Georgia Enacts $900 Million Revenue Package With Fees on Fuel, Vehicles, Hotels

AASHTO Journal, 3 April 2015

The Georgia General Assembly passed legislation to raise a reported $900 million for transportation through increases in fuel and vehicle fees, ending tax breaks for electric or high-efficiency vehicles and on jet fuel and adding a new hotel tax that would help spread the infrastructure support cost to out-of-state visitors.

The measure also allows local governments to increases transportation-related taxes, so its total revenue impact would ultimately be larger. The Assembly completed the measure and sent it Gov. Nathan Deal on March 31, the next to last day of its session.

Deal said he looked forward to signing it so the Georgia Department of Transportation could put the money into projects. “The benefits of these new projects will appear in full view,” he said. “Georgians will soon see the road crews and the orange cones and smell the hot asphalt as it’s poured. That’s the short term. In the long term, they’ll drive on better roads and bridges, giving us not only a better ride but also peace of mind.”

He said that transportation infrastructure “is a huge point of concern for businesses that we court to Georgia, and addressing those needs is one of many tough tasks we must perform to rev up our jobs engine. In addition, this is simply a safety and quality-of-life issue for Georgians, who rightly want less time stuck in traffic and more time at home with their families.”

The state measure comes as Georgia is also delaying $715 million worth of projects from its 2015 program, due to uncertainty over when the federal share of funds would be available as bills come due on federal-aid highway projects.

Only when Congress acts to extend the Highway Trust Fund beyond its May 31 expiration would Georgia and other states be able to count on federal reimbursements coming through on a timely basis for work scheduled this summer and fall.

Despite its size, the bill’s $900 million in additional state revenue falls short of a minimum goal set in a Dec. 30 report by a legislative study group, which called for spending at least $1 billion to $1.5 billion more a year on transportation system investments “in order to merely preserve the current transportation system.” However, the bill roughly doubles the amount of annual revenue available to GDOT.

The legislation would reportedly raise about $700 million by converting the current state sales tax on motor fuels to a per-gallon excise tax, to go along with a previous excise fee of 7.5 cents a gallon. The bill sets Georgia’s excise fuel charges as of July 1 at 26 cents for gasoline and 29 cents for diesel. The measure also creates a formula for annual adjustments to the excise fee starting in 2016.

Deal said the excise charge on fuel that is the fairest type of tax for transportation system users, and that Georgia had not adjusted its fuel fee since the early 1970s.

It ends tax credits of up to $5,000 for electric vehicles and $2,500 for low-emission cars, and imposes a new annual fee of $200 for alternative-power vehicles not used for commercial service, and $300 for such commercial vehicles. It adds annual weight-based “road impact” fees of $50 and $100 for commercial trucks.

The tab for every night’s stay in most hotels and motels will include a $5 fee that goes toward transportation, a provision seen raising at least $150 million a year and more if the occupancy rate rises.

The legislation also ends a longstanding tax exemption for purchases of jet fuel at Atlanta’s Hartsfield-Jackson International Airport, which was particularly seen as benefiting Atlanta-based Delta Air Lines.

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