Capitol Recap: Tax measure sets Georgia car dealers against each other

It’s March, when traditional powers are often matched up against each other.

Not just on basketball courts, but also the floors of Georgia’s House and Senate.

This past week — and possibly until the legislative session closes on March 30 — it’s been new-car dealers vs. used-car dealers.

The fight is over House Bill 340, which would change how the 7 percent motor vehicles tax is charged on the sales price of used cars, basing it on whichever is the higher between the sales price and the state’s book value. Currently, the tax is placed on the book value, which is generally lower than the actual sales price.

It’s a big deal, a hundreds of millions of dollars deal. The state estimates that by fiscal 2019 — the first full year the law would be in effect — the proposed change could mean an extra $237 million in title fee payments. That could rise to $268 million by 2022.

Used-car dealers say that would up the prices their customers would have to pay. New-car dealers — whose customers already pay their taxes on new-car purchases based on the sales price — see the current system as an unfair competitive advantage.

Both have prepared well for battle by greasing the wheels of government.

Combined, the Georgia Automobile Dealers Association (the ones who come with that new-car smell) and the Georgia Independent Automobile Dealers Association (who sell “previously owned” vehicles) have contributed about $1.1 million to the campaigns of lawmakers and top state officials in the past decade.

Lt. Gov. Casey Cagle, who as the Senate president plays a big part in what gets passed in the session’s final days, has been a good friend to both sides – although the new-car dealers have done more to shore up his support. The new-car political action committee has contributed more than $31,000 to his campaigns, making the PAC one of his largest political backers. Used-car dealers have contributed at least $4,500 to Cagle.

The used-car dealers also kicked in $8,750 for Senate President Pro Tem David Shafer, another guy who has a lot to say in what happens in that chamber. The new-car dealers have given Shafer at least $6,500.

But did either side consider throwing in the floor mats and undercoating for free?

‘Sanctuary campus’ bill advancing

Legislation that seems to have momentum going into crunch time is the “sanctuary campus” bill.

State Rep. Earl Ehrhart’sHouse Bill 37, which cleared the Senate’s Higher Education Committee this past week, would restrict funds for universities that violate state and federal law by adopting polices that protect students who are living in the U.S. illegally.

Ehrhart’s reasoning is that if any university designates itself as a sanctuary, it’s a decision that school will make on its own dime.

“If you want to claim sanctuary status, which effectively ignores any statutory construction, then we as a state are going to say that’s not acceptable,” the Republican from Powder Springs told the committee. “You, as a private institution, can make that choice.”

Whether it passes seems academic. Ehrhart has apparently already accomplished his goal.

Back in November, after Donald Trump won the presidency, Emory University issued a statement that said the school would continue to support “Dreamers,” people who were illegally brought to the U.S. as children and had been granted a temporary reprieve from the threat of deportation by an executive order from then-President Barack Obama.

Even though Emory is a private school, Ehrhart’s bill could cost it a critical amount of funding. In 2015, state agencies and the University System of Georgia paid Emory facilities $96 million for various services. The biggest part, about $84 million, came from the Department of Community Health, which administers the Medicaid program for the poor, disabled and elderly.

In late January, after Ehrhart announced plans for his bill, Emory backed away from the “sanctuary campus” label.

State Sen. Nan Orrock, D-Atlanta, pointed that out during the Higher Education Committee hearing.

“Since it’s not broke, what are we fixing?” she said. “You’re proposing legislation to address something that doesn’t exist.”

Broken, fixed, whatever, the bill that has already cleared the House has a good friend in the Senate. Rules Committee Chairman Jeff Mullis will be its shepherd in that chamber.

Tax holiday could wither away

It’s possible one of the state’s tax holidays could fall off the calendar.

One weekend a year, the state collects no sales taxes on the purchases of appliances bearing the “Energy Star’ or “Water Sense,” label as long as the price is $1,500 or less.

As tax holidays go, it’s kind of like Arbor Day, costing the state and local municipalities about $2 million in overall tax revenue. The much bigger weekend for tax-free purchases – with revenue loss measured in the tens of millions of dollars – comes in the summer when consumers benefit from their purchase of “back-to-school” items. You’ll note the quote marks –the tax break also applies to items such as diapers, lingerie and inline skates.

Supporters of the smaller conservation tax holiday, including the Metro Atlanta Chamber, were hunting this past week for a way to renew it. A Senate subcommittee on Tuesday amended a separate tax measure, House Bill 93, to include the holiday.

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Staff writers Michelle Baruchman, Greg Bluestein, James Salzer and Kristina Torres contributed to this article.

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