delaying needed highway and bridge improvement projects and created uncertainty in the transportation construction marketplace, which supports 100,600 jobs throughout Georgia.
The last transportation funding crisis came during the 2014 construction season, and the next one is already setting up for early 2015. If something is not done soon, the potential market disruptions and job losses we saw the last time Congress walked the trust fund to the edge of the fiscal cliff will be easily eclipsed when states try to plan their entire construction season with a big financial cloud hanging over their heads.
The failure of Congress to act and provide a long-term transportation financing mechanism will have real-world consequences. Georgia has 121,600 miles of roadway to maintain and 835 bridges that have been rated “structurally deficient” and are in need of repairs.
Fortunately, it doesn’t have to be this way. All options to generate new revenues — including those identified by scores of private and public sector reports, congressional and presidential “blue ribbon” commissions — should be on the table. It now boils down to political will.
As a member of the U.S. Senate Finance Committee, Sen. Johnny Isakson, R-Ga, can be part of the solution by helping reach a bipartisan agreement that provides a sustainable solution for the HTF so we can begin making meaningful improvements to Georgia’s transportation network. The future of the state’s economy, mobility, and quality of life all depend on it.
Nick Ivanoff is chairman of the American Road and Transportation Builders Association.