Money, get back. I’m all right, Jack, keep your hands off my stack.
— Pink Floyd
In a time of extreme belt-tightening among local governments — out of necessity in most cases, sadly, not of common sense — Monday’s state Supreme Court decision to strike down a section of the law that determines how local-option sales tax is divided among counties and their municipalities has officials asking, What’s next?
LOST was implemented in the 1970s to provide tax relief for property owners, and the 1 percent collection has had a significant impact on city and county budgets since. One of 21 counties in this situation, Dougherty County failed to reach an amicable LOST agreement with Albany, its lone municipality. Those entities’ LOST pie in Fiscal Year 2013 was $16.2 million.
The city, in whose limits a majority of the county’s population resides, has received 60 percent of LOST collections for the past 20 years, last fiscal year’s total coming in at $9.6 million. The county’s 40 percent take totalled $6.6 million.
It’s foolish to think, as some have suggested, Dougherty County/Albany and the other counties that have not reached a LOST agreement will lose their allocations over their inability to determine an equitable tax split. They were, after all, working through the process laid out by the state Legislature in an effort to assure what Supreme Court Justice Robert Benham called in Monday’s ruling “the mischief created by the impasse that may occur by requiring competing political subdivisions to agree upon allocation of the tax ‘pie’” did not occur.
But if city and county officials are not able to work out some kind of agreement each can live with by what most likely will be a time frame set by the state revenue commissioner, that possibility exists.
The state Legislature implemented the new LOST law to stop situations like what happened in Turner County 10 years ago. It’s no surprise that the case ruled on by the Supreme Court Monday involved Turner County and its municipalities, Ashburn, Sycamore and Rebecca. According to Albany attorney Tommy Coleman, who represented the Turner municipalities in their original LOST hearing before Judge O. Wayne Ellerbee, the entities had lived with a 50-50 split of LOST funds until the 2000 census. Turner County officials decided a 65-35 split in their favor was more equitable, and the elected officers in the three municipalities objected.
Under state law in place at the time, government subdivisions had until midnight Dec. 31 two years after the census to put a LOST plan in place or lose the tax altogether. Turner County officials, in a move eerily reminiscent of the impasse that has the federal government currently on the verge of default, decided they would not budge on the amount, so they essentially told municipal leaders accept the 35 percent or get nothing.
The city leaders blinked, accepting the agreement at 11 p.m. on Dec. 30, 2002. The fallout was immediate.
“The city of Ashburn went from a 41 percent split to a 27 percent split (of $886,816 in annual LOST collections) overnight,” Coleman said in a Dec. 22, 2012 interview with The Herald. “They had to cut services, and they’ve raised taxes twice in the time since that ruling. The county, meanwhile, increased its fund balance from $3.5 million in 2005 to $7 million by 2011.”
Citizens — who have only a passing knowledge of these tax collections and are (some say intentionally) kept pretty much in the dark — are having trouble choosing sides in this battle over their money. What’s at stake are the services that they’ve come to rely on from both the city and county governments. A significant loss in the projected $15.5 million LOST collections for Fiscal Year 2014 could mean service and personnel cutbacks.
Since each percentage point of the 1 percent tax funds collected in Albany and Dougherty County is worth about $175,000, even a 10 percent change in the status quo — which city officials are reportedly looking for at a minimum — could mean a $1.75 million swing. That’s enough to bust anybody’s budget.
Email Metro Editor Carlton Fletcher at firstname.lastname@example.org.