To All GIADA Loyal Members:
I am sending you this email to give you the most current Legislative update with what's currently going on at the Capital. There have been some new developments that will most likely change the way the TAVT will be determined. Also, in question is our language in the amendments that allow BHPH Dealers to defer payment of the TAVT fee on the 50-50 plan. These new develpments are originating from the Governors Office. We are doing everything in our power to respond to these issues and are hopeful that we can work out something that we all live with.
As far as I know, March 1, 2013 is still the date when sales tax is replaced with the TAVT fee. We will do our best to communicate with our membership through emails, our magazine and on the home page of our website where you will find current and updated information as we get it.
Please take the time to read through this Legislative Report and don't hesitate to call me if you have any questions, 770-745-9650.
Legislative Update for Members of GIADA
Background
GIADA had a very intense January and is on track to have an even more intense February at the Georgia General Assembly. As we have discussed at Board meetings, it has been this way the last year especially and pretty much the last four years. This is all concerning tax reform that finally passed last session and more specifically, the title fee taking the place of the ad valorem tax and sales tax on vehicles in tax reform. Since the very first day our government affairs team was approached by Georgia's political leadership and the bill's author regarding this idea, we have been intimately involved in meetings, language, policy, numbers, data, research, ideas, and discussions with political leadership across the board and decision makers.
HB 386 passed during the 2012 session with the title fee language. The Speaker of the House, House Leadership, the Lieutenant Governor, Senate Leadership, and the Department of Revenue have since all supported Buy Here Pay Here (BHPH) dealers getting help in two ways. First through the title fee being based off of the "book value" for used vehicles instead of the "sales price" or "invoice". Second through allowing Buy Here Pay Here dealers' transactions to collect or pay the 50% of the title fee up front then pay the rest of the title fee a year later in 2013, then go to 20% up front, then 30% after a year, then 50% after two years in 2014 and going forward. The title fee would have always been paid up at repossession, if repossession occurred.
We have argued that Georgia's Buy Here Pay Here dealer transactions should be allowed to collect and pay the title fee through a cash or accrual method as sales tax is collected now on these transactions. We gave all of the reasons why such as over 100,000 Buy Here Pay Here Georgia transactions per year serving to aid customers who would not and can not get financing to obtain a vehicle through a bank, credit union, or any other financial institution. We have also mentioned our BHPH dealer's repo vehicles on 30 - 50% of transactions, which means the title fee would have to repeatedly be paid on the same vehicle in a short period of time by a local business that provides jobs, wages, benefits, and pays taxes.
Georgia's political, fiscal, budget, and Agency leadership said that the furthest they were willing to go was to give us assistance by using "book value" and doing the 50-50 and 20-30-50 model for title fee collection. Mainly for fiscal reasons in order to keep money coming in to replace the ad valorem and sales tax going away. This is what was agreed to before the start of the 2013 Legislative Session between all parties.
Over the last few weeks, the Governor has made it clear not only that he does not believe BHPH dealers should continue receiving the cash or accrual benefit with the title fee, but he firmly does not believe BHPH dealers should receive the "book value" on used vehicles and the 50-50 and 20-30-50 paying of the title fee over time (still paying the title fee off at repo no matter what). The reason being the Governor has said he wants to make sure the most money possible is coming in to the state due to ad valorem tax going away, because he is terrified the title fee could go to 9% otherwise. Additionally, he wants consistency for casual sales, dealer sales, and all financing in how the title fee is collected and paid. Instead of the title fee being calculated by "book value" on used vehicles, used and new vehicles' title fees will be based on the higher of "book value" and "invoice" for all dealer and casual sales. Last, he feels the cash or accrual model has allowed some BHPH deals to "get around" the system of "not paying their fair share" in sales tax in the past and currently, and this special help for BHPH dealers would just allow this to continue.
GIADA's government affairs team and Georgia's political leadership have all expressed to the Governor and his appropriate staff members the need for this to occur for over 1,500 BHPH dealers, their employees, and their customers, but it is not changing his staunch position on this.
So where does this leave us?
First, this legislation (HB 80 and HB 66) has a very long way to go through the House and Senate process, Georgia State University's fiscal research office, Georgia's Office of Planning and Budget, and the Governor's signature or veto before going into effect. The Senate specifically will be interesting, as every Senator we've spoken with believes we should get some sort of help on the title fee. This is true also in the House also, but the House was hamstrung due to a need to get the bill out as quickly as possible to try and meet the March 1 deadline for changes to anything having to do with the title fee language. With the Governor opposed to the changes and threatening a veto with Buy Here Pay Here language in the bill, the House has had no option but to leave it out for now. We are continuing to meet and communicate with every Senator, Senate leadership, and the Governor's office.
Second, keep in mind that all vehicle transactions before March 1, 2013 will continue to use the current sales tax, ad valorem tax, and cash or accrual model, until a title change occurs on the vehicle.
Third, GIADA's Legislative Committee, GIADA, and our government affairs team are all researching and reviewing different options out there or that can be created to allow BHPH dealers to continue to operate positively, if we don't get the help we're looking for.
This legislation is far from over, and we will continue to do what we have been doing, which is work and communicate with the Governor, his staff, political and state agency leadership, and other decision makers and leaders on behalf of GIADA's interests. Please keep this in mind, as we move forward. Additionally, it is inevitable all title fee stakeholders will be back at the Capitol with fixes and tweaks for the next four or five years.
