Al Gray: Now, A Fair Deal from the Governor

A Fair Deal From the Governor

Originally posted by CityStink
Sunday, Jan. 15, 2012
Augusta, GA
By AL Gray
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
Among Governor Nathan Deal’s 2012 legislative proposals there is real gem, one that cries out for implementation and doesn’t require new legislation – taxation of internet sales. Enforcing the abandoned use tax requirements already on the books  will increase Georgia’s tax revenues from sales and use taxes to where they should be, increase fair compliance, and put Georgia’s imperiled retailers on equal footing with out-of-state wholesalers and online sales sites, like the booming Amazon.com.
Cries of “taxing the internet” or this being a tax increase are wrong. Ignorance of the law is no excuse. The existing laws of the states with sales taxes, including Georgia, invariably include a reciprocating use tax. Georgia has a use tax that operates this way – if the consumer buys an item of taxable tangible personal property where the seller did not charge the sales tax, that consumer is legally bound to complete a use tax return and pay the use tax due to the state at the time of filing the return.
The use tax return form and instructions explaining how the use tax operates are found online here.
No new legislation is needed. This is not a new tax. It is the Georgia “Fair tax.” Everybody pays, or they should be paying. Why not allow and encourage the Georgia Department of Revenue to audit residents for payment of the use tax on their online purchases? It can be done electronically by requesting taxpayers’ annual credit card listing of transactions to allow the revenue auditors to verify that purchases from unregistered, unremitting out-of state firms have been reported for use taxes and that the taxes have been paid on taxable transactions.
Auditing use taxes would very quickly gain compliance from the imposition of interest at 12% and onerous penalties, provided that the use tax return was updated to provide for payment of these items. Another boost to compliance is that there is an infinite audit period for residents who have not filed, because failure to file eliminates the 3 year statute of limitations. Couple 12% interest onto 10 years of taxes will get anyone’s attention!
The first group to be audited and brought into compliance with the laws of the state should be the members of the Georgia General Assembly. The politicos can lead by example or face being made examples. The Georgia Department of Revenue should be required to audit these Georgia citizens first, publicize failures to comply, and impose full penalties and interest for a number of years.
Once citizens and legislators, alike, rediscover this Fair tax, Georgia’s retailers will have more than a level playing field because of the onerous shipping and handling charges applied by the online sellers.
Congratulations to Governor Nathan Deal on this very timely, justified, reasonable, and fair component to tax reform. It is one that will work. Thank you, governor, and let’s roll with this great idea.

