The Times will examine how the redistribution of LOST funds could affect Hall County.
Negotiations between Hall County and its municipalities on how they share sales tax revenues are slated to come to a conclusion by the end of next week, if mediation goes smoothly. If not, the talks could spill over into the court system.
But while negotiations rest in mediation, municipalities, including Gainesville, say it’s equity they’re looking for — not just more revenues.
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.
Under the current agreement, Gainesville receives nearly 20 percent of the LOST revenues in the county, estimated at about $5.3 million for fiscal year 2013.
The county’s proposal would decrease that share to 17.39 percent, costing the city about $636,000 in revenue.
“Our LOST revenues are probably our second- or third-largest revenue source to the city’s general fund, so any decrease would certainly impact our service levels,” Gainesville City Manager Kip Padgett said.
But the city is asking for a larger share of the revenues, arguing that its economic contribution constitutes a greater return.
Under the cities’ proposal, Gainesville would receive about 27 percent of the LOST revenues, an increase of about 36 percent, or $1.9 million.
“The reason we feel like that’s a more equitable split is because it used to be you just looked at population,” Padgett said. “Population is just one of the eight criteria you’re supposed to be looking at. What we’ve seen is that out of all the sales in Hall County, 52 percent of them occur within the city limits of Gainesville. That puts a substantial burden on our infrastructure, our police, our solid waste, all those type areas, and it’s only fair that we get more of that LOST funding to help go and compensate for what we have to spend to keep up with that rather than the taxpayer having to do that.”
Those eight criteria include population, tax digest, central business districts and tax equity, among other things.
The city estimates that its daytime population grows from around 35,000 to more than 100,000 as commuters file in from surrounding cities and counties for work.
Any loss in that tax revenue, Padgett said, would likely force the city to adjust the services it provides residents and daytime visitors, including public works and street maintenance.
“Whenever you lose revenue, you’ve got to really assess what your services are, and the council will have to prioritize which ones we would provide,” he said. “But I’m optimistic we won’t get to that point and that we’ll be able to all find some common ground to move forward.”
The county’s proposal would give cities like Flowery Branch, Oakwood and Buford a bigger share. Smaller cities like Lula, Clermont and Gillsville would lose revenues.
In smaller cities, a loss in LOST revenue could mean an increase in property taxes. Padgett doesn’t anticipate that will be the case in Gainesville, but it’s the City Council’s decision on how to supplement any lost revenue.
Gainesville Mayor Danny Dunagan Jr. said he and the council have not discussed potential outcomes in any great detail.
“We’ll just have to wait and see what the final outcome will be and we’ll go from there,” he said.
But he did say a reduction in revenues would not immediately mean a roll-up in the city’s 1.77 millage rate.
“First, we would look somewhere else in the budget — that would be first and foremost,” said Dunagan.
“Secondly, we’ll just have to look and see. I can’t make that decision. It’s too much that’s unknown out there.”
Conversely, he said a revenue increase would not necessarily mean a rollback in property taxes either, but the council has not broached that subject.
“It would definitely go to the taxpayer’s good, I will say that,” Dunagan said. “We’ve not discussed it, though. I’m one of those that we’ll wait and see what the outcome is and then we’ll discuss it. What happens, happens.”
With an increase in revenue, Padgett said, could come a better road system, something the city has identified as a need.
“A big emphasis would be on our road network,” said Padgett. “If you’ve gone through Gainesville on a Friday afternoon, you’ve seen what kind of traffic we have. We’re in the process of doing a transportation plan now to identify ways, hopefully, to relieve some of that congestion.”
Mediation for the negotiations is scheduled for next week. Denny Galis out of Athens will mediate at a rate of $250 an hour.