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Revisiting Georgia’s Title Ad Valorem Tax System: A billion-dollar raid on local government treasuries

By Charles Hayslett

(Author’s Note: This is the first of at least two and probably three pieces I’m writing on the impact on local governments of Georgia’s transition from a traditional sales-and-property tax system of taxing motor vehicles to a complicated new “title ad valorem tax” system.  This is an overview and stage-setter; deeper dives into regional and county-level impacts will follow.)

Think of this as a political cold case, an opportunity to revisit the scene of an old legislative crime five years after the fact and assess the violence with fresh eyes.  Our case today is a bill passed by the Georgia General Assembly in 2012.  Known officially as House Bill 386, this measure was widely ballyhooed as “tax reform.”  This alone should have been evidence enough that the General Assembly was up to no good.  Further evidence lies in the timing.  The 56-page bill was shared with members of a specially-appointed House-Senate committee on taxation a scant 10 days before the 2012 session was scheduled to end.  When then-House Minority Leader (and current Democratic gubernatorial candidate) Stacey Abrams had the temerity to ask about fiscal models that had been used to gauge the financial impact of HB 386’s provisions, then-House Ways and Means Committee Chairman Mickey Channell “responded curtly,” according to one report, that “we don’t have that available right now.”

Not to worry.  The very next day HB 386 was approved overwhelmingly by the full House of Representatives (only nine members, all Democrats, mustered the nerve to vote against it; Abrams wasn’t one of them) and immediately transmitted to the Senate, which passed it unanimously two days later.  Less than a hundred hours after it rolled off the legislative printing press, this 2,000-line bill was out of the General Assembly and on its way to Governor Nathan Deal, who called it “good news” and said: “It means our state is more competitive and is a state where we can grow jobs.”

Revisiting HB 386 five years later is a little like going back to the scene of a massacre and discovering that nobody bothered to remove all the bodies, let alone mop up the blood.  The joint House-Senate taxation committee was supposed to be following up on the work of a 2010 Special Council on Tax Reform and Fairness for Georgians.  Created by state law, the Council was headed by former Atlanta Olympics czar A.D. Frazier and made up of Frazier and nine other well-respected business leaders and actual economists.  This group produced a thoughtful 34-page report that proposed pretty reasonable changes to the full range of taxes imposed by the state of Georgia.

Those recommendations were, naturally, largely ignored.  Instead, the leaders of the joint House-Senate tax committee ginned up a grab-bag of goodies for a lot of the usual suspects, including agricultural equipment retailers and Delta Air Lines.  But all that didn’t get much media attention, thanks to what one report described as the “wham-bam-thank-you-ma’am” means by which the legislation was rammed through the General Assembly.  Instead, the bill’s legislative champions focused on the lead section of the bill, which overhauled the way motor vehicles are taxed in Georgia, and so did the press.

For now, so will we.  To cut to the chase, this section of the bill alone amounted to a massive raid on local government treasuries by state government.  Working with Georgia Department of Revenue data detailed in a recent report by Georgia State University’s Fiscal Research Center, it’s now clear that this one provision of HB 386 shifted something on the order a billion dollars in motor vehicle taxes from Georgia’s cities, counties and school systems to the state treasury between 2014 and 2016 alone.  Once 2017 numbers are in, that cumulative total will almost certainly rise even further.

Here’s how it worked.  Before HB 386, Georgians paid two types of taxes on their motor vehicles – a sales tax at the time of purchase and then an ad valorem (or property) tax every year thereafter.  These two taxes were important sources of revenue for Georgia’s state and local governments.  The sales tax, paid at the time of purchase, was divided between the state and local governments; the state got its 4 percent and the counties got whatever their local sales tax was set at – generally between 2 and 4 percent.  In subsequent years, the counties collected the ad valorem taxes and divided the proceeds three ways amongst themselves and local municipal governments and school systems.  As motor vehicles aged, these ad valorem taxes declined.

It was a tried and true system, but former House Speaker Glenn Richardson (R-Douglasville) had begun to rail some years before about the fact that these ad valorem taxes came due in the month in which the motor vehicle owner was born.  He complained bitterly that this amounted to a “birthday tax” on hapless Georgians and set out to do away with it.  Richardson himself would leave office in disgrace a year or so afterward, but killing the birthday tax for some reason remained a cause celebre among House Republicans and became a key rallying cry in support of HB 386.

