Ga. communities opt to keep sales tax on energy

ATLANTA (AP) -- Some Georgia communities are keeping their share of a tax on the energy used in manufacturing even as the state government gradually eliminates its share of that tax.

Gov. Nathan Deal, a Republican, signed a tax package this year gradually phasing out a 4 percent state tax on the energy that manufacturers use to produce their goods. Manufacturers typically pay another 2 or 3 percent in taxes on that energy to local governments. The Republican lawmakers who backed the bill allowed local officials to create a new tax that phases in as their share of the energy tax disappears.

While no one officially tracks how many counties have imposed the tax, several counties have taken that step before the beginning of the four-year phase-out.

"I just didn't see the county could take that kind of hit," said Clarence Brown, the sole commissioner for Bartow County, which imposed a tax. "That was just too much."

He noted that local manufacturers will still benefit from reduced state taxes, even if their local taxes stay the same. Brown said no firms have complained to him.

"I think they realize how bad the shape Bartow County is in," he said. "They want the fire trucks and the ambulances to keep rolling."

Bill supporters have urged local communities to get rid of the manufacturing tax altogether. Lawmakers opted to give the locals a choice to keep the tax revenue as a political compromise when local governments objected to losing it, said Rep. Mickey Channell, the Republican chairman of the House Ways and Means Committee.

Channell said cutting the tax will encourage energy-intensive manufacturers to stay or expand their operations in a community.

"What you're going to have is industry looking at one county rather than another," he said. "I think there will be times when industry locates in a county that does not have a tax verse one that does."

Manufacturers are more cost conscious now that the economy is weak and facilities are producing less than their actual capacity, said Roy Bowen, president of the Georgia Association of Manufacturers. As a result, firms are looking for opportunities to consolidate manufacturing operations and save costs. Costs, including local taxes, are a factor when firms decide which plants to shutter.

"The county that imposes the tax is going to be the first to have layoffs and curtailments," Bowen said. "And they're going to be the last county to ramp up."

Of course, giving a tax break to one group can mean less money for other purposes. Troup County officials voted unanimously in October to impose a new tax to keep money that would otherwise be lost to the new tax break. County officials estimated the tax break would have cost $700,000 to $900,000 once it totally vanished, or up to 2 percent of the general budget, said Troup County CFO Scott Turk. Money generated by the tax is used to pave and resurface roads and build bridges.

The local government has already cut 30 jobs in the last year.

Crisp County has also opted to keep its share of the tax, said Commissioner Wallace Mathis, who described himself as an anti-tax Republican.

In addition to financial losses caused by the Great Recession, Mathis said his community lost money when a construction project on Interstate 75 reduced the number of travelers stopping in Cordele, driving down sales tax collections. While businesses have to pay the tax, they also get public benefits, he said. For example, local tax money has been used to extend roads and sewer lines to plants. Mathis said abruptly taking away the money would endanger the ability of local governments to pay back loans for already approved infrastructure projects.

"When you just come in and knock out a tax like that, the revenue's got to come from somewhere," he said.

Source: http://news.yahoo.com/ga-communities-opt-keep-sales-154502674.html

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