Officials from Hall County and its municipalities are moving forward with an agreement to share revenues from an excise tax meant to replace money they’ll lose when a statewide tax exemption kicks in for manufacturers next year.
Still, no one knows what the tax will mean for the governments’ bottom line.
State lawmakers earlier this year eliminated a sales tax that manufacturers are charged on energy use. That tax will be phased out over a four-year period.
The provision was part of larger changes to the tax code and was meant to make the state more attractive to manufacturers.
Along with the state portion of the tax, the law eliminated the two 1 percent sales taxes local governments collect as part of the Local Option Sales Tax, which reduces reliance on property taxes, and the Special Purpose Local Option Sales Tax, which funds special voter-approved projects.
It does not impact education SPLOST revenues.
Local officials have recently complained about the bill’s effects on local governments’ bottom lines and its impact on their ability to attract business.
Gainesville Mayor Danny Dunagan, in a meeting of local officials Tuesday, called it another one of state lawmakers’ unfunded mandates.
“It’s an unfunded mandate that the cities and counties have to suffer for,” Dunagan said.
To keep the law from impacting the two revenue streams, local officials have to enact a new tax by the end of the year that would help them recoup the revenue.
Officials from Hall County and its municipalities agreed Tuesday to share the revenues from the new tax. But they still need answers.
The effect on the state’s revenue, according to a fiscal note connected to the bill, is supposed to total $167.4 million.
But finance officials from both the Gainesville and Hall County governments have said they have been unsuccessful in determining how much the governments might lose if they choose not to implement the new 2 percent excise tax on manufacturers.
They say they have gotten no concrete answers from the Georgia Department of Revenue on the issue nor from local energy providers.
“We’re chasing numbers,” Hall County Administrator Randy Knighton said.
Officials from Gainesville say that, according to “unofficial and preliminary” numbers they were given by Georgia Power, the city will lose approximately $400,000 a year.
“The bottom line is ‘what’s it worth?’ and I don’t think anybody knows the answer to that,” Hall County Attorney Bill Blalock said as he discussed the agreement with local leaders.
But local leaders are moving forward, anyway, in the hopes that, if the new state law results in a serious revenue loss, they can recoup those funds without asking property owners to make up the difference through increased millage rates.
“We know we’re going to lose something, because we’re losing that sales tax,” Gainesville Councilwoman Ruth Bruner said. “The taxpayer will then be affected if we have to raise property taxes.”
Another question, however, is whether, by implementing the tax, local government leaders steer manufacturers away.
“When they look at our area, (the 2 percent excise tax) might turn out to be a disincentive,” Gainesville Councilman George Wangemann said.
While they are moving forward with the intergovernmental agreement to share the tax, local government leaders still have time to determine when they will implement it.
In the meantime, they’ll try to determine what other local governments are doing.
Counties have until Sept. 1 to notify their municipalities that they plan to collect the tax and begin negotiating revenue-sharing agreements; in those counties that choose not to implement the tax, city leaders can still implement it.
If the tax is implemented here, local governments will share the tax based on the percentages they use to determine shares of Local Option Sales Tax revenue.
They are still negotiating how that revenue will be shared for the next 10 years.
The money collected for the excise tax, though it will replace some SPLOST revenues that are meant for specific projects, will be unrestricted, meaning local government officials can spend it on any part of government operations.