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Transportation Sales Tax May Be a Bigger Scam than Bernie Madoff

It appears on close inspection that GDOT may have engineered a financial coup with the T-SPLOST vote.

It appears on close inspection that Georgia Department of Transportation (GDOT) may have engineered a financial coup with the T-SPLOST vote. 

Most supporters of T-SPLOST think we will get both T-SPLOST funds and
our regular state and federal tax funds for road projects. But there is a

not-very-visible term in the bill that may cost our area to lose hundreds of
millions of dollars of funds that taxpayers have paid and should be returned to
our region.

The ugly little secret is that the state (that’s GDOT) is also listed as a benefactor of the regional funds. This will be a legislative scam on a bigger scale than Bernie Madoff. This is much more than giving the people an opportunity to vote themselves a tax. This is “theft by taking.” If any elected official voted for this knowing that the regions would lose money through “redirection” of funds, they need to be held accountable for their actions.

The result of this little redirection could produce a gigantic GDOT slush fund to subsidize MARTA (500 million/year) and the other Atlanta area rail projects that are not fully funded by the “final list” that we are voting on.

After several conversations with local chamber of commerce representatives and both city council members and some state representatives it is clear that few understood how regional tax funds will be “redirected” by the GDOT to other projects both inside and outside the region.

After review of four GDOT presentations and reading their presentation on their website I thought I understood the program. However, looking at the FAQ on their website they explain in no uncertain terms how state and federal tax funds going into the region will be “redirected.”

Here are some quotes from the GDOT website under FAQ:

Why is Georgia building additional projects when we are having difficulty maintaining the current system?

…. In regions that pass the referendum, the revenues generated will supplement funding already appropriated for projects and allow Georgia DOT to redirect federal funding on maintaining our existing roadway.

Can the revenue raised from the regional sales tax be used to match federal funds? 

Yes. There are many projects in the federal-aid pipeline that are good candidates for the regional sales tax. Helping fund the required match with regional sales tax dollars will allow state and local funds to be redirected to other projects.

What happens if a project chosen for the region’s project list is already programmed with federal, state or local funding? 

If federal funds are replaced by the regional sales tax funds this will allow other projects to advance in the Statewide Transportation Improvement Program (STIP)….

The following interpretation comes from Nolan Cox of Valdosta, he says:

These quotes make it clear that regional funds will be used and state and federal funds “redirected” to other state projects. Since money is fungible, this means they will use our T-SPLOST dollars to “free up” already-committed state and federal funds to use as they wish. This can affect as much as 60 percent of the
projects.

I do not believe the mayors and county commissioners working on the Roundtable and the Executive Committee realized this. In fact, I suspect many legislators and the general public may not understand the shifting or redirection of funds.

Under GA Code 32-5-30 Congressional District Balancing our federal and state fuel tax funds are returned in equal amounts to each district over a five-year period.

Since Congressional districts and Transportation Investment Act (TIA) regions are different, the legal and most convenient way to “redirect” funds is from the TIA regions. That is why “the state” is listed as a benefactor of TIA funds on the ballot question.

If “money raised in the region stays in the region” as GDOT says, why does “the state” need to be listed as a recipient of regional tax funds? They do not, but they are.

By listing “the state” as a benefactor of regional funds, this makes it legal to “redirect” regional funds instead of federal and state funds as the FAQ explains. This means the regions lose a huge portion of the state and federal tax moneys they have paid in in fuel taxes. This makes a “bad deal” a “worse deal” for taxpayers, cities and counties. Stop the scam, vote NO on T-SPLOST.

