The striking down of the Legislature’s “baseball style” court arbitration of county and municipality disputes over the distribution of local-option sales tax (most often referred to as LOST) money has some potentially serious financial repercussions for local governments.
Basically, the Georgia Supreme Court told the elected officials who serve on county and city government boards that judges aren’t allowed do their jobs for them when it comes to deciding how to divvy up the proceeds from locally enacted sales tax.
But in announcing its decision Monday, the high court also left the cities and counties who were awaiting its ruling in a quandary, especially in light of the fact that the tax could conceivably disappear in counties where the local governments haven’t reached a consensus.
The sticking point, as always, is who gets how much of the kitty. As the recession took hold and revenue streams dried, local governments have had to cut expenses and look for new or increased sources of revenues. The law that permits the local-option sales tax to be imposed requires local governments to reallocate percentages for the respective political subdivisions after new census numbers come out.
The 2010 census numbers created an opening for local governments to attempt to garner a larger piece of their county’s LOST revenues. In Dougherty County, the total LOST collections that were divided by the county and the city of Albany were about $16.2 million.
If the various governments in a county couldn’t reach an agreement, the tax couldn’t be imposed. Legislators came up with the judge as an arbitrator plan. The cities would give the judge their numbers, the county would present its numbers and the jurist would decide on one of the plans.
The test case came from Turner County, which appeals a superior court ruling that favored the percentages that were presented by the three municipalities in the county. When that was tossed out by the Supreme Court on Monday, local governments knew for certain what they couldn’t do. Now, however, they’re not sure what they can do.
For instance, if the state has to revert to the former law that was in place, the LOST could go away. Under that former law, a decision had to be made on the local level before the end of the second year after the census. That deadline has passed. So, does the tax disappear in the counties, including Dougherty, where there is no agreement in place? Can the Georgia Department of Revenue make a determination? Where, exactly, do things go from here?
The loss of LOST funds for a year — or even a quarter — would have disastrous effects on local governments. A solution, and a fast one, is critical for the 21 local governments who were watching the Turner County case before taking action in their own counties.
The unfortunate thing is that an arbitration system was required in the first place. Elected officials should be leaders, people who are able to work together for the common good with substantial applications of fairness and common sense in their decisions. In our local case, the Dougherty County Commission and Albany City Commission have no excuse for not being able to sit down and equitably divide nearly $10 million.
A meeting of the minds is the best way to ensure that LOST isn’t lost.
— The Albany Herald Editorial Board
EDITOR'S NOTE: In the original version of this editorial, we had an incorrect figure for the amount of revenue generated last year in Albany and Dougherty County. The reported amount was the city of Albany's share.