Fractional SPLOST Can Stop The Madness – By Joel Aaron

February 18, 2013

County governments, municipal governments, and boards of education love SPLOSTs -Special Purpose Local Option Sales Tax. Taxpayers vote on whether or not to impose the extra sales tax and it must be proposed for a specific list of projects, which can include particular educational facilities, infrastructure improvements, public service improvements, etc.

The biggest catch in the current law is that the SPLOST project list has to equal the projected revenue. In larger counties and municipalities, that one percent can add up to big money – i.e., $120,000 per year in Cobb County. So, the project list grows to fill the void between the most prioritized projects and that projected revenue amount. The “filler” projects may not be all that desirable, but the SPLOST is then sold to the voters on the merits of the priority projects. (XYZ School won’t get their gym if you don’t vote for this! Never mind the SPLOST funded granite countertops installed in the concession stand at ABC school to use the remaining funds.) Another potential abuse is that it can incentivize government entities to inflate the cost of listed projects to accommodate the extra revenues.

The fractional SPLOST concept is one way to stop this madness and House Bill 153 is aiming to fix the misplaced incentives that drive up taxes and spending in counties around Georgia. Current law requires a SPLOST to impose a minimum sales tax of 1%; that creates ballooning budgets and lax fiscal discipline where many projects are piled onto the list, and some do not truly need all the revenues that a full percentage point tax will bring in.

HB 153, proposed by Representative John Carson (R-46), allows a county the option of levying a fractional SPLOST, upon approval by voters, to reflect the true needs of a project, rather than creating a pork barrel of spending at the local level. The mechanism is strictly limited to capital projects and does not extend to cultural arts and other such initiatives. Representative Carson calculates fractional SPLOST will save counties like Cobb $30 million dollars a year by going from 1% to 3/4%, while Cherokee could see an $8-$10 million tax drop. Future SPLOSTs will be calculated in increments of 1/20 of a percent.

The bill is drawing heat from powerful special interests around the State, however, the benefit to taxpayers is clear. If we provide ourselves with the flexibility to take in only what we need, we will have a way to trim the fat and taxpayer waste that would otherwise exist in SPLOST projects.

Like this post? Chip in $5 to AFP