The 15 cities in Fulton County offered a counterproposal to the Board of Commissioners on July 29 on how much Local Option Sales Tax (LOST) revenue the county should get, suggesting cutting it in half to 2.45%.
Two weeks earlier the county had proposed increasing its share of the sales tax revenue to 35% from the 4.9% that the legislature had set.
The LOST is a one-cent sales tax used to fund services such as fire, police, transportation, parks and recreation, and other local government services. Its purpose is to provide equitable tax relief from Ad Valorem (property) taxes for all Fulton County taxpayers, Doug Eaves, the county’s consultant, said during the July 15 meeting.
If the cities and counties can’t come to an agreement by Dec. 30, LOST will end. The cities and counties weren’t able to decide if a failure to reach a deal by Sept. 1 would send the issue to mediation or arbitration – or to start with mediation and if that doesn’t work, shift to arbitration. In mediation, they would get help resolving differences. Arbitration would have a third-party decide on the matter.
Sandy Springs Mayor Rusty Paul said after the meeting that he raised objections to the county proposal for mediation rather than arbitration as mediation is a closed proceeding that shields the public from viewing the discussion. Arbitration, he said, is an open process viewable by the public.
“I’m not sure why the county wants to go this direction since they didn’t give us a rationale for mediation over arbitration,” Paul said. “We didn’t get an answer even though I asked twice why they changed their position on the process since our last meeting.”
Several of the newer cities, including Sandy Springs, couldn’t raise property taxes to make up the revenue shortfall if the county’s LOST share goes up. Only voters can approve a millage rate increase in Sandy Springs and Johns Creek. Instead, services would have to be cut.
The county proposed a 65%-35% split, which is about a $90 million shift away from the cities, said Michael Brown, the consultant chosen by the cities.
He said the county’s main claim was that the General Assembly illogically ripped LOST funds from the county by setting its share lower. The reduction and resulting increased share for the cities was done to fund municipal services the cities took on that previously were provided by the county.
He said the county’s proposal ignores the will of the voters and attempts to capture from the cities tax revenue, but not the services they now provide. It tries to impose a per capita tax when that is not the type of tax LOST is, and it uses double counting of the population.
“Much of the data in the county’s proposal is fictional or distorted,” he said.
He said the county was double counting the county population.
The county claims to have been harmed by having LOST revenue ripped from it, Brown said. County revenues have grown nearly 30% over the last 7 years and its millage rate has gone down. At the same time the tax digest – the value of all properties in the county – has gone up 100%.
Brown said that by his calculations, the cities should get 97.55% of the LOST revenue and the county would get 2.45%.
Fulton County Manager Dick Anderson said the county, like the cities, is facing increased costs. This is particularly in public safety and court operations, public health, and behavioral and human services. Costs over 10 years range from $400 million to $500 million in public safety and the same amount in public health, with another $200 million to $300 million in behavioral and human services.
“What we’re suggesting fundamentally is that the county needs support from sales tax mechanisms in the same way with future needs,” he said.
The county will have to fund housing 3,400 inmates, which he said is well above the normal 2,700 to 2,800. And it includes the cost of having to find other spaces for the inmates. The county will be required to spend what early estimates say will be $500 million for a new or significantly renovated jail.
After the two presentations, the county proposed that if negotiations fail, the issue will go before mediation as of Sept. 1. Sandy Springs Mayor Rusty Paul and East Point Mayor Deana Holiday Ingraham were among the mayors that questioned the mediation suggestion. They believed they heard differently at the last meeting with the county, and said the cities proposed going straight to arbitration if negotiations don’t work.
“Mr. Chairman, we do hope that we don’t get to that point. We would love to be able to wrap this thing up very quickly and we’re going in with an attitude to try and get that done,” Sandy Springs Mayor Rusty Paul said.
But knowing the rules in advance is important, he said. And he understood from the last meeting that the county had chosen arbitration.
Paul said the City of Atlanta offered a compromise to start with mediation and go to arbitration if that fails. The cities agreed with Atlanta and the commission said it would take it under advisement.
“I still prefer all aspects of the discussion be open to the public. Given the county’s reiteration of its proposal to raise its share by 600% and our data that based on population served a more appropriate measure would be slight reduction from 4.9% to 2.45%, we are a long way apart,” he said.
He said these are preliminary conversations.
“The hard bargaining starts next week and continues into September. After that, if we don’t reach agreement, will come one or both dispute resolution processes,” Paul said.
Commission Chairman Robb Pitts said he planned to recommend putting the discussion of mediation heading to arbitration if necessary, on the commission’s agenda for its next meeting on Aug. 3.
This was the last expected public meeting on LOST negotiations. Pitts said plans were for negotiating teams to work without the media present, and only members of the cities’ and county’s teams to be present.