Sunday, November 13, 2011

Questions About Clarke ESPLOST

Read the column here (13 November 2011).

The eighth paragraph should read, with a close quotation mark: . . . indebtedness of the school system." If no such debt exists . . .

As I noted in the comments for my previous column:

“O.C.G.A. really doesn’t make a distinction between county SPLOSTs and school district SPLOSTs insofar as terminology is concerned, and whatever terminology is used by others is frequently used inconsistently. For the sake of clarity, I have used the term 'ESPLOST-4.' That is the term used by Charlie Maddox in his earlier opinion piece, short for Education SPLOST 4, which appears to be the preferred term of the CCSD.”

Even so, the preferred terminology seems to have changed over time; note that ESPLOST-4 and SPLOST 4 are the same thing (as are ESPLOST-3 and SPLOST 3).

I must confess that the folks over at the Department or Revenue get high marks insofar as helping me out is concerned. When I first called in with my questions, I got transferred/referred hither and yon which, of course, is par for the course. I finally ended up in the telephone of an attorney in the Office of Tax Policy who could not have been nicer or more helpful. Over the course of several conversations, we reviewed with the applicable provisions of the Constitution, O.C.G.A., and the Department of Revenue regulations (with which I am familiar and had right in front of me before I made any calls). Additionally, the good fellow searched case law and opinions issued by the Attorney General’s office. He then referred me to another fellow in the Local Government Services Division (formerly the Property Tax Division) with whom he had discussed my questions and I covered the same ground with him. Although they would not tell me that I was legally correct, not being in the business of providing “legal advice” to folks on the telephone, neither could they, on the basis of whatever material to which they had access, point out were I was incorrect. In fact, both indicated that mine would seem to be a “reasonable interpretation” of the issues involved.

Be that as it may, here is the source material for you to read for yourselves:

State of Georgia Constitution Article VIII, Section VI, Paragraph IV

(a) . . . This tax shall be at the rate of 1 percent and shall be imposed for a period of time not to exceed five years, but in all other respects, except as otherwise provided in this Paragraph, shall correspond to and be levied in the same manner as the tax provided for by Article 3 of Chapter 8 of Title 48 of the Official Code of Georgia Annotated, relating to the special county 1 percent sales and use tax, as now or hereafter amended. . .

(b) The purpose or purposes for which the proceeds of the tax are to be used and may be expended include:(1) Capital outlay projects for educational purposes;(2) The retirement of previously incurred general obligation debt with respect only to capital outlay projects of the school system; provided, however, that the tax authorized under this Paragraph shall only be expended for the purpose authorized under this subparagraph (b)(2) if all ad valorem property taxes levied or scheduled to be levied prior to the maturity of any such then outstanding general obligation debt to be retired by the proceeds of the tax imposed under this Paragraph shall be reduced by a total amount equal to the total amount of proceeds of the tax imposed under this Paragraph to be applied to retire such bonded indebtedness. In the event of failure to comply with the requirements of this subparagraph (b)(2), as certified by the Department of Revenue, no further funds shall be expended under this subparagraph (b)(2) by such county or independent board of education and all such funds shall be maintained in a separate, restricted account and held solely for the expenditure for future capital outlay projects for educational purposes; or(3) A combination of the foregoing.

(h) Excess proceeds of the tax which remain following expenditure of proceeds for authorized projects or purposes for education shall be used solely for the purpose of reducing any indebtedness of the school system. In the event there is no indebtedness, such excess proceeds shall be used by such school system for the purpose of reducing its millage rate in an amount equivalent to the amount of such excess proceeds.

O.C.G.A. Title 48, Chapter 8, Article 3

Part 1 County Special Purpose Local Option Sales Tax

§48-8-110. Definitions(1) "Capital outlay project" means major, permanent, or long-lived improvements or betterments, such as land and structures, such as would be properly chargeable to a capital asset account and as distinguished from current expenditures and ordinary maintenance expenses. Such term shall include, but not be limited to, roads, streets, bridges, police cars, fire trucks, ambulances, garbage trucks, and other major equipment.

§48-8-111. Procedure for imposition of tax; resolution or ordinance; notice to county election superintendent; election

This section gives lots of examples of permissible “capital outlay projects” for a variety of different categories, none of which even remotely sounds like the study the CCSD is wanting to retroactive fund using SPLOST-4 revenue.

Part 2 Sales Tax for Educational Purposes

§48-8-140. Authority for and legislative intent of articleThis part is enacted pursuant to the authority of Article VIII, Section VI, Paragraph IV of the Constitution of Georgia and it is the intent of the General Assembly in the enactment of this part to further define and implement such provision of the Constitution.

Department of Revenue Regulations - Sale and Use Tax Division

Chapter 506-12-7 Educational Local Option Tax560-12-7-.01 Definitions.(1) The term “Educational Local Option Tax” as used in these regulations shall mean the1% sales and use tax for use by the School Board of such counties and/or independent school boards as authorized under provisions and conditions of Article VIII, Section VI, Paragraph IV of the Georgia Constitution.(2) The term “Educational Local Option Tax Act” as used in these regulations shall mean Act No. 19 (Resolution No. 728) set forth in the Georgia Constitution authorizing a 1% sales and use tax for such School Board or School Boards of Education located within a county.(3) The term “School Board” as used in these regulations shall include any Board of Education of such school district in a county or the Board of Education of any independent school district authorized to levy an Educational Local Option Tax under the authority of Article VIII, Section VI, Paragraph IV of the Georgia Constitution.(4) The term “State Sales and Use Tax Act” as used in these regulations, shall mean the Georgia Retailers’ and Consumers’ Sales and Use Tax Act, approved February 20, 1951(Ga. L. 1951, p. 360) as amended.

Clarke County Board of Education - Minutes of September 2010

Board approval was requested for a contract to complete a district-wide building and site condition assessment related to planning for SPLOST 4 needs and priorities. A Request for Proposals was advertised in the local newspaper and posted on the School District website. Twenty-four firms attended the mandatory pre-proposal meeting and nine firms responded. Guaranteed maximum prices for the scope of work ranged from $37,500 to $391,000. All submittals included commitments to meet the completion deadline of November 12, 2010.

The costs shall be forward funded and included as a reimbursable amount in the referendum for SPLOST 4.

Superintendent’s recommendation: Approve a contract with SP Design Group at a Guaranteed Maximum Price of $37,500 and establishment of a $10,000 contingency for owner-requested additional services.

See pages 3-4 for the agenda item, which was passed by unanimous vote as part of the New Business Consent Agenda

Clarke County Board of Education – Minutes of June 2011

Memorandum: Funding for Architectural Services (Maxine P. Easom Elementary)

The maximum design phase expenditure will be four percent (4%) of the construction budget of $9.1M (total design cost $364,000).

The proposed construction schedule for this new school, if approved by the voters in the November 2011 SPLOST 4 referendum, requires commencement of the project in early 2012. Thus, the design work must begin very soon to meet this accelerated schedule.

Funding for the design costs will be provided in the SPLOST 3 budget for general contingencies.

On both the agenda (page 44) and the minutes (page 2), the item is the second one under New Business. It passed by unanimous vote.

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