Most Georgians depend on cars, trucks or diesel-burning equipment for their livelihood. A hypothetical commuter driving 70 miles round trip at 18 miles per gallon paid approximately $500 annually for gas in early 2009. This commuter is now paying $1,100 per year for the same trip to work. The cost of commercial airline fuel has increased by more than 50 per cent in the past year, raising ticket prices and lowering corporate bottom lines.
Diesel fuel, once cheaper than gas, is now $4.19 per gallon at the local convenience store. Landscape installation businesses and grading contractors use more than 50 gallons of diesel weekly to keep a Bobcat or loader on the job. The operation of one construction vehicle results in an expense of approximately $10,000 per year for diesel compared to about $3,800 two years ago.
Inflated diesel costs adversely affect the trucking industry and are directly responsible for higher prices on delivered goods. Today’s fuel prices play havoc with the purchasing power of households and action is needed to improve the situation. The solution begins with the streamlining of motor fuel taxes and ends with different policies in the Middle East.
The base gasoline tax in Georgia is an excise tax of 7.5 cents per gallon earmarked for transportation projects. The federal government collects another 18.4 cents per gallon of which about 3 cents is set aside for mass transit. The remaining 15 cents is dedicated to roads.
Georgians pay additional taxes on motor fuel determined by a complicated formula set by the General Assembly and calculated twice annually by the Georgia Department of Revenue. The calculation begins with 3 per cent and escalates as the price of gas increases. The escalated amount is known as a secondary tax.
Finally, Special Local Option Sales Taxes are added into the price of gas. These local taxes are based on the sale price at the pump. Sales taxes on fuel benefit the government handsomely because higher prices translate to increased revenue for state and local governments.
It is almost impossible to determine the effective fuel tax rate in Georgia because of the escalation factor, semiannual formula adjustments and differing SPLOST rates throughout the state. Estimates are as high as 41 cents per gallon in some Georgia counties.
The complicated three-level formula is deceptive and stays in place because politicians see it as another way to gouge taxpayers. The best solution for the tax part of the equation is for the federal government to eliminate the federal gasoline excise tax, dismantle a significant part of the federal transportation bureaucracy, and turn the interstate highway system over to the states.
States should follow by eliminating the regressive sales tax on gasoline and levy a flat per gallon rate dedicated for roads with a portion given to local counties and municipalities in the form of block grants. Mass transit funds should be appropriated annually as a part of the state budgeting process.
Reforming and streamlining taxes is the easy part of the gas price crisis. Policies in the Middle East will be more difficult to change. President Barack Obama blames big oil companies and speculators for jumps at the pump, which is partially correct. However, fuel prices in the United States are determined largely by the Saudi royals and their OPEC buddies through the control of petroleum production levels.
The Saudis are quietly reducing production in retaliation for our Middle East policies. Kings and dictators in the Middle East don’t like outside interference, especially from Western leaders who jawbone for the end of dictatorial regimes and openly promote rebellion in the streets. The Saudis are watching our activities in Egypt, Syria and Libya and fear they may be next.
It is time for our government to let sleeping dogs lie and limit Middle East involvement to issues of vital interest to the United States. Less meddling in the Middle East coupled with a little more “drill baby drill” mentality at home will lower and stabilize gas prices.
My unrelated thoughts for the month:
• It is shocking that the Fayette County Commission considered requiring citizens wishing to make comments at meetings submit their names and the topic of their comments one week prior to commission meetings. Such a policy would discourage open government, encourages screening of speakers and might eventually evolve into a “gag rule.”
Faced with considerable opposition to that looney idea, the commission is now planning to drop the one-week requirement and have public comment at the end of the meeting instead of the beginning. The proposed change is in response to a few people constantly complaining about the West Fayetteville ByPass.
Commissioner Steve Brown’s tiny band of followers is dead wrong on the West Fayetteville Bypass issue but the right to speak should not be denied or restricted.
• Has anyone seen the preliminary list of proposed Fayette County projects for the multi-county sales tax referendum? Not much is included for Peachtree City! There are virtually no new roads proposed in the city except the extension of MacDuff Parkway and a little work on Ga. Highway 54 and Commerce Drive.
The list includes the gateway bridge over Hwy. 54 West, a tunnel under Hwy. 54, and a network of new cart paths to Crosstown Road, the industrial park and the baseball-soccer complex. An extra penny sales tax for 10 years is a high price to pay for these improvements.
It is this writer’s opinion that most Peachtree City projects won’t make the “Roundtable cut” and will be eliminated before the final list is released. It is also likely the referendum will fail by a landslide in Fayette County and pass by a narrow margin in the metro Atlanta region.
Since almost 25 cents per gallon of taxpayer money is already dedicated to roads, one wonders why politicians think a one-penny multi-county regional transportation SPLOST is urgently needed to solve traffic problems in the metro area. Throwing another penny of taxpayer gas tax dollars at the problem is not a sensible solution.
• The Peachtree City Council consists of five good, well-meaning individuals who collectively continue to be sneaky. The amended agenda posted the day before the May 19 meeting included some last minute “add-on” proposals that should have been publicized for several days.
First, there was a surprise proposal to approve $50,000 in cost overruns for the renovation of Fire Station #84. Council left observers in the dark by not including the usual background information in the agenda packet that is available to the public on the Internet.
Cost overruns on such projects simply don’t appear overnight! The added project cost has been known by staff for weeks and certainly didn’t constitute an emergency. The explanation given to the public about unforeseen rock and unsuitable soil was vague, unconvincing and inadequate. The expenditure of more borrowed money was approved quickly and unanimously.
Second, there was a late appearing proposal permitting film makers to place directional/promotional signs on city road right of way without regard to zoning classification. There was no discussion of sign size limitations or why the film industry should receive preferential treatment over Realtors and other business interests.
The city’s Kedron Fieldhouse bubble saga continues! Arizon, the single bidder on the bubble, did not perform despite being awarded $6,000 for a promise to study the footings and report in two weeks.
The decision to purchase the bubble was deferred and the council will likely vote at the June 16 meeting when school is out, families are on vacation, and nobody is watching.
This writer stands by his position that the $350,000 expenditure of borrowed money in these troubled economic times is a mistake.
[Scott Bradshaw, a resident of Peachtree City, is a real estate broker and residential real estate developer. He may be contacted at email@example.com.]