TIFTON - The City of Tifton and Tift County missed the first in a series of negotiation deadlines last week as Aug. 29 went by with no agreement on division of Local Option Sales Tax proceeds.
The two governments had 60 days to reach an agreement after notifying the Georgia Department of Revenue on July 1 that negotiations had begun. Since the negotiations didn't result in an agreement, the next steps for the city and county are mediation (an agreement reached by two parties with the help of a mediator) and/or arbitration (a decision reached by an independent arbitrator after the parties present their cases).
In the worst-case scenario for administrators, the sales tax would expire at the end of this year and could be restored only by passage of another referendum.
In a memo written Aug. 29, City Manager Charles Howell described failure to reach agreement as "shooting ourselves in the proverbial foot" and asked elected officials to come together as soon as possible to enact an agreement.
A week later, no meeting has been scheduled, but City Attorney Greg Sowell said he hopes one will be held shortly.
"Part of the challenge of this situation is that it's done so infrequently, just once every 10 years," Sowell said.
"Everybody involved realizes that it's for 10 years, so they want to cover all the bases and do all they can. But we're very hopeful that we'll be able to reach an agreement in the short run. I think we're very close. "
First approved by referendum in the mid to late 1970s, the Tift County LOST generates about 6 percent of the city's annual budget and about 22 percent of Tift County's.
Proceeds from the tax, one cent on every dollar spent on goods in Tift County, are divided between the two governments with small percentages going to the cities of Ty Ty and Omega. The state requires that cities and counties renegotiate the terms of the split after every census.
The LOST is unlike the two Special Local Option Sales Taxes in effect in Tift County in that the county and city are not restricted in how the money is used. SPLOST monies can only be spent on specified projects approved by voters.
The proposal under consideration last week would have left the percentages received by the city and county the same - 61.98 percent for the county and 33.33 percent for the city - except when the revenues from the tax exceeded the amount generated in the year 2000 AND the percentage increase in LOST revenue was greater than the percentage increase in the county's general fund expenditures for the current year. In that case, the difference between the two percentages would be divided with 34.57 percent going to the city and 60.74 percent going to the county.
The proposal illustrated the plan with the following example. Assume that LOST revenues for calendar year 2002 are $6 million. If LOST revenues for 2003 are $6.42 million (a 7 percent increase as compared to the year 2000) and the general fund expenditures for the county in 2003 are $6.36 million (a 6 percent increase as compared to the year 2000), then:
The first $6 million would be allocated by the standard formula (city 33.33 percent, county 61.98 percent).
The next $360,000 of the increased tax revenues (6 percent) would be equal to the actual increase in general fund expenditures for the county (6 percent) and would be divided according to the standard formula (33.33 percent/61.98 percent).
The remaining $60,000 of increased tax revenues (the 1 percent difference between the 7 percent increase in revenues and the 6 percent increase in the county's general fund expenses) would be divided 34.57 to the city and 60.74 to the county.
Other provisions of the proposed agreement call for the city to transfer ownership of certain pieces of real estate to the county, including the site of the Tift County Recreation Department swimming pool, tennis courts and basketball courts between Second Street and Baldwin Drive. Other city property in the Second Street/B
aldwin Drive/Forrest Avenue/Ridge Avenue/Victor Drive area would be transferred to the county if the county builds a multi-purpose recreational building on the property. Ownership of the land would revert to the city if the county ever stopped using it for public recreation.
The city would assume sole responsibility for maintenance of the property in July 2003, with the county continuing to be responsible for recreational programming.
Tax equity study
The agreement also calls for Governmental Solutions, Inc., the company which performed a tax equity study for the city and county in the late 1990s, to update the study, as well as a review of services operations for possible functional consolidation. The cost of the studies would be shared evenly by the city and county, with the study to be completed by April 1, 2003.
Once the study was finished, if both governments believed it to be flawed its recommendations would not be implemented. If only one government thought the study was flawed, then the Carl Vinson Institute of Government at the University of Georgia or some other impartial body would be asked to review the study for accuracy and completeness.
Measures to correct identified tax inequities would be implemented over a four-year period, with at least 25 percent of the implementation to be done in each of the four years.
Sowell said the parties agreed on the division of LOST monies, but could not reach a concensus on some of the other details. County Commission Chairman Buddy Bryan said at a county meeting on Tuesday the provision about the recreation department land didn't sit well with him.
"We haven't slammed the door on negotiations," Bryan said. "It is in everyone's best interest to settle this thing as soon as possible."
Sowell estimated that at least a third of Georgia's 159 counties have not reached agreements with municipalities located within their boundaries yet.
To contact city editor Florence Rankin, call 382-4321, ext. 209.
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