6th UPDATE

Speaker's Tax Reform Plan Sails Through House

6th Update at 5:37 p.m. adds statement from Richardson and critic Alan Essig. New material highlighted.
5th Update at 5:28 p.m. adds Eric Johnson comment.
4th Update at 4:25 p.m. adds Cagle quote and adds cost figures for tax plan.

By Dick Pettys
InsiderAdvantage Georgia

(3/11/08) In the come-back story of this session, Speaker Glenn Richardson pushed a modified version of his tax relief plan through the Georgia House Tuesday, gaining bipartisan support in a 166-5 vote that brought a standing ovation from Republicans on the chamber floor.

If approved by the Senate and then by the voters in November, the bill would eliminate the car tag tax in two steps - half next year and the remainder in 2010. It would eliminate the state's quarter-mill property tax, and it would freeze property tax assessments at 2008 levels except for increases of up to 2 percent for residential property and 3 percent for commercial.

Lt. Gov. Casey Cagle quickly issued this statement: “Now is the time for targeted tax relief that stimulates the economy and creates jobs. The House has started this debate, and the Senate will make time for meaningful and substantial deliberation on tax relief to benefit our economy during this economic downturn. Make no mistake, we have an equal constitutional role with the House on fiscal issues, and the upper chamber will play a significant role in considering, and hopefully passing, an economic stimulus package that meaningfully benefits every Georgia citizen."

Senate President Pro Tem Eric Johnson, R-Savannah, put it a bit more sympathetically: "The Senate is pleased to have the opportunity to reduce taxes and protect property from future backdoor tax increases. We look forward to analyzing all of the options and putting significant tax reform on the ballot in November."

Gone from the major tax measure is the limit on government spending which Richardson had said was necessary to halt excessive spending by local government, but which proved the sticking point when the measure was presented last week and caused Democrats to bloc-vote against it. Democratic opposition at the time denied the measure the 120-vote super-majority it needed. (The vote last week was 110-62.)

"I have tried, tried, tried and I'm going to try one more time because I fundamentally believe the people of the state of Georgia ought to have relief from property taxes," Richardson told the chamber. He said property taxes are "an onerous burden people can't control, and they keep going up and up and up."

The vote came just a day after Gov. Sonny Perdue, warning that the economy is softening, took new steps to rein-in state spending. Among other things, he cut his revenue estimate for the current and following budgets - steps which effectively limit how much money the Legislature can spend.

Rep. Mark Burkhalter, the speaker pro tem and a long-time champion of ending the tag tax, said the governor's concerns shouldn't deter lawmakers from cutting taxes.

"Our state is still very healthy and, contrary to what some economists will tell you, the sky is not falling," he said.

"It's very simple," he added. "You cut taxes, the economy grows. The economy grows, Georgians prosper. The best way to stave off any recession is to cut taxes."

House Democratic Leader DuBose Porter threw the support of his caucus to the measure.

"Democrats are not against taking the tax off vehicles," he said. "We were against some things (in the previous proposal) that would hurt local government."

Richardson's decision to eliminate the caps on local spending "allows those things we were worried about to be off the table. With that not in the bill we, as Democrats, support this bill."

He said Democrats still were concerned that a two-year phase-out was too short and hoped that later in the process, perhaps in a conference committee, the time could be lengthened.

Republicans were set after last week's vote to campaign against Democrats for blocking the tax cut, terming it the best issue ever to use in the fall campaigns. But Richardson's year-long campaign for tax relief had left his own caucus anxious to take something back to the voters, and even some Democrats who voted "no" last week were urging a do-over, said House Majority Leader Jerry Keen.

In addition to passing Richardson's tax reform measure, the House approved 164-7 a separate Richardson bill that would add a $10 fee to car registration costs to fund a statewide trauma network.

Eliminating the tag tax will cost the state an estimated $672 million, since it is required under Richardson's legislation to reimburse counties for the loss of that revenue source. Eliminating the state's quarter-mill share of the ad valorem tax will cost $90 million.

Richardson issued this statement after the vote:

“After working for over a year on property tax reform, I am thrilled that we were finally able to provide some relief for Georgians by passing the largest tax cut in our state’s history. Property tax bills are rising faster than people’s ability to pay them, and today, the House has addressed that issue. I believe this is a much needed first step in relieving Georgians of their tax burden and I hope that we will continue to work towards further property tax reform.

“I owe a huge debt of gratitude to Mark Burkhalter, our Speaker Pro Tempore, Majority Leader Jerry Keen, Ways and Means Chairman Larry O’Neal, and the fantastic staff who have worked on this bill. They have all put in countless hours to bring this day to fruition, and I look forward to working with them as we continue traveling down the road of tax reform.”

Alan Essig, director of the Georgia Budget and Policy Institute and a fierce critic of all of Richardson's tax proposals this year, issued this statement: "What programs do you cut to make up for the loss of revenue? A loss of that amount of revenue means that the state will have to make dramatic cuts. Rather than political pandering, Georgia needs a sound fiscal plan that accounts for the education, healthcare, and public safety budget demands facing the state."

The measure approved Tuesday is HR 1246, as amended by the House Rules Committee. The latest version is not yet online.

The trauma care bill is HB 1158, as amended by the House Rules Committee. Again, the current version is not yet online.