The SPLOST collection extension was suspended due to a technicality in the ballot language, but the real motivation is much simpler than that. The City and the County can't reach an agreement on how to split the money...
Within hours of last weeks legendary ruling that the 20 year run on sales tax revenue via Special Purpose Local Option Sales Tax (SPLOST) would be suspended, the two sides were scheduling discussions to come to an agreement, but as of this writing it appears Forsyth County will roll back to a 6% sales tax beginning July 1st, 2008
The SPLOST collection extension was suspended due to a technicality in the ballot language, but the real motivation is much simpler than that. The City and the County cant reach an agreement on how to split the money.
According to state law, SPLOST revenues can be split one of two ways 1) via an intergovernmental agreement between the 2 parties, or 2) failing any agreement, a pro rated split by population. Since the majority of the citizens of Forsyth County live outside the city, a population split would put the city's portion of funds at approximately 4.3%. This is less than 1/3 of what the city has received in the past, but failing to reach an intergovernmental agreement prior to the vote in February, this is exactly what the city was set to receive. Due to a previous intergovernmental agreement, the city continues to receive 15% of another sales tax known as Local Option Sales Tax (LOST) which is not set expire until 2012.
The City of Cumming, not willing to accept the 4.3% split of SPLOST VI, hosted an organizational meeting to oppose SPLOST VI on the February ballot, and sued the county over a technicality in the ballot language. Although SPLOST VI was approved by a margin of 70-30, the city won thier lawsuit regarding the ballot language last week, effectively throwing out the measure and forcing a new vote. The city has the right to withdraw its complaint if the 2 sides reach an agreement, or the measure would need to be put before the voters again.
With no time left to hold another election before SPLOST V expires on June 30th, the City and County have once again been in negotiations on the split of the funds. Several offers were made from the city in the neighborhood of 10%, an amount that was rejected by the city in pre-election negotiations. Counter offers were made by the county in the neighborhood of 7%, and rejected by the city. The gap between the 2 sides is only about $10M, but as of this writing, no agreement has been reached, and letters will be mailed to merchants this week from the Department of Revenue with instructions to change sales tax to 6% rather than the current 7% effective July 1, 2008. Since there are still some options available, the Department of Revenue has elected to send the letters with a note to check their website for updates in case something changes. A 1% reduction in sales tax will result in lost revenues for both parties of over $2M per month over at least 9 months, or until a new ballot measure can be passed, and a new SPLOST can be implemented.
As a result of the lost revenue, the county must find other sources to fund over $218 million in road improvements the SPLOST VI revenue had been earmarked for, as well as $7.2 M for public libraries, $17.8M for Public Safety Improvements, $13.5M for Parks and Recreation, and $6 M for Cultural Activities. Click HERE for a full breakdown of projects
Options available include a new SPLOST and / or bond measure on the November ballot, but there will be no way to replace the nearly $3M per month in revenues the county will lose every month the SPLOST is not in effect. The difference is that bonds are paid via property tax increases, while SPLOST is paid via sales tax.
A likely scenario will be a vote for a Bond in November for road improvements, and a SPLOST for major projects in the city such as a new Jail and Courthouse.
