Gone is the GREAT Plan
One of the issues I wrote about on Feb. 22 was House Speaker Glenn Richardson’s ever evolving tax plan. The GREAT Plan, an acronym that stood for Georgia’s Repeal of Every Ad Valorem Tax, originally started out as a proposal that eliminated every property tax, from the vehicle ad valorem tax to local property taxes, and would have also eliminated some sales tax exemptions on services. Schools systems and local governments would have received subsidies from the state to fund operations and projects.
This radical proposed change in funding had local governments up in arms. An article from last September by our own Rachel Oswald highlighted some of the animosity towards the proposal from several Newton County leaders. It seems that the opposition was strong because the plan was not properly presented and left many questions unanswered.
The plan underwent many changes in the following months. The version that I wrote about just two weeks ago eliminated the school portion of the property tax and sales tax exemptions on 174 services such as haircuts, waste management and groceries. School boards still balked at the plan.
Democrats in the State House announced their intention to vote against the plan last week. It was bad news for Richardson. He was relying on some Democrats to defect and vote for the GREAT Plan because of weak support in his own caucus.
Grover Norquist, head of the pro-taxpayer organization Americans for Tax Reform, blasted the GREAT Plan. In a letter to state legislators, Norquist wrote, “Taxpayers oftentimes find themselves on the losing side of the bargain when comprehensive ‘reform’ is on the table.” He also added, and this is absolutely correct in my view, “This plan, which has been modified numerous times, is now being fast-tracked with little room
Make no mistake about it this was Speaker Glenn Richardson’s attempt
at saving face.
for legislators to analyze or fully digest the consequences to taxpayers. This is not the way to set tax policy.”
On Tuesday, media outlets reported another change in the proposal, including a name change. Gone is the GREAT Plan. In its place came the Property Tax Reform Amendment. The new plan still would have done away with the ad valorem tax on vehicles by July 1, 2010, a tax cut of just over a billion dollars over two years. It also would have frozen property tax assessments at 2008 levels and placed limits on how much they can grow — ending backdoor tax increases by local governments. It also placed restrictions on how much local governments can spend by capping outlays at 2008 levels; however, it allowed spending to increase with the rate of governmental inflation each year. A mechanism is provided in the bill that would permit local governments to spend above the rate of inflation, but this would have needed approval by voters through a ballot question.
The House Rules Committee placed the proposal on the calendar for debate the next day.
The latest incarnation of this plan seemed like meaningful reform that provided relief for homeowners and did not strip away home rule from local governments. Despite the fact that they had condemned the GREAT Plan the previous week, Americans for Tax Reform endorsed the Property Tax Reform Amendment as did the Americans for Prosperity and the Republican Liberty Caucus of Georgia.
One item of caution was that the proposal did not include spending reform at the state level. While the proposal was a massive tax cut over two years, there were absolutely no guarantees that there would be a cut in spending. Without spending cuts, this tax reform plan would have been merely a tax shift.
Debate on the Property Tax Reform Amendment began at just before 2:30 p.m. Wednes- day. The Republican caucus in the House seemed to coalesce behind the proposal. Democrats, however, stilled played the wild card. There were no real signs as to how party leaders were urging members to vote. Even if every Republican in the House voted for Richardson’s plan, support from Democrats would be needed to achieve the required 120 votes to pass, the twothirds majority required to pass a constitutional amendment.
In the end, the Property Tax Reform Amendment fell short by ten votes — only seven Democrats crossed over to back the proposal. There was no motion to reconsider the action. Republican leaders in the House immediately started pointing fingers at Democrats, claiming that they killed a tax cut. We should expect this to be the feature of campaign ads in the fall.
While it is true that the overwhelming majority of Democrats voted against a tax cut, blame does not solely rest on their shoulders. If Republicans want to place blame somewhere, they need not look any further than Speaker Glenn Richardson.
Had the issue not been handled so poorly, questions about the plan could have been answered to settle the nerves of local governments and school boards. Perhaps some Democratic legislators could have carefully reviewed the amendment over a longer period of time, as opposed to the 24 hours they were given to make sense of a proposal that had evolved so much over the last six months and been the source of so much contention. In the end, I don’t believe Democrats can be blamed for this.
Make no mistake about it, this was Speaker Glenn Richardson’s attempt at saving face. Taxpayers would have only benefited from this latest proposal as a by-product of the Speaker attempting to salvage his ego. Richardson has spent so much political capital in the last year only to be met with defeat at every turn, and it is not limited to the GREAT Plan and the Property Tax Reform Amendment.
Perhaps it is time for Glenn Richardson to step aside.