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Truckers Lawsuit Hits Judicial Roadblock

March 17, 2016

The Georgia Motor Trucking Association’s (GMTA) lawsuit to limit use of local sales taxes on fuel to road and bridge projects came to an abrupt halt on March 17th, when Fulton County Superior Court Judge Robert McBurney granted a motion to dismiss the case. GMTA filed the lawsuit in September of 2015 against the State of Georgia and certain State officials.

Citing a provision of the Georgia Constitution that limits the expenditure of state sales taxes on motor fuels to “providing and maintaining an adequate system of public roads and bridges” and “road and construction maintenance,” GMTA sought to have local sales taxes collected on motor fuel sales diverted from local governments and, instead, placed in an escrow account pending resolution of the lawsuit.

Shortly after suit was filed, GMA and ACCG filed friend of the court briefs seeking dismissal of GMTA’s claims. In addition, although the State’s interests were ably represented by the Georgia Attorney General’s Office, GMA moved to intervene in the litigation to ensure the interests of Georgia’s cities were vigorously defended. GMA recognized that if GMTA’s arguments were accepted, the interests of the State and local governments would be in conflict. Judge McBurney granted GMA leave to intervene, after which GMA presented additional Constitutional and statutory arguments in favor of dismissal. 

Commenting on the GMTA’s contention that the expenditure of local sales taxes on motor fuel should be restricted to road and bridge purposes, Judge McBurney said:
“… the Court finds that this means precisely what it says: motor fuel taxes that the State receives must be dedicated to road and bridge maintenance. Tax revenues ultimately accruing to local governments are not so restricted. Plaintiffs' claim that the State "receives" local sales and use tax revenues because the Revenue Commissioner's office is charged with initially collecting -- but ultimately disbursing -- said taxes is strained and unpersuasive. Proceeds from local sales and use taxes are not somehow transformed into State revenue simply because the local governments use the Commissioner as their agent.”

GMA’s contention all along, adopted in Judge McBurney’s ruling, was that local sales taxes are not imposed by the State, are not eligible for appropriation by the state, and are specifically authorized by the Georgia Constitution for the provision of local government services or for educational purposes. GMA is pleased that its active efforts to obtain dismissal of the suit were successful.

Update: GMTA appealed Judge McBurney’s ruling to the Georgia Supreme Court on March 30, 2016.