There were concerns coming into this year that sales tax revenues for the Gainesville and Hall County school systems would go down.
School leaders were told to expect a decrease, notably after the state’s tax reform legislation changed how sales tax is calculated for vehicle purchases beginning in March.
That expected decrease has not emerged a few months into that change, though. In fact, Gainesville has actually seen an increase in revenue in its portion of the education special purpose local options sales tax.
“They originally told us that with all of this to expect SPLOST collections to go down around 10 percent,” said Janet Allison, financial director with the Gainesville City school system. “However, that seemingly has not panned out yet, because our SPLOST collections have been more than they were.”
For Hall County, collections are similar to what they were in previous years, though those numbers can be volatile, Deputy Superintendent Lee Lovett said.
He said collections depend on businesses turning in their sales tax dollars. If a larger business is behind one month, it can change the numbers.
He did say that since the recession, the numbers have been on an uptick.
“At the same time, what have we lost?” Lovett asked regarding the change in car sales tax and ad valorem tax.
Since March, instead of being charged 7 percent sales tax and an annual tag decal purchase, new car buyers now are subject to a one-time title ad valorem tax, which for 2013 is 6.5 percent of the vehicle’s fair market value.
“The county gets a SPLOST, also,” said Lovett. “They also had a 1 percent local sales tax, and then the state has a 4 percent sales tax ... so the state and local (authorities) lost the sales tax on cars. That’s why they get this title ad valorem tax split between people.”
Rather than being wrapped up into e-SPLOST funds, that ad valorem tax money goes to the county’s tax commissioner, who then delivers a monthly check to the school systems with their portion.
That check goes into the general fund rather than e-SPLOST revenue. It allows for more flexibility, both Lovett and Allison said.
“Now, the thing about it is that money used to be money that went into the SPLOST, and had to be spent on specific capital type projects,” Lovett said. “Now that money we lost is coming into the general fund, which can be spent on anything.”
Since March, the Gainesville system has received around $173,500 from the ad valorem tax. The county school system has received $612,116, according to the tax commissioner.
Vehicles purchased before March 2013 still are subject to the regular motor vehicle tax, though there is an exemption period that allows people who bought cars in 2012 to change over. The schools still receive that money from the regular motor vehicle tax, as well.
In a few years, as more people trade in old vehicles for new purchases, the number coming in from the annual title and tag fee will naturally decrease. That’s when school systems really will be keeping an eye on SPLOST revenue.
“In my mind, we have to be losing money because now the consumer pays 6.5 percent, and it used to be 7 percent sales tax,” Lovett said. “In addition to that, they will never have to pay an ad valorem tax on that car. Experience will have to tell us, but my mind tells me we will not get as much money.”
“I think it will be less money in the long run,” he added. “That’s the bad side. For the consumer, the taxpayer, that’s a good thing.”