Following last year’s passage of House Bill 170 which imposed a new excise tax on motor fuels, the Georgia Motor Trucking Association filed a suit intended to overturn parts of the law and which could have had potentially disastrous economic fallout on local governments who also collect SPLOST dollars from the sale of motor vehicle fuels. That lawsuit was dismissed in the Fulton County Superior Court in recent days.

Butts County, as the county that collects the highest percentage of motor fuel sale SPLOST in the State of Georgia, led the fight last year against HB 170 and through the intervention of many community leaders and the direct efforts by our State Senator and State Representatives, the bill was heavily modified, leaving the counties to continue receiving this revenue from fuel sales. Following the passage of this bill, the suit was filed by GMTA and has been in the legal process up until now.

According to the Georgia Municipal Association “The Georgia Motor Trucking Association’s (GMTA) lawsuit to limit use of local sales taxes on fuel to road and bridge projects came to an abrupt halt today when Fulton County Superior Court Judge Robert McBurney granted a motion to dismiss the case. GMTA filed the lawsuit in September of 2015.

Citing a provision of the Georgia Constitution that limits the expenditure of state sales taxes on motor fuels to “providing and maintaining an adequate system of public roads and bridges” and “road and construction maintenance,” GMTA sought to have local sales taxes collected on motor fuel sales placed in an escrow account pending resolution of the lawsuit.

Commenting on the GMTA’s contention that the expenditure of local sales and use taxes on motor fuel should be restricted to road and bridge purposes, Judge McBurney said:

“… the Court finds that this means precisely what it says: motor fuel taxes that the State receives must be dedicated to road and bridge maintenance. Tax revenues ultimately accruing to local governments are not so restricted. Plaintiffs’ claim that the State “receives” local sales and use tax revenues because the Revenue Commissioner’s office is charged with initially collecting — but ultimately disbursing — said taxes is strained and unpersuasive. Proceeds from local sales and use taxes are not somehow transformed into State revenue simply because the local governments use the Commissioner as their agent.”

GMA’s contention all along, and supported in Judge McBruey’s ruling, was that local sales tax revenues are not imposed by the State, are not eligible for appropriation by the state, and are specifically authorized by the Georgia Constitution for the provision of local government services or for educational purposes. This position has also been shared by the Association of County Commissioners of Georgia (ACCG).

Has this measure been passed, Butts County and other counties would have had to place fuel sales tax revenues into an escrow account until the lawsuit was finally settled which could have taken years. Since the county receives 53% of its sales tax from motor fuel sales, this would taken a significant amount of revenue used for a multitude of county projects that reduce property tax use; it would have also affected the Butts County School System similarly.