In place of the old sales-and-property tax system and its evil birthday tax, they unveiled what they called the Title Ad Valorem Tax.  Now known as TAVT, this is a convoluted Frankenstein monster of a system that appears (fortunately for the rest of America) to be unique to the Great State of Georgia.  (I’ve Googled it and called everybody I can think of to call, and I can’t find anybody who’s aware of anything like it anywhere else in the country.)

Basically, it functions like a sales tax that is paid at the time of purchase.  When it first went into effect, the new TAVT tax was set at 6.5 percent of the cost of the vehicle and the proceeds were split between the state and the county; initially, under HB 386, the state got 57 percent of that 6.5 percent and the local county got the other 43 percent.  Since that first year the rate has increased, first to 6.75 percent and now to 7 percent (where it will likely stay) and the split (again, as provided for in the legislation) has been shifting in favor of the local governments.  As of 2016, that 7 percent tax was being split 53.5 percent-to-46.5 percent in favor of the state.  Over time, the law calls for the split to shift incrementally in favor of the local governments.

That was one of two major elements to the HB 386 overhaul of the way the state taxes motor vehicles.  The other was that the state began taxing two new categories of motor vehicles: casual sales between individuals (this was one of the few Special Council recommendations that survived the legislative shredder), and motor vehicles that are moved into the state.  Bottom line, the TAVT section of HB 386 did away with annual ad valorem taxes, sought to replace that lost revenue with the new “title” taxes on casual sales and motor vehicles moved in from out of state, and changed the way the overall pie was carved up.

By my arithmetic, that trade-off has so far turned out to be about a wash – maybe even a little bit of an overall money-loser.  Under the new TAVT, actual total motor vehicle revenue for the state and local government combined has grown from $1.67 billion in 2012 to $2.01 billion in 2016.  If the old system had remained in place and the state and local tax streams had continued to increase at their respective 2010-2012 growth rates, total revenues for 2016 would have hit $2.05 billion.

While much of the debate that surrounded HB 386 has been lost in the political fog that usually envelops the State Capitol, various legislators, lobbyists and policy wonks tell me there was a lot of discussion about the need to “keep local governments whole” – at least over the long haul.  At that, HB 386 has so far failed miserably.

The table below (using DOR data drawn from the GSU Fiscal Research Center report) compares actual motor vehicle revenues collected by the state and local governments with (for the years 2014 through 2016) what they would have collected if their revenues had been allowed to continue to grow at their 2010-2012 growth rates, which averaged 3.7 percent per year for state government and 5.9 percent per year for local governments.  (2013 was omitted from the Fiscal Research Center report because it was a transition year.)

  State Government Actuals for all years shown Local Government Actuals for all years shown State Government motor vehicle revenue actuals for 2010-2012 and projections for 2012-2014 @ 2010-2012 growth rate Local Government motor vehicle revenue actuals for 2010-2012 and projections for 2012-2014 @ 2010-2012 growth rate
2010 $472,850,810 $1,040,287,022 $472,850,810 $1,040,287,022
2011 $516,340,012 $1,120,536,551 $516,340,012 $1,120,536,551
2012 $506,622,862 $1,165,640,024 $506,622,862 $1,165,640,024
2014 $787,251,834 $1,164,914,899  $    544,806,520  $        1,307,243,140
2015 $899,534,821 $1,123,206,907  $    564,964,362  $        1,384,370,485
2016 $1,018,812,824 $993,062,894  $    585,868,043  $        1,466,048,344
2014-2016 Totals $2,705,599,479 $3,281,184,700 $1,695,638,925 $4,157,661,968

The two left-hand columns show actual state and local government motor vehicle revenue totals for the years shown, as reported in the GSU Fiscal Research Center report.  The two right-hand columns repeat the actual data for 2010 through 2012 and show what the state and local motor vehicle revenues would have been if the old sales-and-property tax system had been left in place and state and local recent growth rates had continued.

Bottom line, the state government’s actual revenues for the period 2014-2016 are just over a billion dollars higher than they would have under the old system and at the old growth rate, while local governments are down a cumulative $876 million.

In a follow-up post soon, I’ll take a deeper dive into how TAVT affected counties in various parts of the state.  Spoiler alert: Rural counties got screwed the worst.

