AG to state: Give sales tax money back

ATLANTA -- Georgia's top lawyer says the state must hand over $18 million in disputed sales tax revenue to local governments in the midst of a crippling state budget crunch.

The opinion from Attorney General Thurbert Baker was obtained by The Associated Press.

A spokesman for Gov. Sonny Perdue was critical of the opinion, and said Wednesday the office was analyzing the decision. He declined to say whether they would comply.

But county officials who are grappling with economic woes of their own praised Baker's opinion, which they say could hand them some badly-needed cash.

Dougherty County Administrator Richard Crowdis called the news "refreshing."

"It's refreshing news to us. It can only help local government," Crowdis said. "At this point, we don't know what pro-rata share Dougherty County will get, but it can't hurt."

The legislative director for the Association of County Commissioners of Georgia agrees.

"Every little bit helps," Clint Mueller said.

Baker delivered the 15-page opinion to Lt. Gov. Casey Cagle, who had sought legal advice on who had rights to a pot of "unidentifiable" sales tax revenues.

At issue are sales taxes collected by the state without clear information about which local government they belong to. Typically, Georgia collects sales taxes from merchants and then distributes a portion back to the appropriate local government. But some of the sales taxes arrive in state coffers without the information needed to determine which county they belong to.

Under state law, the revenue commissioner divvies up those "unidentifiable" funds between local governments.

In 2008, however, the state law handing state revenue Commissioner Bart Graham that authority expired. When the state law was enacted again in May 2009 it was unclear what should become of the roughly $18 million in "unidentifiable" sales tax revenues that had accumulated during the 16-month gap.

Jaillene Hunter, a spokeswoman for Cagle, said he asked Baker for guidance last July "in order to prepare for budget discussions and to receive clarification on the pot of local government sales tax dollars."

But Perdue spokesman Bert Brantley suggested the law was clear.

Lawmakers could have made the law retroactive "and chose not to do that," Brantley said.

"This opinion from the attorney general appears to be an attempt to speak for the legislature rather than applying the plain language it passed last year," Brantley said.

The decision comes as the state is scrambling to fill what is shaping up as another $1 billion shortfall for the fiscal year that begins July 1. This week, state money managers reported that tax collections were down for the 15th straight month.

Last spring, some local governments got a surprise worth thousands of dollars from the Department of Revenue after officials in Atlanta had no idea where to disperse millions in collected sales taxes.

Conversely, the department of revenue also unexpectedly withheld approximately $1.4 million from the city and county governments later in the year when an unidentified manufacturer was discovered to have paid sales taxes on exempt items.

The effect on the Dougherty County School System, which also collects sales taxes, was never completely determined.

A debate has quietly been growing throughout the state to overhaul the department of revenue or at least change the way sales tax money is collected.

In question is whether local governments can afford to continue allowing Atlanta to collect their sales tax and trust them to disperse it correctly, or should local governments collect sales tax themselves in a way similar to the way they currently do property taxes.