Officials hash out LOST dispersal
By SARAH FAY CAMPBELL
There were no fireworks at Thursday’s meeting of Coweta County and local city officials about the distribution of the Local Option Sales Tax.
Behind-the-scenes negotiations have been going on for months, and a proposed distribution, with a three-year phase in, was discussed at the meeting, which included representatives from Coweta County and all its municipalities.
The division of the proceeds from the one-percent sales tax must be renegotiated every 10 years, following the Census.
The division is based primarily on population but also takes into account other factors, including point-of-sale, service delivery, and debt service obligations.
During the past 10 years, most of the population growth has been in the cities of Newnan, Senoia and Grantville.
Under the proposed distribution, Coweta would see its share drop significantly — almost $2 million a year.
Haralson, Sharpsburg and Palmetto will also see drops.
The proposed distribution, and previous distribution, is as follows: Coweta County, 61.78 percent (down from 72.74 percent in 2002); Newnan, 31.19 percent (up from 21.89 percent in 2002), Senoia, 3.13 percent (2.34 percent); Grantville, 2.87 percent (1.76 percent); Sharpsburg, 0.32 percent (0.42 percent); Turin, 0.26 percent (0.22 percent); Haralson, 0.16 percent (0.19 percent); and Palmetto, 0.29 percent (0.44 percent).
Moreland currently does not receive any of the LOST because it doesn’t meet the requirements established by the Georgia Department of Community Affairs and the Georgia Department of Revenue. However, Moreland is working toward becoming a “qualified municipality” for the purposes of LOST. When that happens, Moreland’s share will come out of Coweta County’s portion.
“We’ll deal with that at some point in the near future,” said Coweta County Administrator Theron Gay.
Sharpsburg became qualified to receive LOST funds in 2004, and Turin qualified in 2008, according to Gay.
Georgia’s Local Option Sales Tax was created in 1979. In 1994, some changes were made to state law that required the re-negotiations every 10 years, and set up the eight criteria, said Gay.
“After 1994, we established locally a factor that considered population and the eight criteria,” Gay said. That “multiplication factor” was “used in ‘02 and is proposed to be used again here in 2012,” Gay said.
The multiplication factor is 1.2021, to give a “weighted average over and above population,” he said.
In 2002, the share for most of the municipalities went down because the population of the unincorporated areas of the county had grown faster than the cities.
“The cities were facing a loss of funding” at that time, Gay said. “Realizing this was a problem for the cities — the county agreed, at that time” to a phase-in that would make sure “we protected them from a catastrophic revenue loss in the base year.”
“The roles are kind of reversed now,” Gay said.
“This time around, the county is looking at almost a 9 percent decrease in our revenue collection,” Gay said.
“We understand the county is going to take a loss,” he said. “The problem we’re facing, like the cities were facing in ‘02, is that is a substantial loss of revenue.”
Gay said county officials had started discussing the issue with staff at the municipalities in April.
If there were no phase-in, Coweta would lose $1.9 million the first year. And that is on top of the $1.4 million reduction the county is “having to absorb” because of reductions in property values.
“That is pretty catastrophic for our budget going forward,” Gay said.
“So we looked at a phase-in period.”
Gay showed a slide with numbers from a five-year phase-in. Coweta would lose about $635,000 the first year, Gay said.
But five years is “probably just a little bit too long,” so the county would like to see a three year phase-in. “We are going to still take about a $635,000 reduction next year. A pretty big hit,” Gay said.
But dealing with that reduction is “a lot better than trying to deal with a $2 million reduction in one year,” Gay said.
The numbers are based on projected 2 percent annual growth in sales tax collections. “It’s hard to believe that the next decade could be as difficult as the last one,” Gay said. For the previous decade, the average annual growth in sales tax collections only ended up being half of a percent, once all the years were averaged together.
“I think 2 percent is going to be conservative. We hope it is going to be a lot better than that,” he said. “Every point that it goes over 2 percent is going to make all these numbers look better.”
No one expressed disagreement with the proposed distribution formula, or the three-year phase-in, at Thursday’s meeting. However, no votes were taken. The county and individual cities will consider the distribution formula at their own future meetings.
Thursday’s meeting was the beginning of formal negotiations. Under state law, those can last 60 days. If an agreement is not reached by Oct. 15, the county and municipalities move to non-binding arbitration. If that doesn’t work, they move to “baseball arbitration” in superior court.
Gay said he doesn’t think any of that is going to happen. “I believe we’re going to be able to work this out,” he said.
Haralson Mayor Ted Bateman said it doesn’t bother him much that his town’s LOST share is going down. Bateman said his residents don’t want Haralson to grow. “They want to keep it a small farming community and I’m all for that — so whatever we get, we’re thankful for,” Bateman said.
Sharpsburg Mayor Wendell Staley said his town does want to grow. It hurts to see the town’s share of LOST going down, “as bad as we need it for our growth and our infrastructure,” he said. “But I appreciate all of the effort” of those working on the renegotiation, he said.
Newnan Mayor Keith Brady said he’d especially like to thank Gay, Newnan City Manager Cleatus Philips and Senoia City Administrator Richard Ferry for their work. “I know how much communication there was back and forth. Everybody in the room appreciates that,” Brady said. Brady said he wanted to give Newnan residents an opportunity to come to a city council meeting and express their thoughts on the issue.
“Quite frankly, I don’t think we have a problem with it. But I’m not counting votes, either,” Brady said.
“I hate seeing those negative numbers. But the fact of the matter is, that is what it calls for,” said County Commissioner Tim Lassetter.
“It hurts my feelings to know that Coweta County is taking a big hit, and trying to figure out where we are going to make these cuts,” said Commission Chairman Rodney Brooks. But “I feel confident. Hopefully our county will grow faster than 2 percent and we will regain that,” he said. “But you just don’t know what economic times are going to bring,” Brooks said.
But no matter what the distribution formula is, “this is a win for Coweta County property owners,” Brooks said.