ATLANTA — As many as 21 Georgia counties and the municipalities located within their boundaries face an uncertain economic future after the Georgia Supreme Court ruled Monday that courts cannot settle disputes over the distribution of local-option sales tax revenues collected in the counties.
The 21 counties and municipalities that have not settled their split of the 1 percent sales tax, including Albany and Dougherty County, are left in a state of flux with no clear ruling on how to divide the funds for the next 10 years. The Supreme Court, basing its decision on a case involving Turner County and its municipalities Ashburn, Rebecca and Sycamore, ruled 7-0 that Superior Court judges could not rule on the tax matter.
“The scheme set forth in the 2010 (legislative) amendment improperly authorizes judicial resolution of the allocation and distribution of tax proceeds, an exclusively legislative power,” Justice Robert Benham wrote in the high court’s decision. “In this case, we hold that, absent an abuse of discretion or other showing of illegality, the allocation of tax proceeds by and among political subdivisions of a LOST special district is left to the discretion of those entities and is not a matter for judicial determination.”
The court’s reference is to the Legislature’s decision that counties/municipalities that did not reach an amicable agreement of their LOST tax split would be subject to a “baseball arbitration” ruling by a Superior Court judge. In such a ruling, the judge listens to each side’s “best argument” for allocation and chooses one or the other.
Albany attorney Tommy Coleman, who represented the Turner County municipalities in the case that went before the Supreme Court and who is representing the city of Albany in its case against Dougherty County, said the ruling does not provide an answer on how to split the funds.
“There are a lot of questions,” Coleman said Monday morning. “If, for instance, the Legislature repealed the former law (on which LOST allocation is based), there is no law in place to determine how funds will be allocated. And, if you revert to the former law, it determined that a split had to be decided by Dec. 31 of the second year after the census, which has passed. Under that law, if no agreement is reached, the tax goes away.
“We will have ongoing discussion on this matter, but the Department of Revenue or someone is going to have to make a decision on how these funds should be divided. The Legislature would, I think, readdress this situation when it convenes, but these taxes are being collected now. There’s just so much political stuff in this right now, I don’t know what the answer is.”
The city of Albany, which currently gets 60 percent of LOST funds collected in the county, has reportedly asked for as much as 80 percent of the tax revenue based on a number of factors. Dougherty County officials, who admit they’d be happy to maintain a 40-60 split, have reportedly asked for a 50-50 division.
Albany City Attorney Nathan Davis and Dougherty County Attorney Spencer Lee, neither of whom is the attorney of record in the city/county LOST dispute, said it’s too early to tell what counties and municipalities with no agreement in place will do in the days ahead.
“The big question we have right now is where does this (Supreme Court ruling) put us,” Lee said in a report to the Dougherty County Commission at its business meeting Monday morning. “Twenty years ago, the city and county agreed on a 60-40 split that worked, and then 10 years ago — based on the recommendation of a consultant hired by the city — we agreed again that the 60-40 split worked.
“This agreement has been in place for 20 years, and I see no reason why it couldn’t continue to work.”
Commission Chairman Jeff Sinyard also pushed for a quick settlement between the city and county once a decision is made on the next move by counties that have no agreement in place with their municipalities.
“It seems to me cities and counties should be able to come together and work things out,” Sinyard said. “This is, after all, taxpayers’ money. City and county officials should be able to understand that any action they take to harm one group to the advantage of another is not good leadership.”
Davis said he expects the state Revenue Commissioner to make a decision on distribution of LOST funds in the short-term before the state Legislature takes up the matter in January.
“Until there’s some official ruling in place, the question everyone is asking is where do we go from here,” Davis said Monday afternoon. “From reading the Supreme Court’s ruling, I think it’s clear they were chiding someone — perhaps the Legislature — for making judges part of the decision-making process over allocation of tax funds. They made it clear that subsection D of the state law was the only part they were overturning.
“LOST funds in the county are currently being distributed under the same 60-40 split that’s been in place for the past 20 years, and while it’s beyond my purvue to do anything but speculate, I would think the revenue commissioner would leave that in place until a satisfactory decision is made.”
Jim Grubiak, an attorney who represents the Association County Commissioners of Georgia, discussed the Supreme Court ruling in a conference call with county officials statewide Monday afternoon.
Valdosta attorney Walter Elliott, who represented Turner County in its appeal before the Supreme Court, could not be reached for comment Monday by The Herald’s press time.