Chuck Warbington April 13, 2012 at 12:55 pm
Mr Towry,
I am surprised at your blatant disregard and twisting of the facts regarding the upcoming regional sales tax for transportation. How else will the list of transportation projects be built if the money is not managed by GDOT who own and maintain the majority (if not all) of the roads and ROW. GDOT has managed financial projects regionally for years based on federal manadates that federal funds should be spread equally across all congressional districts (although I disagree with this federal mandate). Would encourage you to check your facts and become a bit more educated on the topic before you attempt to write an opinion on the subject. Feel free to disagree with the upcoming vote but please do so based upon facts and not conspirancy theories.
Emil April 13, 2012 at 01:34 pm
Let those of us in DeKalb & Fulton counties also not forget how our exclusive funding for MARTA is ignored in this vote to add yet another TAX on us. Nothing about this bill sounds like it's any more than a loose cobbling of exiting departments and agencies to reach into our pockets to make up for past mis-management.
Chris P. April 15, 2012 at 12:18 pm
Chuck, rather than accuse the author of being loose with the facts and a conspiracy theorist, why don't you calmly and rationally refute his main points with evidence?
It seems to me that the author has done a nice job of research here. The fact is that the T-SPLOST is being sold to voters by the chamber of commerce as benefitting specific projects in their local counties. Tim Lee in particular has touted the benefits to Cobb County residents. If in fact the money can be re-directed to a statewide transportation "slush fund", that is something that the voters should be made aware of prior to the election. Thank you Mr. Lowry!
Mike Lowry April 15, 2012 at 05:59 pm
First, I am a bit surprised at the editing of my blog submission done by the Patch. I submitted an image of the actual language of the ballot initiative, which has been changed for a not-very-informative image submitted by the Atlanta Regional Roundtable.
Second, none of the reactions refute the comments made on the GDOT website. I would like very much to see the backup financials for each of the projects on the list. Many are rumored to be hugely inflated. Third, if I were planning a strategy as described in my post, I would be outraged at its exposure also. The amounts of money in this issue are huge. It will be the largest tax increase in Georgia history. I welcome all facts which shine light on every aspect of the issue. Maven, ARC and the several Chambers of Commerce are engaged in a massive spin campaign that masks the real underlying facts of the TIA vote. Let's get the truth out front.
JAH April 15, 2012 at 06:36 pm
Also let's not forget that this proposed tax primarily benefits the proposed beltline around Atlanta - doesn't it represent over 60% of the total? Enough with taxing "here" to give money "there"!
Christine Foster (Editor) April 16, 2012 at 11:46 pm
Mike,
Like I explained in my e-mail, we cannot approve blogs that merely re-post someone else's writing. After you edited, I merely highlighted the areas that were not your original works: quotes from GDOT and Nolan Cox. I did not, nor am I aware of any other editor doing any real "editing" of your blog. I am not sure why the original image you uploaded was removed and I'm currently looking into it.
No Name April 17, 2012 at 04:27 am
This is what the "conservatives" here in GA have cooked up. CINOs.
Robert Steinhardt April 17, 2012 at 12:17 pm
Let's all do nothing and hope it goes away...that's the plan that seems to work the best around here....
R April 19, 2012 at 03:50 am
"I suspect many legislators and the general public may not understand the shifting or redirection of funds."
I would agree that most members of the general public don't understand, BUT would contend that the leaders involved ARE KEENLY aware and in fact count on the slight of hand. Taxes and fees collected state wide for YEARS are commonly redirected and were called out at the capital this year as such. Drivers Ed, Trauma centers,dump site cleanups and the redirection to Sony's DO List Go Fish Center to list a few. It's illogical to believe that the GDOT listed anything on their website beyond what they actually plan to do and Chuck KNOWS this. Why even work planned for YEARS on GA Route 20 is now suddenly dependent on T SPLOST passage for funds... Some of us have been around long enough we can pinpoint the inaccuracies our leaders are trying to press on citizens of lesser tenure so up your game guys.
Brian Davis April 22, 2012 at 02:28 am
No- the BeltLine is $600 million out of the 8 billion the referendum will raise.
Brian Davis April 22, 2012 at 02:32 am
Listen- GA is 49th per capita in total government spending, 48th per capita in taxation and 48th per capita in transportation spending.
With that in mind our roads are well maintained. With a decline in gas tax revenues and a smaller amount of our money coming back to Georgia from the Federal Government we need to defend our own and fix the congestion problems we have in the Atlanta region. The regional referendum is not a perfect solution, but with no plan B and a the spineless politicians in Atlanta we have no choice if our region wants to prosper. Anytime a region of 5 million gets together in an attempt to solve a major problem there has to be give and take. The same people in North Fulton upset about transit can do intown and find people just as upset about the road projects.
JAH April 22, 2012 at 05:55 pm
No, the tax will raise $6 billion, the total outlay would be 8 billion.
Chris P. April 23, 2012 at 12:18 am
Brian,
I believe you are making a bad assumption. The purpose of the TSPLOST is not to improve road congestion. That may be the ostensible purpose, but the real purpose is to line the pockets of special interests who have bought off our politicians. It's giant wealth redistribution scheme. And I am getting tired of the proponents claim that there is no plan B. Of course there is. Vote "No" and demand accountability from your elected officials before you hand over your money. Some of the projects will get done anyways with other funding sources.
John Cook April 23, 2012 at 04:44 am
Neither the Transportation Improvement Act (TIA), which creates the TSPLOST, nor the ballot question, makes clear that the redirected money is to stay within the Congressional District.
Since the CIDs are advocating for this SPLOST with tax money because, in their opinion, they are "educating" rather than advocating, it appears that we cannot trust bureaucrats to do what is ethical unless the law is extremely specific. I use "ethical" in the public definition rather than the legal definition as defined by our GA legislators.
