Welcome to the new order, Part II. -- Ga. GOP House leaders introduce bill to replace local property taxes with a state 3% sales tax to fund schools.
I did a 11-20-04 post entitled "Preparing ourselves for a new order. -- A spending bill addressing the deficit including something about abortions. Why not? It's a new day."
The background was the national scene. As noted in the following described 11-25-04 ajc article on replacing property taxes with a 3% sales tax to fund schools, we also can expect a new day in the new order on the state level.
In the article ajc staff writer Nancy Badertscher has done a great write up on the GOP's proposal of a 3% sales tax increase and shares some of her state-by-state research with us (the lattter is not included in this post). The article:
Republican leaders in the Georgia House intend to use the clout of their new majority to launch a debate on replacing local school property taxes with a 3 percent hike in the state sales tax.
A bill to do just that was proposed during the 2004 General Assembly and went nowhere.
But since then, Republicans have won control of the 180-member House and have voted to put the bill's two main sponsors — state Reps. Jerry Keen of St. Simons Island and Glenn Richardson of Dallas — in charge.
If it gains support in the upcoming General Assembly session, the measure could be on the ballot as a constitutional amendment as soon as 2006.
For property owners, the Keen-Richardson proposal could mean a huge financial break. On average, 55 percent of property tax bills go to the local school system. In some counties, it's as much as 77 percent, according to a study by David Sjoquist, director of the Fiscal Research Center at Georgia State University's Andrew Young School of Policy Studies. For the tax year 2003, the last year for which figures are available, the Revenue Department says property taxes collected statewide for school maintenance and bonds totaled $4.6 billion.
In Fulton County, eliminating the school tax would reduce the property taxes on a $200,000 house by about $1,500. A 3 percent increase in sales tax for a family making $100,000 a year would represent an average increase of about $1,500.
The state now collects a 4 percent sales tax, but local taxes vary substantially. In Atlanta, the total sales tax amounts to 8 percent.
Under the proposal, the money collected from the additional sales tax would be redistributed to school systems based on an as yet undetermined formula. The measure's supporters pledge that individual school systems would not suffer financially.
"Obviously, you cannot fund Gwinnett County [in metro Atlanta] the same amount as you fund Brantley [County, in rural Georgia]," Keen said. "But under our proposal, not a single school system in the state, including the metro systems, would not receive a penny less than they are receiving now."
The proposal's supporters can expect stiff opposition.
Advocates for poor people long have argued that increasing sales taxes hits people who can't afford it hardest. They also argue that property tax relief would do little for people who rent or cannot afford to buy homes.
State Rep. Tyrone Brooks (D-Atlanta), president of the Georgia Association of the Black Elected Officials, said such a sales tax increase would be devastating for poor people, the elderly and people living on fixed incomes.
"I'm very, very concerned about that proposal," Brooks said.
Herb Garrett, executive director of the Georgia School Superintendents Association, acknowledged that the proposal may appeal to homeowners weary of paying school property taxes. But he believes the sales tax plan is a bad idea.
"We believe that the funding of public education ought to be based on a stable and reliable source of revenue, and the sales tax alone does not meet that definition," Garrett said.
Under last year's bill, Garrett said the state would have left local districts unable to spend more than their state allocations.
"That would immediately hamper the ability of parents in north Fulton to have orchestra in high schools," Garrett said. "It would hamper the ability of the city of Atlanta schools from having special remedial courses."
Garrett urged caution. "We think it has real problems, and it deserves a lot more discussion," he said.
Richardson, who will become speaker of the House in January, and Keen, who was picked to be majority leader, said legislators have two incentives to give the sales tax proposal a serious look.
In September, a group of parents and more than 50 rural school districts filed a lawsuit, challenging the current system of funding public education in Georgia. Property owners also are being hit with higher assessments and are clamoring for tax relief, they said.
"We've got two problems. and we need a solution to fix both," Richardson said.
