The Georgia General Assembly removed the tax — it phases out during a four-year period, beginning in January — but left the option for a local excise tax.
If elected officials don’t take action by the end of the year, they’ll start seeing a revenue drain in 2013.
“Nobody will tell us how much that is, but I’d guess it’s between 5 percent and 25 percent of our sales tax,” Rome City Manager John Bennett told his board this week. “You need to know; it could be a killer-diller.”
All but five Georgia counties have a permanent local option sales tax to offset property taxes. The loss also would affect SPLOST revenue and school construction programs funded through an education, or ELOST, levy, but state law caps the local tax at 2 percent.
Out of Floyd, Polk, Gordon, Whitfield, Bartow and Chattooga counties, only Chattooga has chosen a course. Sole Commissioner Jason Winters said he and Chattooga city officials want to help existing manufacturers and lure others.
“We don’t know how much money we’ll be losing because we don’t know what the individual power bills produce,” he said. “But we’ve reassured our local industries we’re going to do everything we can not to implement the local excise tax.”
The city of Calhoun has its own electric utility, so City Administrator Eddie Peterson has a good idea of the hit they’ll take.
“At the full 100 percent, it’s like $250,000 a year,” he said. “That’s nothing to sneeze at.”
Peterson said “it’s a touchy decision,” since energy is a manufacturer’s biggest expense after personnel, but the revenue is important to local governments’ budgets. The exemption also applies to other utilities necessary to run a plant, such as natural gas, steam, water, gasoline, oil and wood.
Gordon County has a meeting with city officials scheduled for Sept. 4, County Administrator Randall Dowling said, and it appears possible they’ll decide to reimpose the sales tax.
“If we don’t do this, we’re going to lose SPLOST and LOST funds,” Dowling said. “And, remember, this is not a new tax. It’s keeping what we’ve been getting for decades.”
Floyd County Manager Blaine Williams already has been talking with Bennett about the issue and the city and county boards plan to discuss it next month.
Commissioners have asked for more information about the impact, but both managers said they’re being told the data is proprietary.
Link to more information about the energy excise tax
“I’m still trying to figure out how much we’ll lose, because it will affect how we do the 2013 budget,” Williams said. “But keep in mind, whatever happens, companies are going to be saving the 4 percent state sales tax.”
Bartow County’s meeting is Sept. 6, according to County Administrator Steve Bradley, and Polk County Commission Chairman Cleve Hartley said his board is setting up a session with officials from Cedartown, Rockmart and Aragon.
Bradley said he’s not sure how the Bartow talks might go, but Hartley said Polk is “leaning toward” taking the hit.
“The county manager is compiling a report on how much we’ll lose, so we’re still in the exploring process,” Hartley said. “But you need something to offer factories to relocate…and if you have a carrot on the end of a string, it certainly helps.”
The Legislature took the action because most states don’t impose an energy sales tax on manufacturers, but Bennett pointed out that many of those states have a higher sales tax on other items.
Whitfield County has not made a decision yet, Commission Chairman Mike Babb said, but “there’s not much interest” in reviving the tax.
Dalton-Whitfield is one of the state’s major manufacturing centers, and Babb said some of the biggest plants spend $300,000 to $500,000 a month on electricity alone.
But the area is notoriously anti-tax. It has no SPLOST or ELOST, and a 100 percent Freeport exemption on business inventory went into effect in January — culling an estimated $1.6 million a year from local governments.
“We don’t have a good number on (the energy tax loss), but we know it will be fairly significant,” Babb said. “It hurts, but so does not having manufacturing in your area. In this econ-omy, that’s one of the things people look at when they’re es-tablishing a plant, and we need people to have jobs.”
If counties opt not to impose a local excise tax, individual cities may choose to levy it on operations within their borders.