ATLANTA — City leaders across Georgia say their budgets are hurting, and taxpayers could be stuck making up the difference.
They blame a 2013 overhaul of Georgia's tax laws, including Georgia's Agriculture Tax Exemption (GATE) program.
A Channel 2 Action News investigation decided to test the system by which tens of thousands of Georgia farmers can legally avoid paying sales tax on necessary supplies for their farms.
The experiment exposed loopholes in the application process which could make it easy for non-farmers to join the program.
A Channel 2 investigative producer applied online for a GATE card using a piece of family land with trees on it; she answered the entire application truthfully.
She qualified for a timber exemption, meaning she could produce timber on that property sometime in the future.
Her GATE card approval arrived in less than 24 hours.
"The state's going to have to make it harder for people to qualify for them, there is no question about that," said Valdosta Mayor John Gayle.
The program also considers an applicant a "farmer" if they earned $2,500 in the prior year farming or could have the potential to earn $2,500 in the coming year.
"The legislature felt like that was a fair threshold," said Georgia's Agriculture Commissioner Gary Black, whose department manages the program.
Channel 2 investigative reporter Jodie Fleischer told him of the station's experiment, and asked about the controls in the application process.
"We built our system so that an individual has to attest to a number of things as they go along in the process," said Black, "Prior to that, all they did was go into a retailer and sign a form."
Black said this newest version of the decades-old exemption is the most stringent yet, although he acknowledges the application process is largely based on the honor system.
His staffers scrutinize about 10 percent of the applications they receive. They do not pull tax returns to check for agricultural income or interview the applicants.
In 2014, the program included more than 31,000 card holders.
But state leaders do not know how much farmers saved, because no one tracks what they buy.
"The whole program is just set up to be exploited," said Bainbridge City Manager Chris Hobby.
Hobby joined Gayle and Norcross Mayor Bucky Johnson for an interview with Channel 2 to raise questions about the program's controls.
None faulted real farmers for reaping the GATE card's benefits, but all wonder about the crop of people who apply for the card.
"Somebody who's got a garden with a row of pole beans and two rows of corn can get a GATE card so it's pretty easy," Gayle said.
The Channel 2 investigation also tested for controls and oversight in usage of the card, by shopping undercover at six stores.
The state provides a very specific list of items allowed for purchase tax-free.
The undercover producers never saw an associate at any of the stores consult that list.
They purchased home improvement items, a charcoal grill, even the proverbial kitchen sink; all of the receipts rang up with zero sales tax, even for prohibited items.
The producers immediately returned each of the purchased items, so the state did not miss out on any sales tax revenue.
Norcross Mayor Bucky Johnson said anecdotes regarding the card's misuse are legendary.
"Someone tried to bury their father using the gate card; the person he went to was actually an elected official and said I'm sorry but you can't do that," said Johnson, adding, "I'm disappointed that it's not monitored better and is not administered better."
Georgia's Municipal Association, which represents 520 cities around the state, says many fear they would need to raise property taxes to make up for the revenue lost to the GATE program and other exemptions.
"We're working with our partners who represent the counties and school districts to encourage the legislature to tighten controls and limit abuse," said GMA government relations associate Michael McPherson.
The state has hired two new auditors to monitor the program, but stores are not required to send in records of GATE purchases.
"Currently, we don't have them, or we don't request of them specific reporting information," said Lynne Riley, Georgia's newly appointed revenue commissioner, adding that stores should keep records just in case they get audited.
Department of Revenue records show a very narrow chance of that happening.
Of approximately 220,700 businesses, the state has audited 4,245 in the past five years. That's an average of 849 audited each year, or less than 1 percent.
Riley said she will assess the controls over the GATE program as her auditor’s progress in their work, and both commissioners were open to making changes if needed.
"We're going to work with the Department of Revenue to solve those kinds of issues," said Black, "It's always an ongoing process, we can always get better."
Black said if people abuse the program, they will lose it.
"It does so many good things for so many organizations that it would be hard if they pulled that gate card," said Tamma Trump, who owns Lakota Creek Equine Services in Acworth.
At her horse farm, saving is a way of life.
"They've been neglected, abused, starved," said Trump, who has dedicated her life to rescuing horses.
The horses depend on her, and she depends on all the help she can get. She applied for a GATE card a year ago.
"Between the price of the grain, the price of the hay, the vet bills, all that adds up," Trump said.
Trump was surprised the state never asked for proof of her farming revenue, but would welcome tighter controls to keep the program in use.
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