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Study says Georgia has shortchanged Hall County
County has lost out on $25M over 3 years, report says
An audience of local leaders listens to a presentation of a sales tax study Monday afternoon at the Georgia Mountains Center. - photo by Tom Reed

Hall County, its cities and school boards met Monday at the Georgia Mountains Center to ask their legislative delegation for help making changes at the state level to bring home more sales tax dollars.

Rep. James Mills, Rep. Carl Rogers and Sen. Butch Miller, along with Dennis Pitts, a field representative and job advocate in Lt. Gov. Casey Cagle’s office, heard a study commissioned by the local governments that estimates the state has shortchanged the county more than $25 million in sales tax revenue over three years.

“I think we’ve scratched the surface,” said Frank Norton Jr., who conducted the study. “There are lots of little holes in this system.”

Pitts said a senior adviser to the lieutenant governor likely will be talking to Cagle Friday about the information.

Hall County is one of four counties in the state that were selected to participate in a Department of Revenue pilot study that compared local business license data with Department of Revenue records.

“I can tell you the lieutenant governor is very upset with the (Department of Revenue) commissioner as far as agreeing to put this pilot program in place,” Pitts said. “And then there’s been no connection, there’s been no dialogue with Phil (Sutton, assistant county administrator) who’s worked on behalf of the four counties above and beyond the call of duty. We’re engaged with it, and I should know a little more later in the week.”

The Gainesville City Council, Hall County Board of Commissioners and the Gainesville and Hall County school boards commissioned Norton’s study, which is a separate investigation from the Department of Revenue pilot study and showed a number of issues with the current system.

Cross checks in the pilot study revealed 957 Hall County businesses that were not on the department’s sales tax list and 680 businesses that were reporting sales taxes to the state but did not hold a business license in Hall County.

“Separately, Frank’s group took a careful look at the commodity report that the Revenue Department generates ... and compared that with certain businesses in Hall County to try to get his own feel for, are we collecting as much as we should?” Assistant County Administrator Phil Sutton said.

Norton’s study looked at numbers reported from Hall County retailers on food, gas and automobile sales compared with state sales tax money returned to the county from the years 2007, 2008 and 2009.

Norton estimates the county should have received $25.8 million more in sales tax money over the three-year period.

His data showed the Department of Revenue’s payments were inconsistent and on average were between 20 percent and 46 percent below what he calculated they should have been.

“That builds a lot of schools. It subsidizes a lot of employees. It helps lower the overall tax base for a community of our size. It helps major industrial recruitment. It helps water systems, sewer systems, roads and our citizens,” Norton said. “Now, we may be wrong. We may be off 50 percent. But that’s 12.5 million.”

He pointed out that major events — such as the opening of a new Target, Wal-Mart and Home Depot — generated additional commerce in the county that did not return in the form of sales tax.

“There’s been negligible effect of over 1 million square feet of additional retail occupancy between 2007 and 2009,” Norton said. “To me, that doesn’t correlate.”

Commissioner Steve Gailey expressed concerns over online sales, which do not contribute to state sales tax.

“There’s a tremendous amount being bought over the Internet,” Gailey said.

Norton said it is just one piece of the puzzle.

“We’re missing all of that,” Norton said. “But it’s not $25 million.”

Sutton said there were a number of accomplishments that came out of this year’s General Assembly that will help solve some of the county’s dilemmas.

One problem Sutton and Norton encountered in their study was that the Department of Revenue’s database was not accessible to local governments.

House Bill 1093 now allows counties collecting business occupation taxes to ask businesses for their sales tax identification numbers so the county can verify that the business is paying both state and local taxes.

Additional auditors should also help reduce issues.

The General Assembly budgeted $9.8 million to hire 145 tax compliance auditors who are expected to pay for themselves by collecting an estimated $900,000 each — or $128 million total — from businesses who aren’t complying with the system.

But local officials agree they need to work with legislators to do more.

“Where’s our money going?” Oakwood Mayor Lamar Scroggs said. “Somebody needs to stand up. Our money needs to be counted in Atlanta, Ga.”

Mills said the legislators are on their side.

“We’re working real hard to bring all the dollars we can back,” Mills said. “The reason we’re here today is because the lieutenant governor and delegation saw this as a problem ... and we’re trying to fix it.”

Rogers said the next governor will need to stand behind changing the system as well.

“They’ve got to sign the bill,” Rogers said.