Georgia County Government - May/June 2012 - (Page 29)

Feature A More Level Playing Field for the 2012 LOST Renegotiations By Clint Mueller B January 1, 2013. y now, most counties have begun the legally mandated renegotiation of Local Option Sales Tax (LOST) with their cities. Within two years after every census, state law requires counties and cities to file a new LOST distribution certificate with the Department of Revenue. To have a valid distribution certificate, the county and eligible cities making up more than 50 percent of the municipal population must agree. Without a voluntary agreement or one that is decided by an arbitrator, the local governments will not be able to continue to collect the LOST after To begin negotiations, the county must first submit notification to the Department of Revenue before July 1 of this year. If the county fails to begin negotiations before this date, any eligible city can call for the negotiations. For an outline of the negotiation process, see the timeline for LOST renegotiation on page 30. Unlike previous negotiations that required little to no justification for how these revenues were split between the county and its cities, the new process for negotiating may end with a judge/arbitrator deciding the appropriate distribution based upon which government’s proposal best reflects the eight criteria required to be considered by the law. Although all eight criteria should be considered, they should not all be given equal weight. Counties need to be able to explain how their proposed formula for allocating LOST revenues between the county and its cities takes into account the eight criteria by showing how each criterion was measured, the extent it was used in the allocation formula and the reasons some of the criteria may not have been used in the formula. To create an allocation formula, the county must determine the type of data that best reflects the purpose of LOST and the required criteria to be considered in the law. Remember that the purpose of LOST is to reduce property taxes by providing an alternative revenue source to pay for the services that would normally be paid for through the property tax base. The criteria in the law consider each local government’s relative share of service delivery burden and how the cost for providing services is distributed. The data used should be easy to collect, come from a reliable source and provide an appropriate measure of funding service delivery burden and providing property tax relief. Appropriate data may include general fund expenditures, property tax digest, ad valorem tax collections and population. The data used should also not be mutually exclusive because counties provide services to incorporated residents and include them in the county’s LOST rollback on the property tax bill. For example, if population data is used, the county should receive credit for the entire county population, not just the unincorporated population. The ratio using population would be calculated by dividing each local government’s total population by the collective sum of all local government populations and multiplying this result by 100. An example of an inappropriate use of data would be “point of sale.” First, the location where the tax is collected has no relationship to the relative service delivery burden or property tax relief provided by each local government. Furthermore, any sale that occurs in a city also occurs in the county and therefore cannot be credited solely to the city. Finally, the Department of Revenue does not have “point of sale” data and there is no other reliable source for this data. The 2012 negotiations are completely different from the 2002 negotiations because of the passage of HB 991 during the 2010 legislative session. This change to the law creates an option for binding arbitration if a voluntary agreement cannot be reached. A visiting judge from outside the judicial circuit is called in to act as the arbitrator and has the authority to choose between several proposed allocations that may be submitted by the local governments. The arbitrator does not have the authority to come up with his or her own allocation. This new requirement to justify the allocation to a neutral arbitrator eliminates some of the political games that were played in previous LOST negotiations. In 2002, some local governments that knew they were getting a greater share of the revenues than could be justified used the threat of eliminating the tax to continue LOST RENEGOTIATIONS continued on page 30 MAY/JUNE 2012 29

Table of Contents for the Digital Edition of Georgia County Government - May/June 2012

President’s Message
In Memoriam
Director’s Desk
An Inside Look at Criminal Justice Reform
Taylor County: Strongly Rooted in an Agricultural Economy with Expectations for Growth
ACCG Annual Meeting Highlights
How Counties Can Stay on Top with an Uncertainty in Federal Funding
A More Level Playing Field for the 2012 LOST Renegotiations
Counties & the Law: Road Acquisition and Abandonment
Preferred Partner News: Georgia United Credit Union Now Welcomes County Employees
Preferred Partner News: How M2M Technology is Poising Local Government for Growth
News & Notes
Index of Advertisers

Georgia County Government - May/June 2012