By Maggie Lee
Sandy Springs City Council gave businesses a happy holiday season as it voted 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 city’s business occupancy tax rate by 8 percent across the board. It also voted to reduce the cap on the tax – the largest amount a business could be ordered to pay — from $400,000 to $75,000.
“I think it’s important we show the small businesses in Sandy Springs that we’re here [for them] just like we did last year for the developers when we cut the fees for the permits,” City Councilman Tibby DeJulio said, championing the percentage cut for all businesses.
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and the Perimeter Community Improvement Districts perched on the edges of their seats in the audience, the council also repealed legal language that allowed them to collect the tax on certain out-of-state revenues.
Since the early days of Sandy Springs existence as a city, its tax code specified that 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 also added to the taxable total.
However, many jurisdictions, such as DeKalb County, Dunwoody and Fulton County 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 Wendell Willard said.
Before the Dec. 21 council meeting, the cap on the business occupancy tax was $400,000, levied at a rate of between 50 cents and $2.20 per $1,000 of revenue after the first $20,000. The new cap will be indexed to the cost of living and will be adjusted annually.
Nine Sandy Springs companies will see their taxes cut by the reduction in the cap. The top three payers of the tax, according to the city, are Cisco Systems, RBS Worldpay and Costco.
In 2008, Mirant Corporation hauled Sandy Springs into 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.