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Friday, July 08, 2016

NOTES FROM THE SENATE, JULY 8, 2016

STATUS OF THE NEW TRANSPORTATION FUNDS AND HOW ARE THEY BEING SPENT?

Virtually all states that Georgia competes with are struggling to meet the transportation needs of the present and into the future. The passage of HB 170 in the 2015 General Assembly was praised by some who saw the state stepping up to meet a need that was strangling the state and dissed by others who saw the new fees as unnecessary. After 11 months of collection, it is possible now to reflect on how accurate the projections have been in predicting the additional revenue the changes have brought in, and with two budgets, the 2016 Amended and the 2017 General Budget, there is a pretty good picture of how those funds are going to be spent.

ELEVEN MONTHS FUEL REVENUES/FEES CONSISTENT, PREDICTABLE

A quick review: Previously, Georgia had a 7.5 cents per gallon excise tax on fuel and a 4% sales tax that usually was suspended when prices of fuel rose to an historical high. These two sources totaled around $1 billion yearly in funds that went to transportation. However, only 3% of the 4% sales tax actually went to transportation. One fourth of the revenue went into the state treasury, estimated to be around $180 million yearly. One of the changes brought by HB 170 was the dedication of this lost 1% back to transportation. Of course, correspondingly, that reduces the state's general fund revenues by that same $180 million.

HB 170 removed the 4% sales tax on fuel and instead changed to a total excise tax (by the gallon) of 26 cents per gallon. Usually, when scribes talk about the changes brought about by HB 170, they lump taxes, fees, and 1% sales tax transfer together and the total looks like a huge increase. Technically, since we were already receiving about $1 billion in the two sources (excise & sales taxes), only the amount above that figure less the transfer amount is truly "new revenue."

So, how are revenues from the new sources coming in? I think the answer is about as projected. Overall, the increase in motor fuel taxes should be attributed to the new tax set-up. Some might argue that the reduced price of fuel increased consumption and collections would have increased any way. But as the price came down on fuel, the sales tax would have come down as well, so, in my humble opinion, virtually all of the increase can rightly be attributed to the new excise tax structure. Here are the 11 month totals for sources tied to HB 170:

Motor Fuel Excise Taxes - $572.7 million
Highway Impact Fees - $13.9 million
Hotel/Motel Fees - $136.1 million
Total New Sources - $722.7 million

This does not include the 1 % fuel sales tax transfer that is being appropriated to DOT as well.

AMENDED 16 AND FY 17 BUDGETS BEGIN TO APPROPRIATE NEW DOT FUNDS

Amended FY 16 Budget:

DOT Capital Construction - $461.7 million
DOT Capital Maintenance - $58.1 million
DOT Dept. Admin Transfer - $1.75 million
DOT Departmental Administration - $1.5 million
DOT Local Maintenance - $36.1 million
DOT Routine Maintenance - $200.0 million
DOT Intermodal - $1.2 million

Less Transfers:

Data Collection - (-$1.0 million)
Planning - (-$750,000)
Net Total - $758.7 million

General FY 17 Budget:

DOT Capital Construction - $475.0 million
DOT Capital Maintenance - $68.1 million
DOT Construction Administration - $12.6 million
DOT Data Collection Transfer - (-$1.0 million)
DOT Departmental Administration - $10.2 million
DOT Intermodal - $1.5 million
DOT Local Maintenance - $41.1 million
DOT Planning - Net - (-$525,528)
DOT Traffic Mgt. & Control - $3.8 million
DOT Routine Maintenance - $204.7 million
Net Total - $815.5 million

Next - what are the major projects and areas DOT is spending on?

The FY 2017 budget (H.B. 751) may be found at http://www.senate.ga.gov/sbeo/en-US/AppropriationsDocuments.aspx. As always, I welcome any questions you may have.

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