Before the end of the month, negotiations between Hall County and its municipalities on how to share tax revenues will have likely gone through mediation.
And some cities believe negotiations, if they end up as the municipalities think they should, would appropriately represent the financial impact they have in the county.
In August, local option sales tax revenue-sharing negotiations between leaders in Hall County failed to reach a conclusion and, per law, mediation was required.
LOST revenue is meant to help offset governments’ reliance on property taxes to fund day-to-day operations.
How it’s distributed is determined every 10 years following a federal count of the population.
Hall County has proposed it keep about 75 percent of that revenue, nearly the same as the current agreement.
The county’s municipalities want to see that number at around 58 percent.
Cities like Flowery Branch, Oakwood and Buford, under both proposals, would receive more of a share of the revenues. But their proposal, the cities said, would mirror their contribution to the county’s tax revenue, something they said isn’t happening under the current agreement.
“I’ll say, from an Oakwood standpoint, we didn’t get the proper amount the first time around,” said Stan Brown, Oakwood’s city manager.
Under the current agreement, Oakwood receives 1.63 percent of the LOST revenues. It makes up roughly $450,000 of the city’s $3.5 million budget.
In the cities’ proposal, Oakwood’s share would increase to 3.67 percent — a 125 percent increase. Under the county’s proposal, the share would be 1.82 percent.
If the cities’ proposal is accepted, Oakwood’s share of the revenues would increase to more than $1 million.
“From our standpoint, even though it may appear that the county’s offer is an increase for us, we don’t view it that way in that we felt like we got the raw end of the deal the last time,” said Brown.
LOST revenue sharing is based on eight criteria, including population, tax digest, central business districts and tax equity.
“We are an economic engine and for us to receive revenue based on population alone, we don’t think is the fair way to do it,” said Brown, adding that more than 80 percent of Oakwood is commercial property.
He said under the original agreement, 10 years ago, an incremental change in distribution was expected. That agreement had to be submitted every year to the state and, he said, after a political change, those agreements never made it to the state.
Over that time period, Brown said, Oakwood has lost out on around $1.5 million in LOST revenues.
He said an increase in the property tax rate for the city, currently at 2.48 mills, is a possibility if negotiations wind up in the county’s favor.
“Sure (it’s a possibility),” he said. “I think it’d be the same thing for any party. That’s the whole purpose of the LOST. That’s what you have to look at. It ends up being a trade-off.”
But, he said, the process is in mediation and out of the cities’ hands.
“We are in mediation, so I’m talking philosophically,” said Brown. “By no means do I want to say a certain amount is fair or not fair. We’ve made our pitch so we’ll see where it goes.”
Flowery Branch, under the cities’ proposal, would receive 4.77 percent of the revenue. It currently receives 1.39 percent — about $340,000.
The county thinks Flowery Branch’s share should be 2.35 percent.
Bill Andrew, the city manager, declined to talk about the negotiations.
“Since the issue is going to mediation, I would rather not discuss it at this point,” Andrew wrote in an email.
Flowery Branch’s revenue would increase by around 140 percent to more than $820,000.
During the fiscal year 2012, Flowery Branch received $604,000 in property tax revenue.
Buford, which has city limits in Hall County, is currently receiving about $7,000 annually in LOST revenue from the county.
Any change, city officials said, in the way the tax revenue is shared would only more accurately reflect the city’s contribution to Hall’s economy. It wouldn’t likely affect the city’s millage rate, currently rolled back to zero.
“We think we’re certainly a net contributor to the LOST in Hall County,” said Bryan Kerlin, Buford city manager. “We don’t think we get every penny we generate up there in Hall County back, but, you know, Hall County provides some services and those services need to be supported by some revenues in the city. It’s a sense of fairness that we want.”
Under the cities’ proposal, Buford’s return would be 1.42 percent. It is currently 0.03 percent.
LOST revenues currently make up less than two-tenths of the city’s $37.5 million budget.
“We’ll abide by whatever the process determines it should be, but we think the cities have put together a strong case pursuant to the statute and the criteria of the statute, so we expect a positive result,” said Kerlin.
Mediation for the negotiations is scheduled for the third week in October.
Denny Galis out of Athens will mediate at a rate of $250 an hour.
If mediation proves fruitless, negotiations could make their way to Superior Court.