Good Deal.***

Al Gray

Sen. Hardie Davis’ Tax-Free Energy Drink


Taste Grates, Less Filling

Orginally posted on CityStink
January 14, 2012
Augusta, GA
By Al Gray
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
When Augusta Democrat Senator Hardie Davis heartily endorsed Nathan Deal’s latest financial brainstorm, the elimination of sales and USE tax on energy used in manufacturing we were surprised for a host of reasons, the main one being that it will cost Augusta Richmond County $millions in lost tax revenue. In a time that the state and municipal governments are desperate for revenue Davis wants to give away stable sources of sales taxes that cannot be replaced? He wants to shift the Georgia tax burden from corporations to constituents on fixed incomes, like social security recipients?
Then it hit us. Hardie Davis is switching to the Republican Party. Good for him. It will be a marriage made in haven – the Gold Dome. It might be even smart politics. Everyone involved can guzzle tax free energy drinks courtesy of the Georgia Traditional Manufacturers Association (TIPAC). The legislators have a ken for fun drinks, but to constituents this one grates the tongue and doesn’t fill the revenue coffers with anything more than hot air.
If Hardie isn’t going GOP, he has sure failed us with a stellar imitation. Now right about now, Hardie and every other GOP hawker of this money give-away is screaming about passing this exemption to become “competitive.” Change the word to “cannibalistic” and you about have it. What this give-away does is to strip Augusta Richmond County and the 13 county region of $11 million of sales tax revenues over 10 years if you believe the projections underlying the huge new transportation tax increase. This writer knows the losses to be far worse. You can multiply that $11 million (see page 7 ) by 4 – the loss on the new 1% transportation tax, plus the existing 3% local, special, and educational taxes, for a stunning $44 million over ten years! If the legislators tinker with not having the exemptions apply to local sales, that subverts the simplicity always cited for a sales tax.
Just one Augusta manufacturer provided a written statement in 2010 to the Georgia Tax Reform Council that indicated that her plant pays $2 million a year in state sales taxes on electricity and a staggering $1.5 million a year in local Augusta Richmond County taxes. Right about now some of you readers are exclaiming “The consumers of the plant’s products really pay those sales taxes!” Right. The problem is that the vast majority of consumers paying the embedded Georgia and Augusta tax of our manufacturers are in other states. Tax payments by consumers spread the revenues around so that they come to rest outside of Georgia. Does this still sound like a good idea?
The $1.5 million Augusta will lose from that plant on SALES taxes is probably dwarfed by USE taxes that are paid by every Augusta manufacturer that uses a heating process loop in any of their production and manufacturing utility systems. This new exemption also covers industrial fuels, such as coal, natural gas, or diesel fuel in addition to electricity. This revenue loss could easily be between another $2 million and $3.5 million of Augusta local taxes (without the new transportation tax). How will Augusta make up the loss of $3.5 to $5 million of local tax? Is it that easy? On the state tax side of the ledger, doesn’t Georgia need the corresponding $7 million or so to pay teachers?
We sympathize with Georgia companies who are hurting, but what about her people?
The Hardie Davis tax free energy drink won’t sustain financial life in a host of other Georgia municipalities with similar concentrations of manufacturing, such as Chatham, Glynn, and Daugherty counties. Even worse will be the unsuspecting smaller counties with an unknown large energy user. State sales tax reporting to counties doesn’t show the source of the revenues, so many really don’t know what is about to hit them. For example, even though the textile industry has moved largely offshore, electricity-guzzling yarn plants have remained in Georgia and the USA. Can little Rabun County afford the loss of $1 million in sales taxes? Heard? Mitchell? Putnam? Effingham? Bartow?
Proponents of the tax free energy treat cite competitiveness needs between the states. This has some validity, as other states have chosen to cannibalize tax revenues in a futile attempt to overcome the $30 an hour labor cost difference with China, just as Georgia has futilely spent as much as $168,000 per $40,000 auto plant job in the race for our politicians to claim some very strange bragging rights. This will be just throwing good money after bad.
Since the justification for this tax break is to attract new plants one compromise that could be made comes out of Georgia’s own manufacturing tax rules from the 1980’s. Back then, a new manufacturer or a major plant expansion qualified for new exemptions, while existing ones had to be content with the incentive packages that they received upon building in Georgia. This would satisfy the lack of competitiveness for new plants without destroying the fruits of the past and the revenues of many Georgia counties with them.
That we would welcome Hardily and Senator Davis could keep his Democratic Party bona fides. Who knows, Augusta even might get an energy drink bottler, with $168,000 per job incentives, of course. Better yet, let’s return good old fashioned mathematics to the legislature. Professor Davis can lead our way instead of drinking Gov. Nathan Deal’s Kool-aid.***

 

AG

 

Exclusive: Magnolia Trace Double Take: County Attorney Worked for Developer


Angry residents gave commissioners and the county attorney an earful back in December

Originally posted on CityStink
January 13, 2012
Appling, GA
By Hwy 221
The author, Al M. Gray is President of Cost Recovery Works, Inc., a provider of Cost Avoidance and Cost Recovery for America’s leading companies, businesses and governments desiring Superior Returns.
At the tumultuous Columbia County Commission meeting over the Magnolia Trace subsidized housing subdivision on December 6, 2011 City Stink videographer Jill Peterson caught WGAC radio talker Austin Rhodes lending sage advice to Columbia County Attorney Doug Batchelor here:

In case the audio was too poor for some readers, Rhodes said “From now on, you make sure that Mr. Batchelor has a standing order that if anybody like this comes in his office again – kick them out.“The double sounds of ‘Kaaa-Chinngg…” might have been ringing so loud in Batchelor’s ears that he missed Rhodes’ imperative.
As with most City Stink pieces, let’s seek guidance from the deed and court documents. Directives to mail executed sales documents to Mr. Batchelor appear on the warranty deed for the sale of the land on September 23, 2011 by Dorra LLC. To Magnolia Trace LLP recorded in Deed Book 7987 Page 196 and it looks like Mr. Batchelor signed as a witness on Page 197. Here are the delivery instructions:
PLEASE RETURN TO :
Douglas D. Batchelor
Hull Barrett, P.C.
7004 Evans Town Center Blvd., Suite 300
Evans, GA 30809
Directives to mail executed and recorded documents to Mr. Batchelor appear on the security deed from Magnolia Trace LLP on September 23, 2011 to Sterling Bank recorded in Deed Book 7995 Page 25. Here are the delivery instructions:
WHEN RECORDED MAIL TO :
Douglas D. Batchelor
801 Broad Street – 7th Floor
Augusta, Georgia 30901
Directives to mail executed sales documents to Mr. Batchelor appear on the Assignment of Rents from Magnolia Trace LLP on September 23, 2011 to Sterling Bank recorded in Deed Book 7995 Pages 35-39. Here are the delivery instructions:
WHEN RECORDED MAIL TO :
Douglas D. Batchelor
801 Broad Street – 7th Floor
Augusta, Georgia 30901
The warranty deed was recorded in the Columbia County Clerks office on September 26, 2011, with the security deed and assignment documents being recorded on September 29, 2011, apparently after being signed by Sterling Bank of Poplar Grove, Missouri and returned for recording. The assignment was re-recorded on October 10,2011 to include a missing exhibit.
The odyssey that began in the Spring of 2010 in Mr. Batchelor’s office looks to have concluded in his office in late September 2011 with Magnolia Trace LLC land purchase documents. Why were the developer’s purchase documents signed in county attorney Doug Batchelor’s presence? Why were the security deed and assignment papers directed to be returned to him after they were recorded? Does the county attorney usually become involved in closing developers’ property? The protesting citizens were told that the county had nothing to do with the sale of the Magnolia Trace property. Was this the truth? If so, why these delivery instructions? Was Mr. Batchelor serving two masters while garnering pay from both? Why are there no other local attorney’s work in evidence on the sale documents?
A decade ago a group of property rights activists was seeking support from Evans businesses in battling the Evans Town Center ordinance and thought a car dealer to be a likely ally. The manager very quickly asserted that he didn’t see that they had a problem, because the county attorney who wrote the ordinance was their attorney. Frankly, that story wasn’t believed then – there was no substantiation of it – and is hard to believe now.The county video of the December 6 meeting shows uncharacteristically halting, stammering, and searching by Doug Batchelor. That was hardly reassuring.
Earlier this week, the report of the special outside counsel engaged to explore ways of halting Magnolia Trace construction was released. It said that the development cannot be stopped.
The legal work on the other side in advance was just too good to overcome.

