Rural Caucus discusses agriculture tax exemption

2/17/2015

The Georgia Legislative Rural Caucus, which I chair, met Feb. 11 and received information from the Georgia Farm Bureau and the University of Georgia Center for Agribusiness & Economic Development on the Georgia Agriculture Tax Exemption (GATE) program.

GATE provides a sales tax exemption for farm input costs, including seed, feed, fertilizer, chemicals, and other inputs. Although the GATE program was implemented in 2013, most farm sales tax exemptions have been in effect for decades. GATE is administered by the Georgia Department of Agriculture, and the program set additional guidelines for farmers before exemptions could be used.

As soon as GATE was enacted, it came under fire because of statewide reductions in county sales tax revenues. Many people speculated the state underestimated the fiscal impact of the GATE program, and that failure was the cause of the revenue decline. One widely circulated study inferred GATE was the likely culprit.

At the request of the Farm Bureau, UGA began a study in October of historical sales tax revenues to try to spot trends in the reduction in local sales tax revenues. UGA's Dr. Kent Wolfe and Sharon Kane compared sales tax distributions from 2011-2012 (two years before GATE) to 2013-2014 (two years after GATE's implementation).

Their findings show the only segment of the economy with a significant difference in sales tax revenue was the automotive sector. That decrease was due to the fact that the state no longer collects sales tax on automobile purchases.

Automobiles now generate tax revenue through a new "Title Ad Valorem Tax" (TAVT) that is collected when automobile titles are transferred. The UGA study found that when the TAVT was added back to local revenues, only 33 of Georgia's counties lost revenue for the period. The remaining 126 counties experienced an increase in revenue collections.

The takeaway from the meeting was that when the TAVT was enacted, it essentially eliminated all sales tax revenues from automobiles. It should come as no surprise that sales tax revenues dropped as a result. When the TAVT is added back to county revenue, the average county in Georgia increased revenue by almost 6 percent.

In other words, GATE is not harming Georgia county revenue. To the contrary, when farmers purchase farm inputs, that money is put to work helping generate Georgia's economy.

This week, the Rural Caucus will be focused on rural healthcare in Georgia as we hear from the CEOs of two rural hospitals.

Rep. Shaw's Legislation: Last week, two legislative measures that I introduced received hearings in the House Insurance Committee. HB 162, which would provide for insurance compliance self-evaluative privilege to protect the confidentiality of communications in order to encourage insurance companies to conduct voluntary audits, received committee approval and now awaits action by the House Rules Committee. Work continues on HB 185, which would extensively revise the Standard Valuation Law.

Also, I have introduced HB 282, which would provide credit to members of the Teachers Retirement System of Georgia for service rendered in government-supported or operated schools in addition to the public schools in Georgia. The Former Federal Teachers Fairness Act was referred to the House Retirement Committee for its consideration.

Additionally, I attended two meetings of the House Economic Development Appropriations Subcommittee to hear from state department heads as work continues on the annual state budget for fiscal year 2016.

Transportation Bill Changes: Our House Majority Whip team continues to work with the House Transportation Committee on changes to legislation that would provide an additional $1 billion per year for infrastructure maintenance and improvements in Georgia's transportation system.

Addressing concerns over how HB 170 would affect local governments and school boards, which depend on sales tax revenues, a change was made to authorize county commissions to levy a local excise tax of 6 cents per gallon, with the revenues to be divided between county and city governments.

This bill continues to be a work in progress and I commend Transportation Committee Chairman Jay Roberts for continuing to work with those who have concerns about this legislation. I also appreciate the feedback and detailed financial data that I've received from local government leaders from House District 176.

Solar Power Legislation: The House of Representatives voted unanimously Feb. 9 to approve legislation that would allow homeowners and small businesses to finance the purchase of solar panels to generate electricity.

The Solar Power Free Market Financing Act (HB 57) is the result of nine months of careful negotiations between the solar industry, Georgia Power, the electric membership corporations and members of the Municipal Electric Authority of Georgia. It is designed to enable residential and business customers to use leases or output-based financing agreements to install solar technology on their property and connect it to the grid.

Georgia has had strong growth in utility or large-scale solar but only a small amount of small-scale solar. This legislation does not contain any tax breaks or credits, nor does it change regulations for existing solar installations or cash purchases. Likewise, existing requirements dealing with the sale back to the utility of any excess solar-generated electricity are not changed.

Based on the size of the installations, utilities can enforce appropriate safety and power reliability requirements on the solar provider. Georgia Power, the EMCs and MEAG members are able to engage in solar financing if desired, but they have to remain in their own territory, and existing legal protections for consumers would remain in place. HB 57 does not alter the zoning rights of city or county governments. The legislation now goes to the Senate for its consideration.

Removing Diploma Barrier: House members voted Feb. 12 to approve legislation that would retroactively provide former students who did not pass the Georgia High School Graduation Test with the opportunity to earn a high school diploma.

The graduation test was phased out three years ago, but it remains a barrier for some students who attended high school when graduation was partly contingent on passing the exam. HB 91 would allow students who had failed the test but met all other graduation requirements to petition their local school board to obtain a diploma from their high school.

This legislation would help these students in pursuing postsecondary education and in entering the job market. HB 91 now goes to the Senate for its consideration.

Services for Aging Population: On Feb. 11, the House voted to approve legislation that would establish the Georgia Adult and Aging Services Agency to be responsible for ensuring that state services are properly and effectively administered to meet the needs of older adults and people with disabilities, along with making improvements to those services when necessary.

HB 86 moves the current Division of Aging Services out of the massive Department of Human Services, allowing state officials to better focus on individuals dealing with Alzheimer's disease and dementia, which affects many families across the state. The legislation now goes to the Senate for its consideration.

January Revenue Increase: Gov. Nathan Deal has announced that Georgia's net tax collections for January totaled $1.86 billion, an increase of $53.9 million, or 3 percent, compared to January 2014. Through the first seven months of fiscal year 2015, state revenues have increased by approximately $571 million, or 5.2 percent, over the same period last year.

In other economic news, Gov. Deal has announced that Georgia experienced a record increase in both exports and imports for the fifth consecutive year, with a 4.9 percent increase in exports and 11.5 percent increase in imports over last fiscal year's numbers.

The Governor said, "With our strong and diverse international presence, Georgia is able to successfully support companies in reaching new markets. Another record-breaking year in international trade indicates that businesses in our state are growing year-over-year. When combined with the ever-increasing value of Georgia's exports and imports, I am confident that we will continue the trend of more record-breaking international trade in the future."


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