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New state tax structure for transportation takes effect Wednesday
Changes include elimination of state fuel sales tax
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Now: Taxes per gallon

  • 7.5 cents state excise
  • 3 percent state motor fuels sales tax
  • 1 percent state sales tax
  • 18.4 cents federal excise
  • 1 percent SPLOST
  • 1 percent LOST
  • 1 percent E-LOST

After July 1: Taxes per gallon

  • 26 cents state excise
  • 18.4 cents federal excise
  • 1 percent SPLOST
  • 1 percent LOST
  • 1 percent E-LOST

An additional $830 million to $850 million is expected to be generated each year through a change in the gas tax structure taking effect Wednesday.

The changes, approved by the General Assembly this year, primarily eliminates the state fuel sales tax and enacts a 26-cent excise tax.

The law also calls for electric car owners to pay an annual $200 fee — $300 for those used for commercial purposes — and removes a $5,000 tax credit serving as an purchase incentive.

“I think (legislators) did a fantastic job with coming up with the ability to address funding at the state level now and into the future,” Department of Transportation Commissioner Russell McMurry told The Times last week.

Consumers now pay a 3 percent state motor fuel sales tax, 1 percent state sales tax, a 7.5 cents per gallon state excise tax and 18.4 cents per gallon federal excise tax.

Also, they pay local taxes: 3 percent in Hall, with 1 percent covering local option sales taxes, 1 percent for the county’s special purpose local option sales tax and 1 percent for education SPLOST.

After July 1, gas buyers will pay 26 cents per gallon state excise and an 18.4 cents per gallon federal excise, plus the local tax. The new state law, however, caps the retails sales gas price at $3 per gallon in terms of how local gas taxes are assessed.

The average retail sales price is set by the state every six months, with the last rate set in May of $2.35.

Thus, the average price of gas per gallon, with taxes built in, is now $2.77. Starting Wednesday, it rises to $2.86.

But as most drivers know, gas prices can fluctuate wildly, based on many factors.

The $2.86 amount is “the snapshot of one day’s gas prices,” said state Sen. Steve Gooch, R-Dahlonega, who helped lead a House-Senate committee that formed last year to address state transportation funding.

He quickly added that lawmakers, in crafting a bill, sought to determine the new tax structure’s impact on consumers based on four years of retail gas prices and determined the average increase would be about 5 cents per gallon.

The $3 cap would serve as the hedge for consumers, Gooch said.

“If (the retail price) was $4 a gallon right now, we’d be talking about a tax cut,” Gooch said.

At $4 per gallon, consumers would pay 54 cents taxes now, compared to 53 cents after July 1.

The price of gas is moving “back to the $3 range and who knows (where it will be) this time next year,” he said. “It may be back to $3.50 or $4 a gallon. We’re one hurricane short of a crisis.”

The annual hurricane season is a key factor in determining future gas prices, largely because of storms’ effect on offshore oil operations.

Also, “when people are fussing about the price of gas going up and down, it’s not the gas tax that’s doing that,” Gooch said. “It’s the free market.”

Last week, “I filled up my tank in Cleveland for $2.44 per gallon,” he said. “In Hall County and (other places), it was $2.78 and $2.80.”

Some residents, when asked about the new tax structure, said they didn’t know about the new law or its effects, while others said they heard a big spike was in store.

Regardless, for Gainesville resident Wayne Stradley, “it’s an extra tax at the pump that people are going to have to pay, and we keep getting hitting over and over again with extra taxes.”

“Roads are something people see every day, so that’s their focus when they look at taxes,” he said. “If they’re going to be paying more in taxes, they want to see more results than what’s been accomplished so far.”

And for Georgians, that means patience will be required. The DOT won’t be able to start spending tax revenue it has collected until July 1, 2016, McMurry said.

But that doesn’t mean state officials will be idle concerning where the dollars will go.

“There’s a lot of planning” for projects that must happen, McMurry said.

Officials won’t produce a specific project list to match up with new money; rather, it would flow into other revenues being generated at the state level.

“What the new revenues are going to do is give us the ability to be more flexible,” McMurry said. “Where we always depend on federal funds to do big projects, we might able to do some of those projects with state money.”

That frees up federal money for maintenance projects, “where there is a much simpler environmental (process) and bureaucracy that you have to work through.”

“And maintenance is a project,” Gooch said. “We’ve got literally just billions of dollars’ worth of needs in our state ... and we’ve got to address them soon.”

The other issue for the state is “we don’t want to rely heavily on the federal dollar when we don’t know what the future of that’s going to be,” he said.

Congress currently is wrangling over federal transportation and infrastructure funding.

A funding law Sept. 30 was renewed until May 31. President Barack Obama signed a two-month extension, dubbed the Highway and Transportation Funding Act of 2015, on May 29.

Locally, a committee of top elected officials with the Gainesville-Hall Metropolitan Planning Organization, the Hall area’s lead transportation planning agency, voted in May to OK a long-range, $1.77 billion plan.

As part of that, the committee asked MPO staff to work with the DOT to incorporate potential funding from the new law into the long-range plan.

In doing so, the plan should “include a significant regional project that would benefit our community,” Gainesville Mayor Danny Dunagan said at the time.

“This would be a question to ask at this time next year,” said Sam I. Baker, the MPO’s senior transportation planner, about the law’s overall impact on area projects.

“The new law, and hence the new higher gas tax rate, will just take effect,” he said. “It will be a while until the state generates any additional revenue and then distributes it throughout the state.”

Seth Millican, director of Georgia Transportation Alliance, a Georgia Chamber group that closely eyed the legislation, said he looks forward to whatever takes shape with the new revenues.

“The focus now shifts to return on investment and making sure we get what we bargained for,” he said.

Effect on area businesses

Effect on local government agencies 

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