Saturday, August 18, 2012

A Primer On Special-Purpose Sales Taxes

Read the column here.

The foregoing is intended as a brief outline only.  Even though the various sales taxes mentioned above are all variations of the same general concept, the legal structures and technicalities governing each vary considerably insofar as duration of the tax, on what the revenue may be spent, and how the sales revenue is to be distributed, etc.  In fact, this is another of those instances when I could have penned a good comparison and contrast of the various local option sales taxes, but such a thing would have come in several times longer than my target of 750 words.  Be that as it may, those who so desire can employ the links below to learn all that they may desire about the subject (and then some).

In addition to the 4% sales tax collected by the State of Georgia, four other 1% optional sales taxes may be collected at the county level (excepting the MARTA levy unique to the Atlanta area) and a fifth may be collected at the special transportation district level, though not all can operate simultaneously.

A county may levy "up to two" local option sales taxes, but this limit only applies to 1) LOST, 2) HOST (a county cannot have LOST and HOST both, and 3) SPLOST. ELOST, levied for the benefit of a school district, does not county against this limit, thereby making the limit three in a practical sense. Even what some of these taxes cover can vary by county depending on when they were enacted by the county in question.   And, of course, TSPLOST is on top of all of these and is unaffected by any limit on county-level optional sales taxes.

According to the Georgia Department of Revenue, Sales and Use Tax is defined as “a tax upon the consumption of tangible personal property and certain services.  It is levied or imposed upon retail sales, rentals, leases, uses, or consumption of tangible personal property and certain services that are specifically taxed under the Georgia Retailers and Consumers Sales and use Tax Act.”

The Georgia Supreme court invalidated 1975’s original LOST statute in 1979, ruling that counties had no constitutional basis for sharing revenue with municipalities.  The General Assembly rewrote the law in 1979, this time creating 159 “special districts” through which the program could be administered.  Not coincidentally, those special districts correspond exactly to the boundaries of the state’s 159 counties.

The LOST statute continues to evolve.  In 1994, a provision was added requiring counties and qualified cities to renegotiate their respective revenue distributions following every decennial census.  This was followed in 1997 by a provision that required county and municipalities governments to adopt “service delivery strategies,” so as to eliminate the duplication of services and bridge any gaps that may exist in the provision of services.  Finally, 2009 saw the introduction of the so-called “baseball arbitration” provision that enlisted the county’s superior court as a binding third-party arbitrator in case the parties cannot agree on a revenue distribution scheme.  None of these provisions are applicable to the other local option sales taxes mentioned.

Clarke County’s original SPLOST levy ran for a single year, from October 1985 through September 1986.  That was followed by a second levy running the four years from April 1988 through March 1992.  Following a three year hiatus, a pair of five-year levies ensued, spanning the periods from April 1995 through March 2000 and April 2000 through March 2005.  Next came a six-year affair, running from April 2005 through March 2011.  We are up to at least nine years with the current SPLOST 2011.  Notice how they keep getting longer and more expensive.

Ostensible control of ELOST levies resides with the county government as, by state law, a board of education is a “requesting authority,” as opposed to a county commission, which is a “levying authority; a school board cannot impose taxes in and of itself; it must request its levy though the county government.

Clarke County’s trio of completed ELOST levies ran from July 1997 through June 2002, from July 2002 through June 2007, from July 2007 through June 2012.  The current levy extends from July 2012 through June 2017.

The three optional sales tax implemented in Clarke County have become, for all intents and purposes, permanent additions to the tax landscape.  Yes, I realize that these levies are ostensibly “optional” (though to my mind the ballot resolution process is consistently stacked in favor of “pro” votes) and that the voters have approved them (but only with the consent of a plurality of the county’s registered voters).

To the best of my knowledge, Clarke County voters have denied but a single optional sales tax ballot resolution.  That happened back in 1993, when a one-year SPLOST referendum, slated to retire general obligation bond debt on the Clarke County jail and general obligation intergovernmental debt on the Athens Downtown Development Authority parking debt, was defeated by the margin of about 3 to 2.  Otherwise, the single LOST, six of seven SPLOST, all four ELOST, and the recent T-SPLOST ballot resolutions have all passed here, usually by considerable margins (the T-SPLOST vote being a notable exception).

O.C.G.A. (See Title 48 – Revenue and Taxation, Chapter 8 – Sales and Use Taxes):

Department of Revenue Sales and Use Tax Overview:

Department of Revenue Sales Tax Rate Chart (July 2012):

Department of Revenue Sales and Use Tax Historical Rate Chart (July 2012):

Association County Commissioners of Georgia SPLOST Guide (March 2011):

Association County Commissioners of Georgia LOST Negotiations Guide (October 2011):

Georgia Municipal Association LOST Guide (January 2011):

Georgia Municipal Association SPLOST Guide (June 2004):

New Georgia Encyclopedia article on “Revenue Sources, Local:”

Addendum - And just to gum up the works even more, a school district does not have the power to levy taxes. In legal parlance, it is a "requesting authority." It must go through the county government to levy its taxes for it. That is why the Athens-Clarke County Commission, as the county's "levying authority," must formally enact the Clarke County School District's property tax levies. Of course, according to case law the Commission has no legal authority to deny the CCSD's requests (assuming that they are made in a legal manner), but that is fodder for another day.

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