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Hall: It’s Gainesville that owes SPLOST money

County denies claim that it owes tax funds to the city

POSTED: March 12, 2013 11:48 p.m.

Hall County has denied it owes the city of Gainesville additional special purpose tax revenue and said the city owes it more than $185,000, a court filing says.

The county filed its answer and counterclaim Monday with the Superior Court in response to the city’s lawsuit filed last month.

Gainesville City Attorney James Palmour filed a breach-of-contract lawsuit, saying Hall County owed it more than $5.3 million in special purpose local option sales tax revenue from SPLOST VI’s collection. At the center of the dispute is a December 2008 agreement that each is interpreting differently.

Gainesville Mayor Danny Dunagan declined to comment, citing ongoing litigation.

A call to Richard Mecum, Hall County Board of Commissioners chairman, was not returned.

Hall County Attorney Bill Blalock said the county’s reply speaks for itself, and a call to Palmour was not returned.

The county said in its court filing that it “has not acted in bad faith, has (not) been stubbornly litigious,” as the city complaint said in February. Hall County has not breached the terms of the 2008 letter and puts emphasis on part of the 2008 letter that says “If revenues are higher or lower than anticipated, the total payments to the city of Gainesville will be based on the 14.79 percent of total SPLOST VI collections.”

SPLOST VI was estimated to collect $240 million in a six-year period, ending in 2015. Hall County agreed to make 48 monthly payments to Gainesville of $593,750, which is about $7.1 million a year and, after four years, Gainesville would receive $28.5 million. However, the county has lowered its projected revenues to $162 million, which would mean it would be paying the city about 17.6 percent of “total collections.” Hall County has made only 39 payments, but has paid Gainesville more than $23 million in revenue, or about 14 percent of $162 million.

The December 2008 agreement also said the city would pay back the surplus funds the county advanced it and pay an annual interest fee for the additional upfront money.

In the complaint, Gainesville asks the court that Hall County continue accelerated payments. It also asks that the court rule Gainesville is not responsible for extra money the county pays to the city that’s not offset by tax collection revenue because of the accelerated payments.

The county said the payments were based on estimated revenues and the accelerated payments were subject to actual revenue reaching estimated figures.

The issue, the county said, is that both governments are subject to Georgia’s constitutional ban against improper gratuities. Blalock argues that because the county doesn’t receive a substantial benefit by providing a gratuity, it’s against state law to continue making the payments.

Gainesville’s complaint acknowledges that the county failed to deduct $185,659 in SPLOST VI interest, but says that Hall County owes the city $189,442.07 from the SPLOST V revenue collection. The county agrees the city was overpaid because it didn’t take out the interest payment and has filed a counterclaim asking for that money to be paid back. The county’s response said the city can’t get additional SPLOST VI money from 2009.

The county sent letters to the municipalities about a change in the state’s accounting system in May 2009 and the county’s decision not to adjust accounting practices on SPLOST in 2009 and in 2011. Gainesville didn’t object, the document states.


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