South Georgia vs. Gwinnett County

By Charles Hayslett

Here’s an easy way to understand the widening gap between Metro Atlanta and the rest of Georgia.

Compare all 56 counties of interior South Georgia to Gwinnett County alone.

Gwinnett County’s 2013 population was estimated at 859,304 – just under three-fourths of the 1.16 million people living in our 56-county South Georgia region.

But despite that population disadvantage, Gwinnett County:

  • Generates more income and contributes more in taxes than all 56 counties of South Georgia combined. According to IRS data, Gwinnett County’s total income for 2013 was $21.2 billion versus $17.4 billion for South Georgia.  Similarly, Gwinnett County taxpayers paid $2.5 billion in federal taxes while South Georgia taxpayers contributed $1.7 billion.
  • Consumes substantially less in social services than South Georgia. In 2013, as one example, Gwinnett County consumed less than a third as much in Medicaid services than South Georgia.  The federal share of South Georgia’s Medicaid costs totaled $927.6 million; Gwinnett County, $266.2 million.  The picture for SNAP (food stamps) and other social benefits is similar.South Georgia vs Gwinnett County
  • Is home to significantly more college graduates than South Georgia. Based on data compiled by the U.S. Department of Agriculture’s Economic Research Service (ERS), there were 175,290 college graduates in Gwinnett County over the period 2009-13 versus 110,576 for all of South Georgia.  This hasn’t always been the case.  As recently as 1990, Gwinnett County and South Georgia were basically tied in this category: 65,281 for Gwinnett and 63,073 for South Georgia.
  • Sends more students to University System of Georgia colleges than all of South Georgia. This is also a recent development.  A decade ago South Georgia still sent significantly more kids to college than Gwinnett County – 5,117 versus 3,762.  But by 2011 they were basically tied.  South Georgia sent 5,498 kids to college while Gwinnett County sent 5,493, according to University System of Georgia data.  Since then the gap has widened steadily, and in 2015 Gwinnett County sent 1,100 more freshmen to University System colleges than South Georgia.
  • Is substantially healthier than South Georgia. Using premature death rates as a proxy for health status, Gwinnett County is about twice as healthy as South Georgia.  The 2015 YPLL 75 rate for the 56-county South Georgia region was 9,823.3; for Gwinnett County, it was 5,163.2 (with YPLL 75 rates, the lower the number, the better).   In this category, South Georgia has actually gained a little ground over the past 20 years.  It’s improved about 5.4 percent over that period while Gwinnett County has been essentially flat.  But South Georgia’s numbers in this category are abysmal while Gwinnett County’s are pretty close to optimal, especially for a county as large and diverse as it is.  For 2015, Gwinnett County’s YPLL 75 rate was the fifth best in the state, and it has consistently been in the top tier of counties in this category.
  • Produces about half as many criminals as South Georgia.   In 2015, according to Georgia Department of Corrections data, South Georgia sent more than twice as many people to prison than Gwinnett County did: 2,403 for South Georgia versus 1,049 for Gwinnett.  The picture for new probationers is similar: 5,956 for South Georgia versus 2,630 for Gwinnett County.

In a future post, we’ll take a look at political and cultural trends in Gwinnett County and South Georgia.

Copyright (c) Trouble in God’s Country 2016

 

A Data Mash-Up: University System of Georgia vs. Georgia Department of Corrections. It’s not pretty.

Spend much time sifting through reams of data about Georgia counties and sooner or later you’ll stumble across an interesting factoid you weren’t even looking for.

Here’s one example: Georgia convicts more people of crimes than it sends to college.

Maybe that’s not surprising, but it still seems a little troubling, and it may be one reasonable indicator of the overall social health of a community.

I was pursuing two different lines of research – one with University System data and the other with Department of Corrections statistics – when I noticed the contrast.

Ten years ago, in 2006, 36,202 Georgians matriculated as freshmen at one of the state’s colleges or universities, according to University System of Georgia data.  That same year, a total of 66,255 were either convicted or pled guilty to crimes, according to Georgia Department of Corrections (DOC) data.  This group included 44,762 who were placed on probation and another 21,493 who were sent to prison.  That works out to 1.83 convicts for every college freshman.