"If education is everyone's responsibility, shouldn't all Georgians be paying for it, not just the one million or so property owners?" Richardson said.
He said the bipartisan group that signed on to the bill this year knows "there are upsides and downsides, as with any proposal. But we've studied it," Richardson said.
One concern — that sales tax revenues could fluctuate with turns in the economy — could be addressed by the creation of a major reserve fund, he said.
House Ways & Means Committee Chairman Richard Royal (D-Camilla) said he introduced the same proposal 10 years ago but was uncomfortable about the reliability of sales tax collections in an economic downturn to pursue it.
Royal said he's keeping an open mind about the Keen-Richardson proposal, but he expressed reservations about the 3 percent cap. Ten years ago, he had calculated a 2 percent sales tax.
"What about growth? Inflation?," he said. "If we put that cap on, it would take another constitutional amendment to raise the cap."
Royal said he also worries about a provision in the bill that would remove all sales tax exemptions, including the one on groceries.* "That would put a $700 million burden placed back on the people of Georgia," Royal said. "I have a concern about that."*
_______________
As noted in my 10-09-04 post -- and for the very different reasons discussed therein from those underlying the legislation seeking to change funding for education -- I am very much in favor of removing the sales tax exemption on "groceries." The post is entitled:
"The time is now; the need is acute; sponsors solicited and welcome -- In 2005 the Gen. Assembly needs to remove the sales tax exemption on groceries."
The background was the national scene. As noted in the following described 11-25-04 ajc article on replacing property taxes with a 3% sales tax to fund schools, we also can expect a new day in the new order on the state level.
In the article ajc staff writer Nancy Badertscher has done a great write up on the GOP's proposal of a 3% sales tax increase and shares some of her state-by-state research with us (the lattter is not included in this post). The article:
Republican leaders in the Georgia House intend to use the clout of their new majority to launch a debate on replacing local school property taxes with a 3 percent hike in the state sales tax.
A bill to do just that was proposed during the 2004 General Assembly and went nowhere.
But since then, Republicans have won control of the 180-member House and have voted to put the bill's two main sponsors — state Reps. Jerry Keen of St. Simons Island and Glenn Richardson of Dallas — in charge.
If it gains support in the upcoming General Assembly session, the measure could be on the ballot as a constitutional amendment as soon as 2006.
For property owners, the Keen-Richardson proposal could mean a huge financial break. On average, 55 percent of property tax bills go to the local school system. In some counties, it's as much as 77 percent, according to a study by David Sjoquist, director of the Fiscal Research Center at Georgia State University's Andrew Young School of Policy Studies. For the tax year 2003, the last year for which figures are available, the Revenue Department says property taxes collected statewide for school maintenance and bonds totaled $4.6 billion.
In Fulton County, eliminating the school tax would reduce the property taxes on a $200,000 house by about $1,500. A 3 percent increase in sales tax for a family making $100,000 a year would represent an average increase of about $1,500.
The state now collects a 4 percent sales tax, but local taxes vary substantially. In Atlanta, the total sales tax amounts to 8 percent.
Under the proposal, the money collected from the additional sales tax would be redistributed to school systems based on an as yet undetermined formula. The measure's supporters pledge that individual school systems would not suffer financially.
"Obviously, you cannot fund Gwinnett County [in metro Atlanta] the same amount as you fund Brantley [County, in rural Georgia]," Keen said. "But under our proposal, not a single school system in the state, including the metro systems, would not receive a penny less than they are receiving now."
The proposal's supporters can expect stiff opposition.
Advocates for poor people long have argued that increasing sales taxes hits people who can't afford it hardest. They also argue that property tax relief would do little for people who rent or cannot afford to buy homes.
State Rep. Tyrone Brooks (D-Atlanta), president of the Georgia Association of the Black Elected Officials, said such a sales tax increase would be devastating for poor people, the elderly and people living on fixed incomes.
"I'm very, very concerned about that proposal," Brooks said.
