Concerns that Hall County voters will not approve a new five-year round of special purpose local option sales tax money to pay for capital needs have led local government officials to begin preparing contingency plans to deal with the potential loss of revenue.
“In the event that it does not pass, it will lend itself to serious budget challenges,” Hall County Commissioner Craig Lutz said.
Officials still plan to hold a referendum on renewing the 1 percent sales tax in March. If passed, SPLOST VII would take effect in July.
But getting it passed could be challenging in the current political climate.
Moreover, criticism of the current SPLOST VI, which ends in June, is making the sell even harder.
SPLOST VI was approved by 62.25 percent of voters in 2009. Initial projections placed revenue for the county and participating cities at about $240 million over the six-year life of the tax.
But those estimates have now fallen to $152 million. The latest projection for SPLOST VII is $158 million, but that figure is no guarantee.
Government officials warn that without SPLOST, cuts to services, tax increases or a combination of the two would be likely.
They argue that capital projects, such as road paving and sewer infrastructure, must be paid for somehow, some way.
“It’s either SPLOST or raise property taxes,” Hall County Commission Chairman Richard Mecum said.
Gainesville Mayor Danny Dunagan said city officials have had “casual” talks about what to do if SPLOST VII fails at the ballot box.
Dunagan said the city is dependent on SPLOST money for major road and stormwater projects it has in the pipeline, adding that the benefit of the tax is that it is paid not just by county residents but by all who visit and spend money in the county.
The Greater Hall Chamber of Commerce estimates that about 25 percent to 30 percent of SPLOST revenue is generated from visitors and tourists.
Meanwhile, Oakwood has proposed a 50 percent hike in property taxes, which would produce an additional $320,000 in revenue.
“There is a cost that we have to maintain our infrastructure,” said City Manager Stan Brown, adding that while SPLOST is not the only reason for the proposed tax increase, it is a significant element. “I have to assume that it’s not going to be there.”
Flowery Branch passed a property tax increase in July that will produce about $110,000 in additional revenue. That money will be used for capital projects, one way to offset any funding lost if SPLOST VII does not pass.
The city had to get a loan from the Georgia Environmental Finance Authority after SPLOST VI revenues fell short of paying off expenses on a lift station and force main for its sewer system.
City Manager Bill Andrew has said it’s an example of why a new round of SPLOST needs to be approved by voters, adding it’s a better option than raising property taxes or increasing utility bills.
Lula City Manager Dennis Bergin told city officials last week that he was preparing next year’s budget as if SPLOST VII would not pass, adding he’ll have a game plan in place this fall to address these concerns.
The fact that local officials are already preparing for the loss of SPLOST revenue reveals just how dependent the county and its cities have become on the tax to supplement general fund revenues.
Lutz called SPLOST a “crutch” and said officials need to work on narrowing the scope of projects funded through the tax.
For example, Lutz said he would never have supported SPLOST VI had he known some revenue would be used to develop the Gateway Industrial Centre, a 518-acre business park off Ga. 365 in North Hall.
Though officials must prepare a list of projects and items to be supported by SPLOST so voters know what they are funding, the tax revenue has been used for other unintended expenses over the years.
Examples include costs related to the Glades Reservoir project, as well as funding for the purchase of a new firetruck to replace one involved in an accident that injured three Hall firefighters in July.
“Of course, I think (SPLOST) has been misused, too,” Mecum said before adding, “There are going to be times when you have situations that you didn’t plan on.”
But these examples make it more difficult for officials to convince voters to support the tax. That’s why there is a proposal to create a citizen oversight committee for SPLOST VII.