Georgia Supreme Court’s tax ruling has cities, counties in a quandary
October 10, 2013
from Atlanta Business Chronicle– by Dave Williams
The Georgia Supreme Court has issued a ruling that could affect the ability of cities and counties to collect local option sales tax (LOST) revenue. (TWG note: LOST brings in about $700,000 per year to Jasper County (based on 2012 receipts), and it is divided between the County, City, and Shady Dale in percentages agreed upon. Each percent represents approximately $7000. The LOST agreement is for 10 years. LOST is a 1% sales tax on everything you buy, including groceries.)
In a unanimous opinion issued Monday, the justices declared unconstitutional an amendment to the 1975 Local Option Sales Tax Act approved by the General Assembly in 2010 allowing cities and counties that can’t agree on how to split the revenue to appeal to the courts.
The Supreme Court declared that having a judge decide how to allocate tax revenue puts what should be a legislative decision into the hands of the judicial branch of government.
WHAT HAPPENED IN JASPER COUNTY DURING THE LOST NEGOTIATIONS?
LOST negotiations were started with the City of Monticello (City) and County in June 2012. These negotiations dragged on with no resolution because it was apparent that County Attorney Jim Alexander did not want there to be an agreement until a new BOC was elected and in office. In fact Mr. Alexander repeatedly told the BOC during 2012 that he was talking with the judge (Judge L.A. (Buster) McConnell, Jr.) and feed the BOC a line about what was going on, when in fact, nothing was going on.
James Alexander, was directed repeatedly over a period of three months (October, November & December 2012) by public vote as well as in Executive Session (pending litigation) by majority vote of the Board of Commissioners to file a petition in court with the approved “highest and best offer” for the LOST taxes. These votes and consensus in Executive Session were either unanimous or by 4-1 vote.
The county attorney continued to mislead the BOC about his filing the petition and even sent an email declaring that he had done so:
From: James Alexander [mailto:email@example.com]
Sent: Thursday, December 27, 2012 12:39 PM
Cc: Joe Reitman
Subject: Jasper County LOST
Dear Judge McConnell:
Attached please find a copy of the “highest and best” offer of Jasper County in regards to the Jasper County LOST matter which I have been directed by my board to file with the Court. Original and service copies should be received by the Clerk of Court either today or tomorrow.
Mr. Reitman is being copied with this transmission including the attachment. It is the request of my Board that we receive the “highest and best” from the City as soon as possible so that this matter may be concluded before January disbursements are made.
James B. Alexander
Alexander Royston, LLP
1121 Floyd Street
Covington, GA 30014-2320
Telephone: (770) 786-8145
Commissioner Cox was directed by the commissioners in an Executive Session on November 30, 2012 to file the petition on the behalf of the county as Chairman if the attorney did not file as directed. Chairman Cox did so on December 27, 2012 at 1:30PM.
After this filing by Chairman Cox, James Alexander sent a “reprimand” email to the Board of Commissioners informing us that he had filed this same petition with the judge; however, the Clerk of Court had no such filing as of January 11, 2013 (two weeks later). By this time Mr. Alexander had accomplished his purpose—putting off any agreement until the new BOC could agree on what James Alexander thought he had worked out with the Judge.
The law, which is now declared unconstitutional, stated that each side would submit their highest and best offer and the judge would choose ONE OR THE OTHER. In the case of Jasper County, the attorneys and the judge worked behind closed doors (which could be considered ex parte communications) to work out a compromise the judge would agree to—the Judge did not choose one offer or the other. In fact, when I questioned the LOST agreement in a public meeting recently, James Alexander told me that the judge had worked out the compromise and added an “intergovernmental agreement” that the judge would oversee and make sure it was adhered to. This agreement stated that both the City and the County would use 2% of their share of the LOST money to fund the Library.
At one point in December 2012, Mr. Alexander said there would be a hearing in courtroom about the LOST negotiations, but it was called off that very morning with the excuse that the City negotiator had been called to Afghanistan (as if he had been whisked away during the night). The BOC was highly skeptical and held an executive session that morning with both Comm. Pennamon and James Alexander absent. The BOC was very concerned that none of the wishes of the board were being addressed and that the conversations between the county attorney and the judge behind closed doors were inappropriate.
It was common knowledge among the BOC members that Comm. Pennamon was already working with the newly elected BOC and convincing them to give the City a higher percentage than proposed by the outgoing BOC. Even though the City’s population was only 19% of the total county population, Comm. Pennamon continued to want to give the City 30% of the LOST proceeds.
SEE details of facts used to determine LOST offer
During the 2002-2012 years, the LOST percentages were 67% to the County, 30% to the City, and 3% to Shady Dale. These were set in 2002 for 10 years. The new BOC agreed to another 10 years of the same percentages, with 2% going to the Library from both the City and County.
It is good this law was declared unconstitutional. The way it was used by Jasper County was never proper and did not follow the law as written. The judge was to choose between two offers—one or the other—and not offer his own compromise nor tell each side what he thought they should do to come up with what the judge would agree to.
District 4 Commissioner during 2012 LOST negotiations