City Stink Exclusive: The TEE Center LLC Trap

TEE Center under construction on Reynolds Street
**City Stink Exclusive!**

Originally posted on CintyStink
Jan. 11, 2012
Augusta, GA
By Lori Davis
Al M. Gray, President of Cost Recovery Works, Inc. contributed multidisciplinary review techniques in support of this article.
On December 1, 2011, several weeks prior to the Augusta Commission’s vote to engage a forensic auditor to investigate the Tee Center Deck ownership fiasco, I submitted an Open Records request To the Augusta Law Department in an attempt to get to the bottom of  the confusing procession of statements coming from Administrator Fred Russell, Mayor Pro Tem Joe Bowles, and others. I received a response to this request from Staff Attorney Kenneth Bray on December 15, 2011. (See pdfs at bottom.)
Most of the information provided dealt with the Laney Walker Overlay. Most of the rest was missing any dates, including the negotiation term sheet (see pdf at bottom) and a schedule which was labeled as a modification (see pdf). The total packet was about an inch and a half thick. After skimming the documents, I called upon Augusta Today and CityStink.net contributor and cost recovery analyst Al Gray to assist in completing my review.
What we found was stunning new information buried in the document pile. I will get to that later.
The first item requested was information relating to the land under the Tee Center Deck being security for any loans or bonds. Since the bonds were known to be general obligation bonds and were tied to the Laney Walker project funding, this was precautionary, with no documents necessarily expected to come back from the Law department. They provided the bond package for the combined Laney Walker and Tee Center funding.
Emails and any other correspondence relating to the deck between any and all Augusta government parties were requested. None were returned. The Law Department cited pretty wide attorney-client privilege. I was very disappointed by that, given publicized remarks attributed to outside counsel Jim Plunkett about events surrounding the failure to have the various parcels under the parking deck donated by Augusta Riverfront LLC. Much has been said of discussions of air rights. I hoped to get clarification of that. It looks like the forensic auditor might run into immediate stone walling, based upon the response to my inquiry.
Since Mayor Pro Tem Bowles has spoken on The Austin Rhodes Show and elsewhere of  having saved the city $1.5 million due to the ownership and financing, I thought that the request would have at least produced the analysis upon which he was basing his claimed savings. I guessed wrong. Do you suppose the savings are the same place as Augusta taxpayers’ property rights with the deck, which is “up in the air?”
A really obscure document I requested was an insurance certificate from Tee Center and Deck contractor R.W. Allen to Augusta Riverfront LLC, as an additional insured during construction. While this document is not one that Augusta would have in its possession, Augusta’s program manager Heery International probably should have it and it should have been accessible.  Not having this insurance document suggests that R.W. Allen thought it was working on land owned by Augusta government, not owned by Augusta Riverfront LLC. It also suggests that program manager Heery was caught off guard too.
I couldn’t form any conclusions as to whether the land under the decks owned by Augusta Riverfront LLC was to be donated or not because the documents provided conflicted on this point and had no dates to tell me what the final word was. The dating is critical. There was an undated “modification” to the Augusta Riverfront Term Sheet in the package. It might have been created last week, for all the public knows.
The undated, unsigned “Management Agreement Term Sheet” between the City of Augusta and Augusta Riverfront LLC  in paragraph 6 states “LLC will transfer to Augusta that portion of its property needed to develop the Trade Center and parking, adjacent to the Convention Center. This land transfer, which will not include air rights, will be a no cost to Augusta.” This term sheet seems to have been modified to reverse this part of the transaction.  With no dates, it isn’t possible to tell the sequence of events. (see pdf at bottom)
What is clear is that Commissioner Johnny Hatney was told several times by Administrator Fred Russell that the land under the deck owned by the LLC was going to be donated at the December 7, 2009 meeting  at which the Tee Center was approved by the Augusta Richmond County Commission. Russell did not clarify that only limited air rights were donated. I think most of the public thinks his talk of “property that’s going to be donated” means just that, not “air rights.” Besides, there are schedules that were presented to the commission that show the value of the “Donated Property,” $464,353, as being the assessed value, not plus or minus the “air rights.”
Amazingly Parcel 037-3-047-00-0, land under the $38 million Tee Center itself,  remains owned by Augusta Riverfront LLC.  There have been no recordings with the Clerk of Court office documenting any changes in the ownership rights with this piece of land, including air rights. As precise as the legal documentation of land ownership and rights is, isn’t it wild that this could happen?
Augusta built $50 million of buildings, some costing nearly $200 per square foot, on land it only partially owns. The taxpayers might get the ‘air rights’ to a parking deck they paid $12 million for. The LLC’s get guaranteed fees and to keep the property, which gives them dominance over the entire complex forever. 1
“Donation” now means having your cake and getting paid to eat it too.