While the Governor is not in support at this time of GIADA's requests with HB 80 and HB 66, everyone else in power in the House, Senate, and at the Capitol is. The problem, obviously, is that the Governor signs or vetoes legislation, and he has said he will veto the legislation with "book value" and "50-50" included. We will continue to fight for GIADA in this matter and all matters. We will continue to get legislative victories, as has been the case the last six years.
As with every other legislative session, there are multiple issues and pieces of legislation with a major impact on GIADA. An example of one of our victories since 2007 was positively amending then totally stopping the finance legislation last year authored by the Senate Rules Chairman (at the time) that GIADA's auto finance company members told us would have severely hurt them and destroyed auto financing in Georgia, specifically the secondary market. This is up again this year in House Bill 82 with the author this time being a House leader. We are again working with the author to make sure GIADA members' interests are protected.
As far as the 2013 session in general, the General Assembly re-convened on Monday, January 28th after a week of hearings on Governor Deal's recently unveiled budget. Ken Heaghney, who is Georgia's state fiscal economist, spoke to both chambers during a joint appropriations committee meeting and highlighted the fact that job growth in Georgia had grown at a faster rate than the national rate. Although his economic projections essentially reiterated the governor's sense of guarded optimism with respect to the upcoming fiscal year, Heaghney predicted that job growth in this state would accelerate in late 2013 and continue to rise throughout 2014.
During this second week of the legislative session, ethics reform remained a top priority for the House. On Tuesday, January 29, House Speaker David Ralston presented his ethics reform package to members of the House. Unlike the recently adopted Senate rule placing a $100 cap on lobbyist gifts to lawmakers, Speaker Ralston and the proponents of his reform package are advocating for a more comprehensive set of rules governing the lawmaker-lobbyist relationship. Given the fact that this issue is of paramount importance for our industry, we are vigilantly following the development of this legislation and will advise accordingly. On Friday, the House also passed Senate Bill 24, more commonly known as the "hospital bed tax," in an effort to provide immediate funding for the state's Medicaid program.
Below is a list of legislation we have identified that could potentially impact members of GIADA. Please feel free to contact us with any additional questions or concerns.
HB 80: Ad Valorem Tax; State and Local Title Fees; Revise Provisions
Sponsored by:
HB 80 reflects the fixes and adjustments being made to HB 386 (tax reform, title fee instead of sales and ad valorem tax on vehicles, and casual sales treated the same as dealer sales on title fee) that passed last session.
Our team discussed these fixes and adjustments at the GIADA Board Meeting in St. Simons last week, and we have been working with the Department of Revenue, Legislative leadership, and the Governor's Office throughout the year. HB 386 from last year goes into effect March 1, 2013, so HB 80 must pass before March 1 in order for the fixes and adjustments to be placed into the Georgia Code.
Negotiations, meetings, and discussions are extremely fluid and change every day between GIADA, House and Senate leadership, the Governor's Office, and the fiscal office utilized by the Legislature and Governor's Office at Georgia State University. The State and Local Governments are concerned about revenue coming in, as we are focused on GIADA's positions. Our team continues to talk with Paul John and all other parties daily regarding both HB 80 along with HB 386.
This bill has been referred to the House Committee on Ways & Means. It is currently in sub-committee.
HB 66: Ad Valorem Tax; State and Local Title Fees
Sponsored by: Rice, Tom - 95th; Geisinger, Harry -- 48th.
HB 66 is the companion bill to HB 80 filed by House Motor Vehicles Committee Chairman Tom Rice this session to make adjustments to HB 386 passed last year. HB 386 dealt with tax reform and the title fee replacing the sales tax and ad valorem tax on all vehicles. Since HB 80 is the main bill the House is going with addressing adjustments to HB 386 and with what was mentioned in the introduction about the Governor's position on "50-50", House leadership is going to put "50-50" collection and paying of the title fee for BHPH dealer transactions in HB 66. As mentioned earlier, House and Senate leadership support "50-50", so everyone is hoping the Governor will come around on it, and HB 66 can go through the legislative process on its own separate of HB 80 at this time. We will keep you updated on where this all moves as session moves forward. HB 66's language could always be combined into HB 80 at any time should the Governor's position change.
This bill has been read by the House a second time and referred to the House Committee on Ways and Means. It is currently in sub-committee.
HB 82: Small Business Borrower Protection Act
Sponsored by: Ehrhart, Earl -- 36th.
In the 2012 session, we positively amended then totally stopped the finance legislation authored by the Senate Rules Chairman (at the time) that GIADA's auto finance company members told us would have severely hurt them and destroyed auto financing in Georgia, specifically the secondary market. This is up again this year in House Bill 82 with the author this time being a House leader. We are again working with the author to make sure GIADA members' interests are protected.
HB 82 allows any guarantors of a debt obligation or judgment to purchase the debt obligation or judgment from a successor creditor (i.e., a transferee or assignee from the original creditor). Within thirty (30) days of purchase or transfer by assignment of the underlying debt, the successor creditor must send written notice to all guarantors. Upon receipt of notice, the guarantors shall have ninety (90) days to purchase the debt subject to the same terms and conditions.
For purchases occurring within thirty (30) days of receipt of notice, a ten (10) percent premium will be added to the purchase price. For purchases occurring within ninety (90) days of receipt of notice, a twenty (20) percent premium shall be added to the purchase price. (Emphasis added)
The Small Business Borrower Protection Act "shall only apply to debt obligations or judgments acquired directly from an original depository or affiliate which is federally insured by a person other than institutions with federally insured deposits or their affiliates."
This bill has been referred to the House Committee on Banks & Banking.
