“This year, everybody knows the three big issues are water, transportation and tax reform,” Mueller said.
Water tops the list now - he said the governors of Florida, Alabama and Georgia are in Washington, D.C., arguing about what to do with the water from the Chattahoochee Basin. Mueller went on to say that although there is more water south of Atlanta than north of it, the state will continue to grow and the state government will have to deal with that or it will have problems for years to come.
Mueller said the state will pass a water plan in January that will affect all communities that hold water withdrawal permits from the Georgia Environmental Protection Division.
Mueller next moved on to transportation.
“We really need someone to come into the DOT (Department of Transportation) and look at that organization from top to bottom,” he said.
He said DOTs in other states are far more active in getting projects approved and said Cobb County spent three to four years getting approval to add a new turn lane, a project that took four months to complete.
Brant Keller, director of public works for the city of Griffin, pointed out that Cobb was lucky - constructing a turn lane on Airport Road has been “in the hopper” since the 1998 SPLOST and it keeps getting pushed back.
“We’re getting further and further behind every day,” Mueller said.
He said that although Georgia is one of the fastest-growing states, it spends relatively little per driver on transportation projects. The state needs more revenue and he said it would be a good idea to raise the motor fuel tax, although he said it is more likely that the state will raise sales taxes instead, since that would generate more revenue.
Mueller then discussed tax reform, House Resolution 900 in particular. He said he does not necessarily oppose expanding the sales tax to cover more services - Georgia only taxes about 30 services, while Hawaii taxes 130 - but he said there isn’t enough “low-hanging fruit” available for the taxing authorities to pick.
He went on to say that abolishing ad valorem taxes will deprive taxing authorities of $10 billion in revenue but expanding the sales tax to cover services and abolishing the existing exemptions will provide only $4 billion. He said that to make up the difference, the state might have to start taxing business inputs, which would make Georgia businesses less competitive with businesses in states that do not tax inputs, particularly businesses that can do things electronically out of state.
He said 75 percent of the exemptions deal with business-to-business, manufacturing and agricultural and that abolishing the exemptions will hurt the economy.
“There’s no way manufacturing is going to stay here if we charge them seven percent on everything they produce,” he said.
He also said Georgia agriculture is on thin ice and taxing that industry on fuel and equipment might well kill the sector.
He then returned to the “low-hanging fruit” he had mentioned earlier.
“The low-hanging fruit is church bells and Bibles and Boy Scouts and Girl Scouts,” Mueller said.
These can be taxed without destroying the economy but there will be political consequences. He said advocating taxing Bibles the same year as the failed attempt to allow Sunday alcohol sales would be politically dangerous.
Mueller said that ultimately, he believes supporters of HR 900 will have to back down and that some kind of compromise, such as abolishing school ad valorem taxes but not city and county taxes, might be possible.
He also warned that if HR 900 passes and sales tax revenue drops due to a recession, the state would fund its own priorities first and leave local governments holding the bag.
Griffin Board of Commissioners member Dick Morrow said sales taxes are a strange animal. He said his parents lived on the farm in Iowa and that Iowa is now taxing pumpkins, ostensibly because they’re used primarily as decorations, not food. He then criticized the state government for imposing unfunded mandates on the local governments and requiring the local governments to raise taxes to pay for them.
“They come off like heroes, we come off like goats,” he said.
Keller agreed, citing how he’s had to spend $2 million locally in order to keep his water permits current.
Morrow later said if the city of Griffin would be permitted to levy a 1 percent sales tax, it could abolish property taxes altogether.
Mueller said the ACCG intends to write a letter to Gov. Sonny Perdue asking him to set up a blue-ribbon commission to study tax reform. He said HR 900 is being pushed with little discussion and that many states have tried proposals similar to HR 900 with more study and ultimately failed.