Questions surround Perdue's property tax break
Atlanta Journal-Constitution
Jay Bookman

When he signed House Bill 488 into law, Gov. Sonny Perdue gave himself a nice little present. Thanks to an obscure provision slipped into the bill by mysterious hands, the governor was able to defer an estimated $100,000 in capital gains taxes that he would otherwise have owed the state.

Georgia Republicans have suggested that the governor was merely the beneficiary of a coincidence, that it was just a happy accident that the bill made a particular little tax break retroactive to 2004, exactly the time frame necessary to help out Perdue.

That is conceivable, if unlikely. To prove otherwise, to prove that the tax break was inserted into the bill precisely to help Perdue, it would help to know who put that provision into the bill. It would help to know if the person responsible for that retroactive provision had some personal and political ties to Perdue. And if that person also had some familiarity with Perdue's financial dealings and land transactions ... well, that would pretty much take the coincidence explanation from unlikely to unbelievable.

So, who inserted the provision into law?

Every tax change in HB 488 — except one — was requested by the state Department of Revenue. The sole exception was the retroactive provision that benefited Perdue.

According to Bart Graham, head of the Department of Revenue, he had been informed about that particular change — not consulted, but informed. When I asked him who had told him about the change, Graham would say only that it was "a member of the [House] Ways and Means Committee."

That's peculiar, because the change in the law was made after the bill had passed the House and was awaiting passage in the Senate. Somebody got the bill pulled off the Senate floor and back into the Senate Finance Committee, where the retroactive language was added.

The chairman of that committee was state Sen. Casey Cagle (R-Gainesville), now the Republican nominee for lieutenant governor.

That fact has tantalized Georgia Democrats with the possibility that the scandal might envelop both Cagle and Perdue, the top two Republicans on this year's ballot.

Cagle, however, says he had believed the change was requested by Graham and the Revenue Department; he seemed genuinely startled to learn that Graham had nothing to do with it.

So if neither Graham nor Cagle initiated the change, who did? It would have taken someone with a lot of influence to get the bill pulled off the Senate floor and amended.

According to minutes of the Senate Finance Committee meeting supplied by Cagle's campaign staff, that someone was state Rep. Larry O'Neal (R-Warner Robins), chief sponsor of HB 488 and chairman of the House Ways and Means Committee.

Attempts to reach O'Neal on Wednesday were unsuccessful. However, his extensive ties to Perdue are well-documented. He and Perdue have known each other for more than 25 years; when Perdue was elected governor in 2002, he named O'Neal one of his floor leaders.

According to reporting by James Salzer of The Atlanta Journal-Constitution, the ties between Perdue and O'Neal are professional as well as political and personal. Despite earlier claims from Perdue that he had ruled out buying property in Georgia to avoid possible conflicts of interest, Salzer found that in 2004 the governor had purchased 100 acres of land in Houston County, where he and O'Neal live.

The attorney in that transaction, and in the later creation of a limited partnership for Perdue and his wife, Mary, was O'Neal. He is a tax attorney, and his office is located in Bonaire, Perdue's hometown. (It would be interesting to know who prepared the tax return in which Perdue took the controversial deferral; that's among the questions the governor refuses to answer.)

A couple of other points are interesting as well. There's no way to know, but I suspect that Perdue was the only Georgia taxpayer who took advantage of that provision on his '04 taxes. Other Georgians might have been eligible. Like Perdue, they might have purchased out-of-state property back in 2004 that qualified them for deferring capital gains taxes. But the provision allowing them to do so was buried at the bottom of a 24-page bill that Perdue signed into law on April 12, 2005, just three days before state tax returns had to be completed and signed. Unless you or your accountant knew the language was in there, you probably didn't take advantage of it.

In our interview, Graham was clearly apprehensive, careful not to take sides. But he did say that if he and the Revenue Department had been consulted about making the tax change retroactive, they would have recommended that it be made retroactive all the way back to 2002, just to be fair.

As Graham points out, state law gives taxpayers three years to file amended returns, so making the change retroactive for three years would have allowed as many Georgians as possible to take advantage of the change.

Instead, the provision was made retroactive for just one year, long enough to ensure that Perdue benefited. And that was no coincidence.

•Jay Bookman is the deputy editorial page editor. His column appears Thursdays and Mondays.

(Original URL: http://www.ajc.com/opinion/content/opinion/bookman/stories/090706.html)

Also see:
Connecting dots on Sonny’s Land Deals & Tax Breaks
Steve Scroggins, GHC, November 1, 2006

Oaky Woods Corruption Update
Steve Scroggins, GHC, December 7, 2009

Sonny won, public lost on his refusal to buy Oaky Woods
Marietta Daily Journal, November 5, 2006

Perdue Failed to Disclose Land Buy Near Prized Tract
Atlanta Journal-Constitution, October 28, 2006

Shipp: Perdue says no to conservation
Bill Shipp, Athens Banner-Herald, October 29, 2006