Fred thinks this was a bargain.
A forensic audit cannot happen soon enough, and trust me, we will be watching every step of the way.

1. According to the detailed term sheet, the public was guaranteed not much more than that the LLC bears losses after the operations loses $250,000 of the public’s money and that figure excludes depreciation and interest. The public would bear those in addition to the losses. According to the modification provided this was changed to the LLC’s getting fees and the public taking the gains and losses from operations.
Augusta Tee Deck Open Record Request Response
Tee Land Acquisition Documents
TEE Center Term Sheet Document
Term Sheet ModificationsUndated Current Tasks Including Deck Info

Last Word: Iowa State Economist Chad Hart

On January 21, 2011, Dr. Chad Hart of Iowa State University was interviewed by C-Span Washington Journal host Peter Slen on the topic of rising food prices. Both received a challenge to the traditional economic theories from this sound money caller and advocate of alternative economics.

To expound on the Arrowflinger’s favorite alternative economic blogs, they include zerohedge.com, globaleconomicanalysis.blogsport.com, maxkeiser.com, market-ticker.org, kingworldnews.com, and financialsense.com.

The C-Span Interview

Last Word: Former Rep. John Spratt (D, SC)

Former Representative John Spratt (D, S.C.)was on C-Span Washington Journal April 18, 2011 discussing the Federal Budget when the Arrowflinger called in to inquire about his inconsistent voting record with respect to his avowed fiscal conservatism.
Host Libby Casey moderated.

Here is the C-Span clip of the interview.

Last Word: Former Rep. Tom Davis (R, Virginia) on Campaign 2010

On July 13, 2010 former Congressman Tom Davis, a Republican of Virginia was on C-Span’s Washington Journal with host Paul Orgel to discuss the 2010 GOP election efforts. Rep. Davis was a prior Chairman of the National Republican Congressional Committee. The topic of the Commodities Futures Modernization Act of 2000 came up. Since that day, horrendous consequences of the CFMA have become manifest, principally the M.F. Global bankruptcy.

The original C-Span interview appears below.

Last Word: FDIC Chairwoman Sheila Bair

On May 6, 2010, the Arrowflinger caught up with Ms. Sheila Bair, then Chairwoman of the Federal Deposit Insurance Corporation, on the Washington Journal. Here is his last word. Since that interview, Wells Fargo, who had the misfortune to be saddled with the carcass of Wachovia, has also had to settle litigation involving mortgage fraud allegations for $590 million and Collateralized Debt Obligations for $11 million, without admitting guilt – of course! There has been a settlement with another bank for $100 million.

Closer to home, Wachovia had an enormous investor base around Augusta, Georgia because of a series of bank acquisitions using Wachovia or predecessor First Union’s stock. Wachovia stock went from $57 to less than $2 before the failing bank was rolled into Wells Fargo. Other national banks saw stock prices plunge. Since many prominent area families were so heavily invested, one of the old family patriarchs has been heard to say that the fall of Wachovia and others swept $1 billion out of Augusta. A cynic would say this is why, now more than ever, it is critical for citizens to keep vigilant, lest they find themselves making up the losses by political actions.

Now the Last Word, followed by the C-Span clip of the Bair Interview.

Here is the C-Span clip from May 6, 2010.