BRADENTON, Fla. – The failure of Georgia’s 1% transportation sales tax in nine of 12 regions last week is a credit negative because the lack of funds to upgrade and expand infrastructure will likely hinder economic development, Moody’s Investors Service said Monday.
Passage of the tax by three regions last week is a credit positive, according to Moody’s analyst Lauren Von Bargen.
Collectively, the 46 counties whose voters approved the tax stand to raise more than $1.5 billion over the next 10 years. There are 159 counties in Georgia, though voters in Macon and Bibb County agreed to consolidate in last week’s election.
In the 11-county Atlanta region, which is among the most congested in the state, 62.6% of voters rejected the transportation tax increase.
Had the tax been approved, state officials estimated that it would have raised $7.2 billion for regional transportation upgrades, and another $1.1 billion for local projects.
“Adoption of the tax was more critical for Atlanta than other regions because of the city’s position as a major economic center in the Southeast, which could be hurt by the area’s less-than-satisfactory infrastructure,” Von Bargen said.
In addition to road projects, the Atlanta region included an expansion of the Metropolitan Atlanta Rapid Transit Authority system.
Frederick Daniels, chairman of MARTA’s board, said the election raised “legitimate concerns” about the transit system’s future.
MARTA officials were scheduled to meet with the public Monday to discuss how the outcome of the referendum would affect the system.
“The Atlanta region needs upgrades to its dated and limited transit system, and congested roadways to maintain its long-term position as an influential economic center,” Von Bargen said. “The region will now be challenged to fund such projects on a local or state level, as the region had not formulated a specific contingency plan for identified projects if voters rejected the tax.”
Cities and counties in the regions that failed to increase the sales tax also could face more strain to finance their own capital improvement plans, she said.
The Transportation Infrastructure Act of 2010 requires regions that reject the tax to provide 30% of their own funding to qualify for state revenues for local projects, which is an increase from the current 10% requirement. Regions that passed the tax are still required to provide 10% of matching funds.
Anti-tax opponents, including the tea party, are calling on state legislators to eliminate the 30% funding requirement for local transportation projects, which they see as a penalty.
The transportation funding plan, if it had passed statewide, potentially could have raised more than $18 billion over 10 years for new or existing roads, airports, bridges, mass transit systems, rail, pedestrian facilities, and ports, as well as operations and maintenance of those facilities.
The tax hike became highly controversial in some areas, particularly the Atlanta region.
The revenues cannot be leveraged to sell bonds or notes.