Ten years later, by 2015, that ratio had improved.  The number of college freshmen was up to 42,908 and the number of total convicts was down to 59,111, giving us about 1.38 new people entering the corrections system for every new college freshman.

That improvement was not, however, spread evenly across the state.  In 2006, all five of our Trouble in God’s Country regions – Metro Atlanta, Coastal Georgia, Middle Georgia, North Georgia and South Georgia – were cranking out more convicts than college freshmen.

By 2015, Metro Atlanta had turned that around and was producing a few more college freshmen than total convicts – 22,903 college freshmen to 22,042 convicts.  The other four regions still had negative college freshmen-to-convict ratios.

The key driver in that change has been a gradual but steady shift in where Georgia’s college freshmen come from.

What might be called a “regional share of criminals” went largely unchanged between 2006 and 2015.  Every single region finished the 10-year stretch within a single percentage point of where it started.  Metro Atlanta’s share of new convicts was exactly the same in 2015 as it had been in 2006 – 37.3 percent.  Coastal Georgia and Middle Georgia saw their shares drop by a fraction of a point, while North Georgia and South Georgia each eked up by less than a point.

But the distribution of college freshmen did change significantly.  In 2006, 46.2 percent of Georgians enrolling at the state’s colleges and universities came from our 12-county Metro Atlanta region; by 2015, that number was up to 53.4 percent.  All four other regions saw their share of college freshmen decline at least slightly, with our 56-county South Georgia region taking the biggest hit; it was down from 14.1 percent of college freshmen in 2006 to 10.6 percent in 2015.

I mentioned above that the state’s convict population falls into two categories – those who are placed on probation (presumably for lesser crimes and/or plea deals) and those who actually go to prison.  Because that overall convict population is larger than the number of college freshmen we produce each year, it follows that most individual counties would fit that profile, and that is indeed the case.  Of Georgia’s 159 counties, 141 produced more criminals than college freshmen in 2015.

Of those, 22 actually sent more people to prison than to college.  That list of counties earning that dubious distinction is as follows:

 

Region County 2015 College Freshmen 2015 Prison Admits
Middle Baldwin 83 85
South Ben Hill 51 94
North Chattooga 47 118
South Clay 5 9
North Elbert 45 59
North Floyd 334 420
North Franklin 40 61
North Greene 40 46
North Hart 44 70
Middle Jones 69 82
South Lanier 5 16
North Madison 59 63
Middle Meriwether 65 72
Middle Richmond 531 558
Middle Spalding 185 212
North Stephens 50 71
North Taliaferro 3 6
North Towns 16 18
Middle Treutlen 26 27
Middle Troup 206 267
Middle Twiggs 19 20
North Walker 134 173

At the other end of the spectrum, 16 counties produced more college freshmen than total convicts (prison admits and probationers combined).  Here’s that honor roll:

Region County 2015 College Freshmen 2015 Criminal Convicts (Prison Admits & Probationers)
Coastal Bryan 239 96
Coastal Camden 241 188
Atlanta Cherokee 1,117 920
Middle Columbia 764 588
Coastal Effingham 306 229
Atlanta Fayette 784 471
Atlanta Forsyth 1,268 548
Middle Glascock 12 8
Atlanta Gwinnett 5,664 3679
Atlanta Henry 1,362 935
South Lee 216 111
North Oconee 305 65
Atlanta Paulding 587 346
Middle Pike 106 20
South Schley 38 25
South Turner 45 40

Probably the strongest performer in this category is fast-growing Forsyth County, which also posts some of the state’s strongest economic, educational and public health numbers.  Even a decade ago, in 2006, Forsyth County was already sending more people to college than into the criminal justice system, and it’s widened the gap considerably in the 10 years since then, as this chart shows.

Forsyth County Chart

In 2006, Forsyth sent 150 more people to college than into the criminal justice system; by 2015, it was sending more than two people to college for each one it convicted of a crime.

Just about the entire Metro Atlanta region performed well in this area, however.  Of the 12 counties in our Metro Atlanta region, all but one saw its ratio of college freshmen-to-convicts improve over the 10-year period.  The exception was Fayette County.  It still finished on the honor roll (above) of counties sending more people to college than into the criminal justice system, but nonetheless finished the 10-year period with slightly poorer numbers.

