As you read this, negotiations between Hall County and its municipalities on how they share sales tax revenues are in mediation. It’s expected to come to a conclusion this week, if everything goes smoothly. If not, talks could spill over into the court system.
But as of Wednesday, no agreement has been reached and the county’s commission chairman, Tom Oliver, said the discussions are “somewhat at a standstill right now.”
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.
If Hall County gets its way, which officials said they are “confident” of, it would only increase its share of the revenue by about one-quarter of 1 percent.
For the fiscal year 2013, the county projected its LOST revenue to be more than $20.8 million.
“I think the system has worked quite nicely through the years,” said Oliver. “But everybody seems to think that they’re entitled to more of the pie and more revenues and more monies, but at the same time the system has worked very proficiently ever since its inception.”
The cities have argued that population alone should not be the determining factor for how the money is divided. They said their economic involvement in the county warrants more revenue.
But the county, if the cities’ proposal comes out on top, could lose millions.
LOST revenues for the county make up about 23 percent of its total general fund. The cities propose a 23 percent cut to the county’s share which, using the fiscal year 2013 projections, could cost the county about $4.8 million.
Officials don’t foresee that happening and conversations surrounding that possibility have not surfaced.
“It’s kind of hard for me to play ‘what if,’ if I’m not in a situation to recognize the ‘what if,’” said Oliver.
However, if the county does find itself without all of its projected revenue, officials said the county would cope — just as it has done in years past.
“First of all, I think our proposal is solid and I feel very confident in it. That’s No. 1,” said Randy Knighton, county administrator. “No. 2, and I’ll speak in general terms, if there are any budget challenges that we have, and that pertains to LOST or anything else ... you obviously then have to make necessary adjustments to compensate for said budget challenges. Absent LOST, we’ve seen that over the past few years, with the local governments in particular, having very tight and pronounced budget constraints and having to make adjustments based on lack of expected revenues.”
Officials said no specific solutions have been talked about.
Any loss in revenue could force smaller governments to roll up property tax rates or cut services. Some cities in the county have said they may have to do both if they lose revenue.
But, Knighton said, the county has not rolled up its 6.25 millage rate in at least five years, even in the face of budget woes, and would adjust the budget accordingly.
“In any scenario, be it this situation or another scenario when a revenue is dimensioned, in any fashion, we’ll make the necessary adjustments,” he said.
Oliver said the commission has not broached the idea of the county not receiving its projected revenue and maintained the county’s proposal is fair for all parties.
“The county is very strong and the county will continue to move forward, regardless of these negotiations,” said Oliver. “What we’re looking at is what is the best way for the county, and all of the county, to move forward and we feel like the ratios are reasonable and they represent all the people.”
Revenue sharing is based on eight criteria, including population, tax digest, central business districts and tax equity, among other things.
Mediation for the negotiations is scheduled for this week. Denny Galis out of Athens is mediating at a rate of $250 an hour.
“There is a window open for us to continue the dialogue and I certainly think that needs to be the forefront of our attention and I’m sure the cities’,” said Knighton. “I continue to remain optimistic that the county and the cities will continue the dialogue and will reach an amicable resolution that will be to the benefit of all Hall County residents and we will continue along that path.”