Hudgens: Amendment To Kill Auto Tax Not Likely To Survive
Local school officials are breathing a little easier this week as a proposal to eliminate the ad valorem tax on automobiles appears to have stalled.
“Appears” is the key word. The proposal is now in a House-Senate conference committee “log-jammed” between House and Senate negotiators, according to Sen. Ralph Hudgens (R-Hull). As of Monday afternoon, no one knew what, if anything, might actually come out of the committee.
“They’re trying to come up with some kind of tax relief program, but I don’t think that’s (auto tax elimination) is what they’ll end up with,” Hudgens said.
By the time the bill got to the Senate, Hudgens said, Lt. Gov. Casey Cagle had “stripped out” the provisions calling for a repeal of the auto tax and replaced it with reductions of the state income tax.
“Right now, we’re at a log jam on what we’re going to do,” the senator stated.
Hudgens said he favored eliminating the auto tax, but proposed that it be done via a state income tax credit.
“I wanted for everyone who got a tag to go ahead and pay the county for the ad valorem tax, then when they file on the Georgia income tax, they would get a credit,” he said.
That scenario would have offered some advantages over the original bill. First, said Hudgens, local governments and boards of education would have gotten their revenue without having to depend upon the state for reimbursement — a stumbling block in the original proposal. Second, one of the criticisms of the plan was that people in the “underground” (illegal) economy who do not pay income taxes would also get the break, something Hudgens’ proposal would have avoided.
The General Assembly has until midnight Friday to resolve the matter. Regardless of the outcome, Hudgens knows how he’ll vote.
“If it’s a tax reduction, I’m going to vote for it,” he declared.
Schools Hugely Affected
The elimination of the auto tax would hammer local school systems.
Commerce Finance Director Steve McKown said that according to the 2007 tax digest, removal of the auto tax would cost the Commerce School System about $250,000 a year.
Multiply that by eight for the Jackson County Board of Education, according to Tax Commissioner Don Elrod.
Based on the 2007 tax digest, the county school system stood to collect $2,077,476 this past year from taxes on vehicles.
Even half that — assuming a two-year phase-in as called for in the legislation — would present challenges.
“We’re levying 18.9 mills,” notes Jeff Sanchez, finance director. “If they take $1 million away, I can be set on 20 mills and still not get the million back.”
The removal of the tag tax would amount to a $672 million tax cut statewide if approved by the voters. As the measure passed the House with overwhelming bipartisan support (190-5), legislators speculated that the state would have little trouble covering the lost revenue.
But assurances from Atlanta that the state would reimburse schools for the lost money are not exactly comforting to those who have to create school budgets. They point out that Governor’s “austerity cuts” to education funding made during a previous budget shortfall were never restored when the economy improved, and note that the General Assembly has never funded public education to the level required by its own laws.
