County lost LOST; now has 120 days to negotiate with cities

So all our tax money the county spent on the alleged county attorney arguing before the state Supreme Court was wasted. The remaining law seems to say by 120 days from Monday the cities and the county need to come to an agreement.

Kay Harris wrote for the VDT yesterday, Lowndes LOST in limbo: Supreme Court tosses key amendment,

In a ruling issued Monday, Oct. 7, the Supreme Court of Georgia declared a 2010 amendment to the Local Option Sales Tax Act unconstitutional, reasoning that the amendment would delegate a legislative function of allocating tax proceeds to the judicial branch of government, a violation of the Separation of Powers clause of the Georgia Constitution.

For Lowndes County, the ruling effectively renders the lawsuit moot that was filed by the five cities against the county in September 2012.

The Supreme Court’s ruling came in the case of Turner County vs. the City of Ashburn over a dispute in splitting the proceeds from the one cent sales tax, the same issue in the Lowndes lawsuit. By declaring the portion unconstitutional that would allow a judge to decide how to allocate the tax dollars between the entities, the issue is now in limbo for several counties in Georgia.

You may recall that former Chairman Ashley Paulk wasn’t interested in discussing proposals from the cities, and said from before the LOST negotiations began that he expected it to go to arbitration.

This was the same Chairman Ashley Paulk who put SPLOST VII on the ballot a year early and lost it. I wonder how much input County Manager Joe Pritchard had into these two losing decisions?

At least SPLOST VI hasn’t expired yet and there’s time for the voters to go again on SPLOST VII in November.

What happens now with LOST?

The Georgia Supreme Court’s online press releases haven’t been updated since February, but Courtney Highfield, writing for Fox31Online 7 October 2013, quoted part of the PR:

“The scheme set forth in the 2010 amendment improperly authorizes judicial resolution of the allocation and distribution of tax proceeds, an exclusively legislative power,” Justice Robert Benham writes for the Court.

“In this case, we hold that, absent an abuse of discretion or other showing of illegality, the allocation of tax proceeds by and among the political subdivisions of a LOST special district is left to the discretion of those entities and is not a matter for judicial determination.”

“While this Court recognizes that the procedure set forth in the 2010 amendment represents an attempt to frame a remedy for the mischief created by the impasse that may occur by requiring competing political subdivisions to negotiate and agree upon allocation of the tax ‘pie,’ and although we have considered ‘the old law, the evil, and the remedy,’ nevertheless this particular solution does not pass constitutional muster,” today’s opinion says.

The opinion points out that “this Court presumes the acts of the General Assembly are constitutional and construes those acts as valid when possible. But in this case, we are not invalidating a tax and not striking the LOST Act or its terms for how the tax may be levied or for what purposes the proceeds may be applied. We are striking only the 2010 amendment…which effectively grants judicial resolution of the allocation and distribution of tax proceeds, a process that we deem to be a clear violation of the separation of powers doctrine.”

“In sum, the trial court erred when it denied Turner County’s motion to dismiss and sustained the constitutionality of the 2010 amendment to [Official Code of Georgia] § 48-8-89 and so its order on said motion is reversed,” the opinion says. Furthermore, the order that picked the cities’ plan over the county’s “is vacated.”

Peach Pundit posted a link to the entire 22 page decision by the court. It turns out SCOG blog routinely posts the actual rulings with commentary.

Since the counties continued not discussing past the 1 Jan 2013 filing deadline for LOST, and collecting it only continued waiting for judicial arbitration, the county now has to stop collecting the tax. That doesn’t mean the county and the cities don’t get the revenue. Instead, property taxes will rise to match the missing $25 to $30 million to their general funds.

Does this mean the county’s property taxes will rise proportionately to account for the 58% percentage in the county’s position paper, same as previously negotiated in 2002?

As Gretchen said to WCTV a year ago:

It’s sort of sad because it is a waste, if you will, of taxpayer dollars. That the elected officials can’t get together and come to some agreement to say that they all understand how the money has to be divided up. Yeah, it’s sad that more money has to go to lawyers instead of being spent on services.

Now it looks like the county and the cities have 120 days from Monday to make up their minds, assuming that this part of O.C.G.A. §48-8-89 wasn’t also thrown out:

(5) If a new distribution certificate as provided for in this Code section is not received by the commissioner, the authority to impose the tax authorized by Code Section 48-8-82 shall cease, and the tax shall not be levied in the special district after such date unless the reimposition of the tax is subsequently authorized pursuant to Code Section 48-8-85. When the imposition of the tax is so terminated, the commissioner shall retain the proceeds of the tax which were to be distributed to the governing authorities of the county and qualified municipalities within the special district until the commissioner receives a certificate on behalf of each such governing authority specifying the percentage of the proceeds which each such governing authority shall receive. If no such certificate is received by the commissioner within 120 days of the date on which the authority to levy the tax was terminated, the proceeds shall escheat to the state, and the commissioner shall transfer the proceeds to the state’s general fund.

So our local legislative bodies need to be negotiating the LOST pie while trying to convince local taxpayers to vote for SPLOST VII in the November election. The alleged county attorney was quoted in the VDT story but didn’t mention this part.

The Times story concludes:

The Times will continue to follow the issue in the coming days to let readers know what the potential impact of the Supreme Court’s ruling may be.

Should be interesting. Meanwhile, maybe the county and the cities, instead of squabbling over the tax pie, could work on increasing local prosperity.


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