VALDOSTA — Local Option Sales Tax (LOST) negotiations between city and county officials have reached a stalemate in the last month, with disagreements on how to split the projected $215 million over the next 10 years.

State law provides guidelines for LOST distribution and every 10 years after the U.S. Census has been performed, local municipalities and county governments across the state engage in negotiations, except in places like Echols County, which receives 100 percent of LOST revenue since there is no incorporated area.

The law does not specify a formula for distributing LOST proceeds. Instead it outlines eight factors that can be used by local governments in negotiating distribution.

Counties are required to initiate LOST negotiations before July 1, 2012, which occurred locally on April 9, when Lowndes County offered a 58/42 percent split in the county’s favor.

The renegotiation procedure involves 60 days of negotiation; 60 days for mediation or non-binding arbitration and Superior Court “baseball arbitration,” where each party will present their best and final offers.

Final certificates must be filed with the Department of Revenue by Dec. 30, 2012 in order for the LOST tax collections to continue.

The current proposal from city officials is a split of 56.37 percent for cities and 46.63 percent for Lowndes County. The county’s second offer was a 72/28 percent split, again in the county’s favor.

The law specifies that LOST revenues be used to provide property tax relief. In that case, total LOST and property tax revenues should not exceed the property tax revenue that would have been collected if the sales tax did not exist.

All county residents pay the same base rate of property taxes, while each city imposes additional taxes on residents to pay for the extra services they provide, such as water/sewer,police, fire, and garbage collection.

County residents in unincorporated portions pay a millage rate of 7.31 mills. Valdosta residents pay an additional 4.112 mills.

Hahira residents pay an additional 5.38 mills. City officials state that one mill is equivalent to about $1.5 million; whereas a mill in the county is worth about $2.5 million. By comparison, one mill in Hahira is about $40,000.

Without LOST revenues, city officials estimate property taxes would need to be raised 10.062 mills to maintain current levels of service.

The City Charter does not allow a millage rate over 10 mills.

According to city officials, all LOST revenues are placed into General Fund revenues.

“We don’t break down our general fund revenues,” said Mark Barber, Deputy City Manager of Administration. “We don’t really break out revenues versus our expenses.”

Each year, Valdosta generates about $9 million in LOST revenues and has a total yearly operating budget of about $78 million.

Public safety, which includes police and fire departments, cost Valdostans about $20 million each year.

Lowndes County generated about $12.5 million in fiscal year 2010. LOST revenues in the county generated almost 37 percent of total budgeted tax revenues in the general fund for fiscal year 2011. Public safety makes up about 44 percent of the Lowndes County general budget, with approximately $16 million isolated for the Sheriff’s Office alone.

Valdosta has not raised millage rates in 17 years; county officials state their property taxes have been rolled back twice in the last five years.

“What’s difficult about the Local Option Sales Tax is that any way you slice it, if there’s a winner, there’s a comparable loser,” said

Valdosta City Manager Larry Hanson. “It’s not about pitting any government against another. We all have needs.”

The City of Dasher has no additional millage rate beyond the base 7.31 millage rate for unincorporated residents and contracts police and fire protection through Lowndes County, and waste management through Veolia Environmental Services.

Counties are legislatively mandated to provide an umbrella of services for all county citizens which include law enforcement, the superior, magistrate, juvenile, probate and state court systems, the jail, the public defender’s office, the county clerk and county treasurer, the board of elections office, the public library system, and animal-welfare system.

All 109,000 Lowndes County residents, which includes all of the cities’ residents, receive these services.

“They’re not willing to acknowledge that we provide services to all county residents,” said County Manager Joe Pritchard. “When we look at service delivery, it is based on services you provide to your political subdivision. Our political subdivision is the entire county.”Georgia Municipal Association Executive Director Lamar Norton recently wrote an article where he states: “People live in cities by choice. They are driven by a wide range of factors such as education and employment opportunities, arts, recreation, public-safety services or simply a quality of life that reflects their values. Many consciously pay higher taxes for these amenities and higher level of service.”

Pritchard said, “If the city gets what they want it means less city tax and more county tax. Basically they’re asking us to give a tax break to the residents of the city paid for by the residents of the unincorporated area.”

City officials maintain that population growth over the last 10 years has increased substantially and will continue in the next 10 years. Hahira has experienced growth of 68 percent, while Valdosta has grown 25 percent or about 11,000 residents.

“From Hahira’s standpoint, we’ve had several discussions with members of council and the mayor and have made several austerity decisions over the last five to six years,” said Hahira City Manager Johnathan Sumner.

“We’ve made the amount we get work (approximately $305,000 in LOST revenues each year), but from a service-delivery standpoint, we feel obligated to provide certain degrees of coverage that we believe the citizens deserve.”

Sumner stated that with more LOST revenue, Hahira could have more police officers and provide 24-hour fire-control coverage.

Pritchard questioned Sumner's statement, though, saying, “Then why is Hahira planning to start covering the interstate if they have a hard time covering the residents who pay the taxes in the City of Hahira? Is it because you’re providing services to your citizens? No. You’re trying to catch somebody going down the interstate,” said Pritchard.

Hahira recently approved the annexation of a portion of I75 around Exit 29 and additional officers to patrol the interstate.

Retail sales within cities make up 78 percent of total commercial digest in all of Lowndes County. Seventy-six percent of accommodations and food service points are located within cities. All LOST revenue is generated through sales tax, but Pritchard argues that cities receive business license fees and sales tax from those points of sale.

“We have to provide services for our citizens and visitors,” said Hanson. “Our police department has not grown but calls for service have — around 83,000 calls for service per year that are putting demands on personnel, many of which are generated by non-residents and who are not paying local taxes.”

Lowndes County houses the city’s inmates, at a charge of $42 per day, and all arrests made by city police are processed through the countywide court system. The county says that increased criminal activity in the city puts stresses on judges and court personnel, all paid for by the county, and the system needs additional personnel as well.

“It’s not something we volunteered to do,” said Hanson about LOST negotiations. “We’re all dealing with these issues; none of us enjoy doing any of this.”

“This is not the first rodeo for me and Larry,” said Pritchard. “We have been down this road before and sat at the table and argued back forth to get absolutely nowhere. They have not given us anything to substantiate their claims.”

County officials say that despite months of negotiations 10 years ago, the last time LOST was up for renewal, the issue still had to be decided by a court-ordered arbitrator.

Since the cities’ demands would necessitate an increase in countywide taxes to offset the loss to the county, the county says rather than waste time in meetings again, they are going to go straight to the court system this time.

City leaders scheduled another LOST negotiation meeting for 2 p.m. Wednesday, May 16, Dasher Community Center, 3686 U.S. Highway 41 South.The county is not expected to participate.

Regardless of the meeting's outcome, officials will have to begin arbitration on or about June 9.

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