ATLANTA – House Speaker Glenn Richardson unveiled a new tax plan Tuesday to eliminate the car-tag tax over two years, limit property assessments to modest annual inflation-ary increases, restrict the growth of local spending to the inflation rate and impose a $10 fee per vehicle to help fund a statewide trauma-care network.
His plan replaces an earlier proposal that had called for replacing school property taxes on homeowners with an ex-panded consumer sales tax on services and food.
Richardson, R-Hiram, presented the idea first to the House GOP Caucus, then took it to the House Rules Committee, which scheduled the package for debate by the full House today (Wednesday).
Richardson called it the largest tax cut in state history, and it cleared the Rules Committee on a loud voice vote of approval.
The previous version of Richardson’s plan, nicknamed the GREAT Plan, was a package of two constitutional amend-ments and one statutory change that would have eliminated the car-tag tax, shifted the school property tax on homesteads to an expanded sales tax, eliminated back-door tax increases caused by unrestrained property reassessments and limited the growth of local government spending to rein-in front door tax hikes.
The proposal was controversial, particularly among city, county and school officials.
Last week, Democrats announced they would oppose the package - a huge blow since Richardson needed some De-mocrat support for it to reach the super-majority 120 votes to pass. In addition, a caucus whip count showed he could not count on all Republicans to stand behind the proposal.
The latest revision still contains aspects that will annoy local officials, who flocked to the Capitol last week to express their opposition to a number of aspects of the earlier meas-ure, including the one to restrict spending growth. Senate President Pro Tem Eric Johnson said the spending restric-tion could be a major sticking point.
"I’m not sure the tax freeze bill gets two-thirds vote (in the Senate) with the millage cap they’ve put on it," said Johnson, R-Savannah.
As Richardson outlined the proposal Tuesday morning, half of the tag tax will be eliminated 2010 at a cost of $329.5 million. The tax will be fully eliminated 2011 at a total cost of $672 million.
The vast majority of that money goes to local governments. Richardson said the state would make every government whole and vowed no entity would lose a penny.
There would be no new revenue stream to help state gov-ernment offset the huge cost. Legislators said Richardson is counting on normal increases in state revenues over time to absorb the expense.
County tax assessors could increase residential property up to 2 percent a year and non-residential up to 3 percent a year.
The caps on local revenue growth would be figured on a 2008 base plus the governmental inflation rate which has averaged 5.05 percent over the last five years.
Local governments wishing to increase spending above the inflation rate could do so, but only with voter approval in a referendum.
Those spending caps are a non-starter with local govern-ment groups, who said lawmakers should allow city council members and county commissioners to do their jobs in pro-viding local services.
"We feel like they were elected to manage the state budget, not the local budget," said Clint Mueller, legislative director for the Association County Commissioner of Georgia.
Other critics said committing the state to spend hundreds of millions of dollars a year on a tax cut as the economy seems headed for a recession was irresponsible.
"The whole discussion about ‘growth will pay for it’ is not true," said Alan Essig, executive director of the think tank Georgia Budget and Policy Institute, which has long been critical of Richardson’s proposal. "It’s not reality."
Democrats said they hadn’t polled their membership on the new proposal to know how many votes might change. But House Minority Leader DuBose Porter, D-Dublin, seemed unmoved.
"It still has a large gap that will have to be made up some-where," Porter said.
