July 26 (Bloomberg) -- Atlanta area political and business leaders have a solution to traffic that’s ranked among the worst in the U.S.: Ask voters to approve a sales tax increase to raise $8.5 billion over a decade for roads and public transportation.
That plan, to be considered on July 31 by voters in 10 counties that include Atlanta and its suburbs, isn’t an easy sell. Groups that normally have little in common have joined together to campaign against the tax: anti-government Tea Party activists, civil rights leaders from the NAACP and environmentalists from the Sierra Club.
“You’ve got the folks that want no growth, the Sierra Club saying there isn’t enough transit, the suburban Republicans saying there’s too much transit,” said John Gornall, head of the economic development and public finance practice at the law firm Arnall Golden Gregory LLP in Atlanta, and a supporter of the measure. “If it weren’t so serious, it would be funny.”
Roads and mass transit haven’t kept up with demand, supporters of the referendum said. Average drive times are the 11th longest in the nation, according to a study last year by the Texas Transportation Institute at Texas A&M University. The Atlanta area ranked seventh among metropolitan regions in numeric population growth in the year ending July 1, 2011, according to U.S. Census estimates.
A recent poll showed the tax may not pass. The July 11 Rosetta Stone poll for Atlanta’s WSB-TV surveyed 1,050 registered voters and found 33 percent in favor of the tax, 56 percent opposed and 12 percent undecided. The survey had a margin of error of plus or minus 3.1 percentage points.
If approved, a 1 percent levy would be added to a 4 percent state sales tax and county taxes of 2 percent to 3 percent. It would be used to fund a list of 157 mass transit and road projects that have been designated by political leaders from the counties considering the tax increase. The Georgia Legislature in 2010 voted to allow a sales tax measure to go to voters in the Atlanta area and 11 other regions.
To succeed, the Atlanta-area levy would need support from a majority of those casting ballots in the 10-county region. Supporters have been running television commercials backing the tax and both sides have been distributing yard signs.
The referendum is “a way around” opposition by the Republican-controlled Georgia Legislature to raising taxes, said Harvey Newman, the recently retired chairman of the public policy department at Georgia State University’s Andrew Young School of Policy Studies in Atlanta.
“They wouldn’t get re-elected if they raised taxes,” Newman said.
The list of projects to be funded was approved unanimously by political leaders, which Newman called “remarkable” in a region where city and suburban officials agree on little.
Failure to reduce traffic congestion hurts efforts to attract businesses, said Paul Bowers, president and chief executive officer of Georgia Power, an Atlanta-based subsidiary of Southern Co. Georgia Power is among local businesses that have donated to the campaign for the tax.
“This tax vote is going to be a big moment in terms of our competitive position relative to Charlotte and Dallas and other cities that have actually done something with transportation,” Bowers said.
Supporters of the tax include Atlanta-based companies such as Coca-Cola Co., Delta Air Lines Inc., United Parcel Service Inc., Home Depot Inc., local professional sports teams and leaders of both political parties. Businesses have been urging employees to vote.
Atlanta Mayor Kasim Reed, a Democrat, supports the tax and predicted it would narrowly pass.
A failure to pass the measure “would hurt our brand,” Reed said. “We have had this tradition of being able to come together and do really hard things.”
Citizens for Transportation Mobility Inc., a group supporting the tax, raised $6.5 million through July 17, according to state records. The Transportation Leadership Coalition LLC, a group formed by opponents raised $14,400 through July 15, the records show.
Opponents have lined up against the tax for varying reasons.
The National Association for the Advancement of Colored People opposes the measure because two counties that include Atlanta have paid a penny sales tax for 40 years to support the agency that provides bus and rail service in the region, while the suburban counties haven’t, said John Evans, president of the DeKalb County chapter.
A needed rail line to predominantly black neighborhoods wasn’t included in the list of projects to be funded by the tax while a line to a largely white suburb was, Evans said.
“We are just tired of folks messing with us,” Evans said. “We’ll be paying two cents and suburbs will pay one cent. That’s backward math.”
The Sierra Club wants a project list more focused on public transportation, said Colleen Kiernan, director of the group’s Georgia chapter.
Debbie Dooley, co-founder of the Atlanta Tea Party, called the transit projects boondoggles and said the tax violates the state constitution’s home-rule provision because it could impose a tax in a county where voters rejected the measure.
“We don’t trust the elected officials to spend the tax dollars they have now,” Dooley said. “We think the project list is fiscally irresponsible, and about economic development, not congestion.”
Municipal finance specialists are watching with interest, said Charles Doty, president of Asset Preservation Advisors, an Atlanta investment firm. The region needs a new revenue source because property tax revenue has decreased, he said.
The tax is unlikely to lead to new bond issuances because it expires in 10 years, said Linda Murphy, a bond analyst with Baltimore-based T. Rowe Price Group Inc., an asset manager. Georgia bonds won’t have prices depressed by a rush of new ones, she said.
“They could issue revenue bonds securitized by the tax, but I haven’t heard that mentioned,” Murphy said.
The most recent push for new transportation money began in 2007, after a business-funded study found that traffic discouraged businesses from moving to the area, said Renay Blumenthal, a senior vice president at the Metro Atlanta Chamber.
Projects that would be funded by the tax include a rail line from Atlanta to a suburb that includes the headquarters of the U.S. Centers for Disease Control and Prevention and Emory University. Also included is money for the reconstruction of an interchange north of Atlanta, where Interstate 285 and State Route 400 meet.
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