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Hall, cities to file certificate to maintain tax distribution

POSTED: October 15, 2013 10:59 p.m.

The nearly two-year fight between Hall County and its cities over local option sales tax distribution may have ended Tuesday night, but there’s no guarantee LOST revenues will continue to flow.

The local governments renegotiate how they share LOST collections every 10 years, following the completion of the U.S. census, to pay for day-to-day operations similar to how property tax revenue is used.

LOST is a 1 percent sales tax, approved by voters, that provides funds for government operations and reduces residents’ property tax obligations.

State law passed in 2009 mandated that counties and cities that couldn’t agree on a new distribution formula had to go into 60 days of mediation. If there was still no resolution after that, a judge would be appointed to supervise the negotiations, known as baseball arbitration.

Hall and the city of Gainesville, on behalf of all other Hall County cities, approved a new LOST certificate to file with the Department of Revenue by Thursday night that maintains the same distribution as the previous 10 years.

About 75.5 percent goes to the county and the cities split about 24.5 percent.

“We didn’t have a choice,” Gainesville Mayor Pro Tem Bob Hamrick said of the agreement. “I think that in order to keep receiving the sales tax proceeds, which is so vital to our budget, then we’re just taking the action to continue.”

Many cities and counties that went through arbitration or were in arbitration were left hanging last week after the Georgia Supreme Court ruled baseball arbitration was unconstitutional. The matter went to the state’s highest court after Turner County appealed when a judge ruled in favor of the cities of Ashburn, Rebecca and Sycamore.

The parties have 10 days to appeal, with the last day being Thursday.

Amy Henderson, spokeswoman for the Georgia Municipal Association, said it recently sent a memo to all of its member cities to file a new tax certificate by the end of the day Thursday.

“No one is sure whether this will help or not,” the memo said, according to Henderson. “The suggestion is based on ensuring that every jurisdiction has on file a LOST distribution certificate that was not potentially ‘tainted’ by the baseball arbitration process in any way.”

Association County Commissioners of Georgia is telling its members to do the same.

In baseball arbitration, a Superior Court judge would hear the best and final offer from the cities and the counties and make a decision based on several criteria, including population, service delivery responsibility and intergovernmental agreements.

The Hall County cities had started 2012 agitating for a bigger piece of the pie from the Department of Revenue’s monthly check. A Times article from January 2012 quoted city officials as proposing a nine percent decrease for the county.

Hall’s best and final offer to the court had the county getting 73.58 percent and the cities getting 26.42 percent. Gainesville’s best and final offer had the county getting 70 percent and the cities receiving 30 percent.

Gainesville’s attorney in the negotiations, Christopher Huskins, said it’s unknown whether Hall and Gainesville are protecting their future LOST collections with this move. After Thursday, the Revenue Department may be limited in what it can or cannot do.

“All we know is since the Supreme Court ruling, practically amputating part of the statute that a lot of us, including Hall and Gainesville, were proceeding under, (that) pretty much pulled the rug out from under us,” Huskins said.

“Hopefully (submitting the certificate) will buy time and keep the distribution flowing to the cities and counties until the legislature can go back and fix the statute.”

Hamrick said he favors lawmakers holding a special session to resolve the problem.

Hall County Administrator Randy Knighton has said LOST revenue makes up about 23 percent of its general funds.

It makes up about 18 percent of Gainesville’s general fund, City Manager Kip Padgett has said.


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