John Cook April 23, 2012 at 06:01 am
No, this was cooked up in response to MANDATES from the Federal Department of Transportation (DOT). Our State, counties, and cities have been told by the DOT that we need not expect approval of transportation grants for individual counties and cities that do not conform to a developed consolidated regional transportation plan conforming to Federal DOT guidelines. These guidelines were developed in accord with the United Nations Department of Economic and Social Affairs, Division for Sustainable Development plan for social justice, Agenda 21. ICLEI, the organization advising local governments on implementation of Agenda 21, has a stated goal of inter-municipal structures to address issues which cross local jurisdictional boundaries. http://www.iclei.org/index.php?id=1613
Brian Davis April 23, 2012 at 01:56 pm
You people are confused. The money collected in each region is spent in that region regardless of congressional district. GDOT is the agency that constructs and maintains roads in this state; where else would money for road projects go?
Brian Davis April 23, 2012 at 01:58 pm
John - you and the others who spout this Agenda 21 nonsense look very dumb.
Fact is- we have a problem, there is one way to fix it and in this case we have to invest more money- you might not like the whole project list, I don't think everyone likes each project but when dealing with a 5 million person region you have to compromise. It would have been a lot easier if the politicians had just raised the gas tax but you would probably have been opposed to that.
Brian Davis April 23, 2012 at 02:56 pm
Chris.
With declining gas tax and federal funds GDOT has been relegated to a road maintenance agency. If you want any new capacity to relieve congestion and increase mobility a new funding source is needed. The politicians are spineless. It took them 4 years to come up with this solution- how long will it take them to come up with something else. We can't wait. Not only will we lose new jobs, we will have a hard time keeping those already here.
Marc G April 23, 2012 at 06:13 pm
$6.14 BILLION (85%) GO TO PROJECTS
$1.08 BILLION (15%) GO TO LOCAL PROJECTS TO BE IDENTIFIED AT A LATER DATE. The $1.08 billion. That's the real slush fund. Intended by the Georgia chamber of commerce to buy off mayors and other politicians they need to support the plan.
John Cook April 23, 2012 at 07:12 pm
You are correct. We are confused--because of the ambiguity of the new TIA legislation. But we are not uninformed. If you take the time to investigate the subject, you will discover that the budget for the DOT is restricted by GA law regarding the spending of certain funds. The TIA legislation allows these funds to be "redirected" and does not specify the appropriation of the "redirected" funds. The legislation removes funds from the Congressional District allocations and places the funds into the general account. Why? Since funds are fungible, it appears on the surface that the TIA law creates a slush fund consisting of "redirected funds." The question is whether the ambiguity in the law was deliberate, and if not, why the law is vague. The TIA legislation was re-written several times by the leadership at the GA Capitol. The lawyers who wrote the legislation are experts at getting things written the way the leadership wants things done. So, yes, the leadership has created confusion. The remaining question is "why."
This year, these same leaders at the State Capitol killed legislation that would restrict the gifts that they receive from lobbyists. An informed person would ask "why" on that issue, also. There is much going on at the Capitol that the casual observer overlooks.
Chris P. April 23, 2012 at 11:29 pm
According to politifact we also have roads that are in the top 10% of the nation in terms of quality. The notion that we're suffering from crumbling infrastructure or is one promoted by the pro-TSPLOST crowd but it doesn't hold up to scrutiny.
The decline in gas tax revenue is due to fewer miles driven which is in part due to the recession and in part due to demographics. Either way it doesn't make for a good argument to be raising taxes unless you are one of the direct beneficiaries, which would be mainly private contractors and government employees who stand to gain from the redistribution of wealth. Another big problem with the way this was structured by our politicians is that it is a very regressive tax and the beneficiaries don't pay for the costs. Anybody who buys something in the 10 county area will be paying for this, including people who don't drive nor use mass transit. While we probably won't convince each other on this, one thing I do agree with you is that our politicians are spineless. That is why a better option that voting yourselves a tax increase is to vote out all the bums who engineered this TSPLOST, at the county and state level.
Chris P. April 24, 2012 at 12:05 am
In the immortal words of Speaker Pelosi "we have to pass the bill to find out what is in it!"
And the more one digs into this thing worse it gets ... check out this video by a local guy who took the time to give a presentation on the details of the TSPLOST. Apparently there is language in the law establishing a new layer of regional government bureaucracy, including the power to use eminent domain to seize private property in the name of the "public good". And then there is this: "The act gives GRTA the power to build and operate, or force local governments to operate, public transportation systems. Further, it gives GRTA the power to cut off transportation funds to developments of regional impact of which it does not approve". So much for local control. http://www.youtube.com/watch?v=Nmz1FdCOuAs&feature=relmfu
Brian Davis April 24, 2012 at 08:13 pm
Are roads are not crumbling but they are over capacity. If you want new capacity more funding is needed. Without the TIA, GDOT becomes a road maintenance agency.
Also- GRTA can use the power of eminent domain now, as can GDOT.
patrick May 27, 2012 at 01:14 am
Atlanta wouldn't exist without transportation and the hub it's been for roads, rail and air. Madoff's money went to him and his lifestyle. This plan isn't the same type of scheme unless we allow lawmakers into the fray. This plan isn't perfect but we need transportation investment and we live in a shared society - we do need engineers and planners making project plans and decisions, not politicians and legislators.

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