Walter C. Jones:

Alternatives Could Sidetrack Speaker's GREAT Plan

By Walter C. Jones
Morris News Service

(2/3/08) While the tax-swap plan proposed by House Speaker Glenn Richardson sits in committee, alternatives are popping up all over that could keep his GREAT plan sidetracked.

Richardson, R-Hiram, proposed expanding the 4-percent statewide sales tax to include services and food as a swap for the school portion of local property taxes, dubbing it GREAT for Georgia's Repeal of Education Ad Valorem Tax. Though the current version would require the state to guarantee a steady flow of funds to local school systems even if sales-tax collections should decline, most education groups still oppose it out of fear money will dry to a trickle in a financial drought.

"There will not be less money for education. There will not be less money for education. There will not be less money for education," Richardson repeated during a recent speech at the Atlanta Press Club.

Last week, Democrats came out with their own two-bill package they say will accomplish all the property-tax relief Richardson promised without any complicated re-write of the state's tax structure.

One bill would dip into the state's $1.6 billion financial reserves to award extra funds to any school system that agrees to roll back its property tax levy dollar-for-dollar.

The second bill eliminates a eight-word phrase in various sections of the state's school-funding law that has served as an escape clause: "subject to the appropriation by the General Assembly." The effect would be to force the state to come up with as much as $2.5 billion for schools over the next four years, either from other agencies or from higher taxes.

Of course, during all the years that Democrats ran the state, like the Republicans of today, they never fully funded the formula's requirements after it became law in 1982, admits Rep. Kathy Ashe, D-Atlanta, author of one of the Democrats' bills.

Still, the two Democratic bills, supporters say, would give local systems enough money so that they can lower their reliance on property taxes -- which is what Richardson says he wants. Instead of his switch to full reliance on sales taxes, the Democratic approach would depend on the full mix of state taxes that includes income, estate, tobacco, sales and so forth.

"This is both a tax cut and an investment in education all at the same time," said Sen. Kasim Reed, D-Atlanta.

While the Democratic package has no hope of ever being voted on and is only offered for debating points, Republican leaders in the Senate are likely to pass their GREAT alternatives.

The Senate Finance Committee unanimously adopted a measure by Senate Majority Whip Mitch Seabaugh, R-Sharpsburg, that would allow local school systems to voluntarily replace their own property tax with a 1-percent sales tax if local voters approve. His proposed constitutional amendment would also give cities and counties the same option.

Richardson originally intended for his legislation to require a sales-tax/property-tax swap for cities and counties as well, but he backed off to limit the number of critics this year while vowing to include them next year.

A major difference between Richardson and Seabaugh's approach is who gets the control, local voters or a statewide referendum. Richardson's measure would cap the growth of revenue for the local systems as a way to curb what he calls out-of-control local spending.

Seabaugh wouldn't mind less spending by local governments either, but he figures that's up to each of them. Perhaps as a result, his proposal has drawn support from local officials -- and Democrats so far -- unlike the GREAT plan.

The senator wouldn't predict how his measure would fare in the House or describe his as being designed purely as an alternative to Richardson's. After all, Seabaugh had introduced a different version of his current legislation during the middle of last year's session, weeks before the speaker announced his.

"The speaker deserves a lot of credit," Seabaugh said. "He's gotten a lot of people talking about property tax reform."

A development late Friday could complicate consideration of Richardson's plan. He punished several House members for voting against his wishes in elections for the board of the Department of Transportation earlier in the day, stripping them of leadership positions, committee assignments and even plum offices in the Capitol.

That demonstration of his wrath could spook legislators into falling into line when the GREAT plan comes up for a vote possibly in a week or two. Or, it could backfire as too heavyhanded, making the alternatives look more attractive.