DEPARTMENT
OF
AUDITS
AND
ACCOUNTS
270 Washington Street, S.W., Suite 4-114
Atlanta, Georgia 30334-8400
270 Washington Street, S.W., Suite 4-114
Atlanta, Georgia 30334-8400
Russell W.
Hinton
State Auditor
(404) 656-2174
State Auditor
(404) 656-2174
April
13, 2007
Honorable Chip Rogers,
Chairman
Senate Finance Committee
Coverdell Legislative Office Building, Room 325-B
Atlanta, Georgia 30334
Senate Finance Committee
Coverdell Legislative Office Building, Room 325-B
Atlanta, Georgia 30334
SUBJECT: Fiscal
Note
House
Bill 148
Substitute
(LC 18 6449S)
(LC 18 6449S)
Dear
Chairman Rogers:
This
bill has two provisions. It would exempt from state sales tax 25% of the cost
of energy used directly or indirectly in the processing of tangible personal
property. This exemption would take effect January 1, 2008 and end on December
31, 2008. These energy purchases would not be exempt from local sales tax. It
would also exempt from sales taxation purchases of tangible personal property
used in the construction or expansion of an aquarium in the state.
The
Georgia State University Fiscal Research Center provided the following narrative
on the revenue impact of this bill:
The
scope of the energy exemption is processing of tangible personal property. This
definition would include manufacturing uses and food preparation uses. The
estimated energy expenditures by manufacturing businesses in Georgia are $3.525
billion. In addition, food preparation businesses are estimated to consume $214
million in energy. Applying the 25% exemption to these purchases would reduce
state sales tax revenues by $18.7 million in each of FY 2008 and FY
2009.
Regarding
the second provision, the bill would extend a previously granted sales tax
exemption for aquariums owned and or operated by 501(c)(3) organizations. The
exemption applies to sales occurring before January 1, 2011. It is assumed that
the legislation applies only to purchases after the enactment of this provision.
In addition, it is assumed that the exemption only applies to purchases of
property used in the construction or expansion of the existing facility and
would not apply to purchases of property used for maintaining or upgrading the
existing facility. If the scope of the legislation is broader than that
reflected by these assumptions, the revenue loss to the state would be greater.
Based
on published estimates in the range of approximately $100 million of the
expected cost of the Georgia Aquarium expansion, the revenue impact to the state
from the loss of state sales tax revenue is estimated to be approximately $4
million over the fiscal year 2007-2011 period. The revenue impact to the local
governments from the loss of local sales tax revenue is estimated to be
approximately $4 million over the fiscal year 2007-2011 period. Since no
construction date is available for this project it is not possible to determine
the exact timing of the revenue loss to the state and local governments.
Sincerely,
/s/ Russell W.
Hinton
State Auditor
State Auditor
/s/ Shelley C. Nickel,
Director
Office of Planning and Budget
Office of Planning and Budget