Copyright (c) 2016 Trouble in God’s Country

 

 

 

Georgia blacks make strong gains in premature death rates; rural white females losing ground

As we’ve noted in various previous posts, Georgia’s premature death rate (known formally as Years of Potential Life Lost before age 75, or YPLL 75) has been improving fairly steadily over the 20 years that the state’s Department of Public Health (DPH) has been compiling pertinent data.[1]  Between 1994 and 2013, the state’s YPLL 75 rate improved from 9,195.6 to 7,104.7, a gain of 19.4 percent.  The national median, as reported the Robert W. Johnson Foundation in its latest County Health Rankings, was 7,681, so Georgia is doing a little better than the nation as a whole.

But, as we’ve noted in past posts, Georgia’s improvement has been far from even; we’ve focused in particular on regional differences and the dramatic gap in YPLL 75 performance between Metro Atlanta and the rest of the state.  Until now, however, we haven’t looked at racial or gender comparisons, and that produces a couple of interesting headlines.  One is that the vast majority of gains in premature death rates between 1994 and 2013 have been made in the black population.  The other is that rural white females are losing ground.  Read more

Is Rural Georgia Dying? Literally?

A basic premise of Trouble in God’s Country is that rural Georgia is dying.  Truth is, I’ve meant that figuratively rather than literally – a reference to local economies gutted by globalization and other factors, failing schools and small hospitals in danger of closing, among other things.

Recently, however, I read an article that made passing reference to the growing number of rural counties across the country where deaths outnumber births.  I wondered if that might be the case in Georgia.

A quick dive back into the Georgia Department of Public Health’s (DPH) OASIS system produced some pretty startling results. Read more

AJC: Rural hospitals bailing on babies

The AJC is up today with an excellent and hugely important story by Lynne Anderson about the state’s rural hospitals bailing out of baby business.  This is the bow wave in the slow-motion disaster that is rural healthcare in Georgia in the 21st century.

One of several money grafs:

Read more

A Tale of Two Regions

Our recent research on premature death rates in Georgia produced a couple of unexpected revelations, and we decided to loop back for a closer look.  The revelations involve two of our five regions, North Georgia and Middle Georgia.  (For a quick primer on that earlier work, click here, here and here.)

For our purposes, North Georgia is made up of 41 counties that lie outside Metro Atlanta and above the gnat line (see map below and click on the map for a larger view).  As a region, it has clearly benefited from its proximity to Metro Atlanta; in recent decades, it has posted far and away the second-strongest population and economic growth in the state, outpacing not only Middle and South Georgia, but the Coastal region as well. Read more

Peachcare and Young YPLL

In a recent post, we began to explore premature death rates within Georgia’s working-age population, men and women between the ages of 18 and 65.  We were initially surprised to learn that improvements in the so-called YPLL 75 Rate for this segment of the state’s population lagged gains for the population as a whole.  That led us to drill down a bit and look at premature death trends in the younger and older age groups – specifically, Georgians under the age of 18 and between the ages of 65 and 75.

Both groups saw significantly stronger gains in their premature death rates than did working-age Georgians.  The question was why; what factors were driving premature death gains for younger and older Georgians that were somehow not impacting working-age Georgians?

Read more

Forsyth County moves to the top of the 2015 TIGC Power Ratings

With the publication Wednesday of the Robert Wood Johnson Foundation’s 2015 County Health Rankings, we can indeed report that, as expected, Forsyth County has slipped past perennial leader Oconee County and claimed 1st place in the 2015 Trouble in God’s Country Power Ratings. Read more

A new Power Ratings champ?

Every year during the old Partner Up! for Public Health campaign, we built a major part of the annual publicity effort around what we called Power Ratings that paired county health rankings produced by the Robert Wood Johnson Foundation with county economic rankings generated each year by the Georgia Department of Community Affairs (DCA).

Throughout the 2010-through-2014 period for which we compiled rankings, Oconee County reigned supreme.  For each of those five years, it was No. 1 in DCA’s economic rankings,[1] which are generated by a formula that incorporates local unemployment and poverty rates along with local per capita income.   And, it ranked either 2nd or 3rd in RWJ’s annual health outcomes rankings, which are based on a formula that includes premature death rates, the percent of the population reporting being in poor or fair health, number of days worked missed for reasons of physical or mental health, and low birthweight. Read more