This month, three of the four cities are presenting a united front against the county in its upcoming LOST — or local option sales tax — negotiations, which take place every 10 years.
The penny-on-the-dollar sales tax, which garners upwards of $4 million county-wide each year, accounts for a large chunk of both city and county revenue.
For the past few decades, the split of funds has been 80-20, with the larger percent going to the county and the remaining fifth left to the four cities to divide accordingly among themselves.
The 80-20 split was originally arrived at based on population, according to Walker County commissioner Bebe Heiskell. Now, with the 2010 census figures available, a more accurate split based on population alone would be closer to 75-25.
However, as city officials are pointing out, OCGA 48-8-89 mandates that the distribution of LOST funds be determined by a handful of other factors, not just population.
Led by the city of LaFayette — which hired its own consultant to crunch numbers for the negotiation — and its two new councilmen Ben Bradford and Chris Davis, the cities of Rossville and Lookout Mountain are also maneuvering to negotiate a bigger chunk of the annual change based on varying degrees of service delivery between the county and cities, points of sales and use, tax equity and existing debt obligations, among other criteria.
On Thursday, Aug. 2, the three united cities placed a starting figure of a 55-45 split on the table, causing ripples of shock among county officials, who have never before faced such a difficult LOST negotiation.
The city of Chickamauga has expressed that is it generally happy with the 80-20 split, and reminded the other three cities that any funds taken out of county coffers will have to be paid back elsewhere, most likely through a raise in the millage (property tax) rate of county property taxes.
“Our LOST funds, one hundred percent of it is going to the rollback (of property taxes)” said Walker County attorney Don Oliver. He said the county has been able to keep its millage rate low over the past years due wholly to the funds generated by its LOST revenue. Any dip in the county’s cut would therefore reverberate heavily on the taxpayer.
“Whatever doesn’t roll back will straight across cost you more money,” said Walker County coordinator David Ashburn. “Because the budget’s here, and you have to use the millage rate to raise it back up.”
LaFayette, Lookout Mountain and Rossville, however, are adamant that they are owed more of the pie than the current plan would give them. In this economic situation, the cities are desperate for more sources of funding just to maintain their operations, much less grow them.
“We have a profound belief that our cities need more income to survive,” said Lookout Mountain mayor Bill Glascock. “I’m laying people off. ... I’m sorry, but I don’t want to lay any more people off.”
“I’m having to raise taxes in order to pay for basic services,” said Glascock. “I’m doing that right now. And I don’t see our investment in the county money, which is $528,000 a year in property tax money, I don’t see that coming back to my city at all. I really don’t. And then when you put the LOST money on top of it, I’m saying wait a minute.”
“You’re saying you don’t want to raise taxes, but what you’re doing with this is that taxes will raise for everyone across the county,” said Ashburn.
“Maybe it wouldn’t be so bad for the cities to control an increase in the share of LOST funds,” said Glascock “Maybe it could work to help the county. To start it off at 80-20 because you’ve always had it that way when it clearly mandates different criteria for distribution is different.”
“The state law says that it shall be considered,” said LaFayette council member Ben Bradford of the city and county population figures and their play into the LOST distribution. “We have it mandated that we have to consider it, but there’s no direct connection.”
“We just feel that when you look at the services that the county provides to the cities,” said Bradford. “We feel that we provide a lot of services that are county-wide. The county provides some services inside the city but we think that’s slanted in favor of the cities.”
“We provide maybe more than we get,” he said.
Still divided between two wildly diverse figures, the cities and county has not yet come to any resolution. Negotiations will continue Thursday evening, Aug. 9, at which time it is hoped that some middle-ground figures can be drafted.
“We want to start at 55-45 and we want to work with you guys because we all are the same,” said Bradford. “We’re in the same county. The cities and county, we’re all in here together in this.”