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Gainesville OKs end to SPLOST spat with county

Council agrees to settlement with Hall over distribution of sales tax funds

POSTED: August 29, 2013 11:29 p.m.

Gainesville City Council approved settling a six-month court fight with Hall County at a called meeting Thursday before its scheduled work session.

In a court hearing before retired Superior Court Judge Frank Mills earlier this month, Mills said an issue between the two entities about the payout of special purpose local option sales tax dollars was basically a wash between the city and county. The contract was about time, not money, he said, and he let the parties work out a settlement.

The Hall County Board of Commissioners approved the terms at its meeting last week.

In the compromise, expected to be filed with Superior Court by the end of today, the county agreed to pay the city about $5.3 million in SPLOST revenue over nine payments. The city agreed to repay the county over the next 24 months about $6 million in excess funds and interest it got from Hall.

“I think this is a good agreement with the county because it’s simple to understand and it’s right,” Councilman George Wangemann said.

SPLOST VI started in 2009 and runs through July 2015. The voter-approved tax collection was expected to generate $240 million, but revenues declined because of the economic downturn. In 2011, the estimate was $162 million and it went down again in March to $157 million.

Hall County now has projected revenue will total between $152 million and $155 million.

A 2008 intergovernmental agreement allowed the city four years of accelerated payments to build its $20.4 million public safety complex. The quickened payments allowed the city to save money on financing. It agreed to pay back excess funds in the last two years of the collection and pay an annual reallocation fee.

Late last year, Hall County cut off SPLOST payments to Gainesville at 39 payments because it said the city had received its 14.79 percent of the collections, what it was entitled to in the 2008 agreement. But in that same agreement, Hall committed to pay 48 accelerated payments of $593,750.

Gainesville filed a lawsuit against the county in February, asserting the county had breached the contract. Court documents stated the city had collected about $23.15 million in SPLOST VI revenue as of March 30, which is about 14.88 percent of the 2011 estimate.

The judge said he would require the county to pay the full 48 months of payments. However, the county was also allowed to start billing the city for excess money it got during those years.

“Under the court’s theory or inclination, at the end of this six-year period, based on projections, assuming they are accurate, are we not basically going to be handing them a check, which they’re going to hand back to us over the next 24 months?” County Attorney Bill Blalock asked Mills near the end of the hearing.

“Yes,” Mills said. “I mean that’s the way I see it. That was what that whole agreement was about.”

Gainesville and Hall County also disagreed about a SPLOST payment in July 2009 where the city was paid less than it is said it was owed. The confusion happened due to a change of accounting procedures at the Georgia Department of Revenue.

Gainesville claimed it was owed $186,442. The parties agreed to use that money to pay the city’s reallocation fee for fiscal year 2012.


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