Published: April 17, 2008 12:33 pm            

Consensus building is the mark of true leadership

Developing consensus on an issue as complex as tax reform is no easy task. Passing such an initiative requires the approval of a two-thirds majority of 56 senators and 180 representatives, not to mention trying to get buy in from 159 counties, 180 school districts and over 500 cities. This year’s legislative efforts to bring taxpayers much needed tax reform proved to be impossible, due to lack of consensus building among the legislative leadership and the stakeholders involved in the process. As a result of crafting tax reform in a vacuum, the details were not sufficiently debated and the public received no benefit.

From the time HR 900, The “GREAT Plan,” was introduced at the end of the 2007 Session of the General Assembly there was no public, comprehensive study of the plan. In fact, there was little discussion at all until the Speaker began his one-man traveling road show across the state last fall. From the beginning, the associations representing Georgia’s counties and cities proclaimed that tax reform was needed and offered to assist. In fact, the counties which administer the property tax system for all local governments offered their technical expertise and resources on several occasions but were never taken up on their offer.

Once the media began covering the Speaker’s tax reform crusade, it became increasingly confusing to determine what was being proposed. The original proposal in itself was a radical shift in tax policy, eliminating all property taxes in favor of an expanded sales tax. The replacement sales tax revenues would be collected statewide and dispersed to local governments based upon a formula created by the General Assembly.

When concerns were raised about centralizing power under the State Capitol and flaws were identified, the proposal began to change. In each reported iteration, the Speaker would proclaim that it was a “work in progress” and that people should reserve judgment until a final product was arrived at.

Unfortunately, a final product never seemed to materialize. As the end of 2007 drew to a close and the 2008 Legislative Session was about to begin, there was still no written proposal, even though many versions had been discussed by word of mouth in meetings and in the press.

These versions seemed to change weekly. About a week before the 2008 Legislature convened, a written substitute to HR 900 was produced and a subcommittee of the House Ways and Means Committee began hearings. Although the committee accepted written comments from the public on more than one occasion, there was only one opportunity where the public was allowed to testify regarding their concerns. These hearings generated far more questions than answers and it became abundantly clear that a well thought out tax reform plan was going to be extremely difficult, if not impossible, to put together before the end of the 2008 Session.

In a late attempt to build consensus, the Speaker asked the Senate to introduce legislation capping property value reassessments and property tax revenues. He also greatly scaled back his tax reform proposal to provide a state credit against school property taxes and eliminate property taxes on personal vehicles.

Local governments voiced concerns with the revenue caps and the lack of a state-guaranteed reimbursement for lost property taxes on vehicles. Although the Senate successfully passed their portion of the tax reform plan without the revenue caps, the House redrafted the Senate resolution, striking all the concessions that had been made to address local government concerns. From there, the Senate resolution was defeated on the House Floor and HR 1246 became the sole vehicle for tax reform. By this time, HR 1246 had evolved into an elimination of the property tax on personal vehicles and a cap on property value reassessments.

What was once touted as comprehensive tax reform was now perceived as no more than political fodder for this year’s elections. Proclaiming a tax cut without identifying a corresponding cut in state or local expenditures drew criticism from Governor Perdue as being hasty and fiscally irresponsible. This last-minute attempt to place a property tax measure on the November statewide referendum resulted in gridlock between House and Senate leadership and as a result no tax reform measure passed during the session.

After a year’s worth of discussion and the Senate, House and Governor’s Office all claiming to be in favor of tax reform, one would think that tax reform should have been a “slam dunk.” It would have been if leaders had used their positions of power to facilitate consensus.

No, there will never be a tax reform proposal that satisfies everyone, but most people will seek middle ground and reach compromise if they have been given the opportunity to be a part of the process.

It is truly amazing what can be accomplished if no one cares about who gets the credit.

Next year there will be another opportunity to accomplish meaningful tax reform, but to do it right, our state leaders should start the consensus-building now. Meaningful tax reform must identify where tax burdens will be shifted or what services will be reduced or eliminated.

State officials that take political credit for cutting local revenues then leave it up to local officials to make the politically unpopular decisions is not an appropriate way to achieve comprehensive tax reform.

        

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