Herb Garrett, executive director of the Georgia School Superintendents Association, acknowledged that the proposal may appeal to homeowners weary of paying school property taxes. But he believes the sales tax plan is a bad idea.
"We believe that the funding of public education ought to be based on a stable and reliable source of revenue, and the sales tax alone does not meet that definition," Garrett said.
Under last year's bill, Garrett said the state would have left local districts unable to spend more than their state allocations.
"That would immediately hamper the ability of parents in north Fulton to have orchestra in high schools," Garrett said. "It would hamper the ability of the city of Atlanta schools from having special remedial courses."
Garrett urged caution. "We think it has real problems, and it deserves a lot more discussion," he said.
Richardson, who will become speaker of the House in January, and Keen, who was picked to be majority leader, said legislators have two incentives to give the sales tax proposal a serious look.
In September, a group of parents and more than 50 rural school districts filed a lawsuit, challenging the current system of funding public education in Georgia. Property owners also are being hit with higher assessments and are clamoring for tax relief, they said.
"We've got two problems. and we need a solution to fix both," Richardson said.
"If education is everyone's responsibility, shouldn't all Georgians be paying for it, not just the one million or so property owners?" Richardson said.
He said the bipartisan group that signed on to the bill this year knows "there are upsides and downsides, as with any proposal. But we've studied it," Richardson said.
One concern — that sales tax revenues could fluctuate with turns in the economy — could be addressed by the creation of a major reserve fund, he said.
House Ways & Means Committee Chairman Richard Royal (D-Camilla) said he introduced the same proposal 10 years ago but was uncomfortable about the reliability of sales tax collections in an economic downturn to pursue it.
Royal said he's keeping an open mind about the Keen-Richardson proposal, but he expressed reservations about the 3 percent cap. Ten years ago, he had calculated a 2 percent sales tax.
"What about growth? Inflation?," he said. "If we put that cap on, it would take another constitutional amendment to raise the cap."
Royal said he also worries about a provision in the bill that would remove all sales tax exemptions, including the one on groceries.* "That would put a $700 million burden placed back on the people of Georgia," Royal said. "I have a concern about that."*
_______________
As noted in my 10-09-04 post -- and for the very different reasons discussed therein from those underlying the legislation seeking to change funding for education -- I am very much in favor of removing the sales tax exemption on "groceries." The post is entitled:
"The time is now; the need is acute; sponsors solicited and welcome -- In 2005 the Gen. Assembly needs to remove the sales tax exemption on groceries."
posted by Sid Cottingham | 5:24 PM
3 Comments:
Why is it, if educating our children is so important, only those owning property should bare the burden? Why should a family with 5 children renting a 3 bedroom apt. not have to pay for their children's education? Why should a property owner with no children pay? What about a family who lives in one county and owns a business in a neighboring county...not only do they pay twice, they can only vote on referendums in the home county. All should pay, or better yet, maybe those who chose to have the children in the first place should take responsibility for that choice.
One big issue, as stated by Herb Garrett in the post, is the stability of funding. My county has about 7,000 students, a population of around 30,000. Being involved in governmental and quasi-governmental work for clients, I watch sales taxes. The base does change a lot.
But you are on point on one thing. It is going to be one hard looked at and studied issue.
I studied the removal of sales taxes on groceries -- state by state type studying -- but really haven't undertaken such in this area.
But I do recall the issue floating around in the federal courts several years ago. I can't cite chapter and verse, but as stated, we all need to buckle up for the ride.
So are they saying that this sales tax would be collected by the state and then be distributed evenly based on the number of students in each school district?
If the concern is state-wide equity, why not just levy a state-wide property tax and redistribute funds that way? Seems like it'd be fairer to all the children of our state.
A lot of these "reforms" sound like they're more concerned with saving a few rich people money (shifting taxes from wealth to consumption) than in really doing something positive for the benefit of Georgia's kids.
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