By Maggie Lee
It’s a happy holiday for businesses in Sandy Springs as City Council decides to hand out lower tax bills, to be covered by an expected rise in property tax revenue next year.
In a unanimous voice vote Dec. 21, the council decided to cut the business occupancy tax rate by 8 percent across the board. And the cap on the tax is falling to $75,000.
The two cuts will leave the city with $1.2 million in unrealized revenue next year, according to calculations from City Manager John McDonough.
“It’s our opinion,” McDonough said, that next year, “based on property tax projections we could make up approximately a million two [$1.2 million], perhaps slightly more, to ensure this is revenue neutral.”
As members of the Sandy Springs/ Perimeter Chamber of Commerce and the Perimeter Community Improvement Districts perched on the edges of their seats in the audience, the council appealed the tax retroactively to Jan. 1, 2006, the date the city started collecting the tax.
Since the first days of Sandy Springs cityhood, its tax code specified that all businesses incorporated in the city must pay an occupancy tax. For companies that provide services, the city counted gross revenues both inside and outside Georgia for the tax bill. Income from franchise fees from outside the state – think Wendy’s and Arby’s – also added to the taxable total.
However, many jurisdictions, including DeKalb County and Dunwoody, don’t count revenues collected outside of the state, so companies aren’t used to paying on those revenues.
“We’ve had some controversy with several major businesses in the city,” City Attorney Wendall Willard said.
In 2008, the Mirant Corporation hauled Sandy Springs to court over the out-of-state tax. Though the case was closed, the judge suggested that the city could indeed tax Sandy Springs companies on services they provided in other states.
Despite the apparent victory, McDonough wrote in a memo to council, “it appears that as a matter of policy, the City should review its interpretation based upon the feedback of the business community.”
By a unanimous vote, council retroactively repealed the taxes on the non-Georgia revenue.
“I want to commend you because I don’t know of another council around the whole region that would take the prudence of turning this around on short notice,” said Debbie Goldman, chair of the chamber of commerce. “You’re going to have a great activity. New companies, they’re going to be happy about the environment.”
Yvonne Williams, president and CEO of PCID agreed: “This is a huge statement that this city is open for business.”
The PCID is a network of areas, roughly centered around Perimeter Mall, in which businesses have chosen to tax themselves extra for economic development projects. It includes parts of Sandy Springs, Dunwoody and unincorporated DeKalb.
But, says Williams, this does “not pit Dunwoody against Sandy Springs … it’s how we can keep all the Perimeter market strong.”