Raising Local Funds through a Regional Sales Tax Initiative in Georgia

Note: The presentation summary below was initially written and published in 2011.  In 2012, Georgia’s Special Purpose Local Option Sales Tax was voted on by the public during the state’s primary elections, and passed in three fairly rural regions, out of a total of 12 regions in the state.  Learn more in the 2012 article Georgia Votes on Regional Sales Tax Initiative for Transportation Funding, With Mixed Results.

On August 25, 2011, the National Association of Development Organizations (NADO) Research Foundation held the RPO America Peer Symposium in Washington, DC.  This event was sponsored by the Federal Highway Administration (FHWA) and was held in conjunction with the 2011 National Rural Transportation Peer Learning Conference, an annual meeting organized by the NADO Research Foundation and Development District Association of Appalachia.  The Symposium brought together transportation professionals from across the nation and addressed how rural and small metro regions and their partners have improved the planning and implementation process of vital transportation projects by strengthening communications and collaboration across state, regional, and local agencies.

One noteworthy presentation was given by Robert Hiett, governmental services director for the Three Rivers Regional Commission in Georgia.  Like many regions and states, the Three Rivers Regional Commission (TRRC) in Georgia is ready to implement many transportation projects necessary for the area that have long awaited funding. Stakeholders have been aware of the need for improved transportation infrastructure for some time, as the state’s level of investment has been among the lowest in the United States, despite Georgia’s rapid population growth. In 2010, the state legislature passed a measure to allow regional voter-approved sales taxes to fund projects in the same region where they are collected. In each of Georgia’s 12 regions, a 1 percent sales tax would be collected for ten years, with the possibility of repeating the process for an additional ten years after the first tax expires. This regional approach is a creative mechanism to move forward with funded transportation projects, as statewide referenda are unpopular in the current political environment, and it also increases local control over the project process.

TRRC is one of the state’s 12 regional commissions, and the boundaries of the sales tax districts will follow the commissions where they are approved. Individual counties cannot opt out of participation in the regional sales tax, and approval of the tax were to be determined by popular vote. The ballot will include a question on whether to approve a sales tax, as well as a list of projects determined by a roundtable of local elected officials (two from each county) that have developed selection criteria for their region to prioritize projects that are most worthy and have the broadest public support. If the sales tax measure fails, regions can try again after two years, but local governments would have to contribute more matching funds for transportation projects in the meantime.

Eligibility for projects is very wide, and includes surface, air and water transportation, bicycle and pedestrian projects, ports and other freight facilities and can be used on engineering, property acquisition, administration, construction, or maintenance and operations. Projects that cannot be completed in 10 years are not eligible for consideration, except for rail projects, which can use funding collected over the first decade within 20 years.

Proceeds from the sales tax will be divided into two parts:

  • 25 percent unrestricted that is allocated back to local governments via a formula including total population and center-lane miles in that jurisdiction, to ensure that small counties still receive needed funds (while in metro Atlanta, the local share would be restricted to 15 percent)
  • 75 percent that pays for the projects identified by the roundtable through the regional selection criteria (metro Atlanta’s regional share would be 85 percent)

Projects may use the regional sales tax in place of an existing or committed local funding match to federal grants, freeing up those funds for other uses. The Georgia Department of Transportation has an extensive website detailing the process works, and the TRRC website specifies how their region accomplished the project prioritization and roundtable selection processes.

The TRRC’s territory includes four suburban and six rural counties in west-central Georgia. Matching up proposed projects with the area’s transportation needs and sales tax projections produced a constrained list chosen by a roundtable of 20 local officials through a list of regional selection criteria; the list of projects and sales tax increase to pay for them would be added to a ballot for popular vote in 2012. Funds would be allocated to districts beginning in the first quarter of 2013. If all 12 regions approved the sales tax, the estimated amount of funding raised would be $1.55 billion in the first year, and $74.7 million in the Three Rivers region. However, with over $2 billion in long-term need for projects and only $513 million in projected revenue over ten years in the region, project prioritization in Three Rivers is a necessary process. All other regions in the state also face higher long-term infrastructure needs than projected revenues from the sales tax, emphasizing the importance of choosing the projects that are regionally significant and enjoy the most public support.

Public outreach and awareness of the sales tax initiative has been a challenge. All roundtable meetings are open to the public and press, and attendees do not always understand the complexity of the process or its relationship to growing population and freight needs. TRRC has also met with local Chambers of Commerce to identify important projects and get early buy-in from the private sector.

More information:

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This case study was researched and written by NADO Research Foundation Graduate Fellow Jonathan Tarr and Associate Director Carrie Kissel and is supported by the Federal Highway Administration under contract number DTFH61-10-C-00050 through the NADO Research Foundation (www.RuralTransportation.org).  Any opinions, findings and conclusions, or recommendations expressed in this publication are those of the author and do not necessarily reflect the views of FHWA or the NADO Research Foundation.

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