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.

 LOST was approved by Lowndes County voters more than 20 years ago and does not have to go back to a referendum unless the tax lapses, according to the Act. In 2002, a non-binding arbitration ruled in favor of the county regarding the distribution of funds. Part of the amendment struck down by the court was a provision for “baseball arbitration” which would allow a Superior Court judge to accept either the county or city’s “best and final offer,” according to the Georgia Code.

That is no longer an option.

The LOST negotiations began in 2012, in accordance with state law, with Lowndes County issuing a letter to the mayors of each of the five cities in the county, requesting they attend a meeting to discuss the LOST distributions. Following meetings over several months, with Lowndes proposing to keep the percentages allocated to each entity the same and the cities each requesting significantly more money from the tax, the cities filed the lawsuit against the county, under the 2010 amendment to the Act which allowed for a judge to decide the issue.

Under the amendment, now declared unconstitutional, the tax expired on Jan. 1, 2013 but was allowed to be collected by the state Department of Revenue while waiting for the judge’s ruling.

Unfortunately, the cities and county failed to file the required certificate to continue the tax and allocate the funds by Dec. 30, 2012, leaving cities and counties statewide in a state of limbo.

Walter Elliott, Lowndes County attorney, said the law is clear that if the certificate was not filed by the deadline, the tax collections must cease.

Due to the ramifications of the court’s ruling, the issue is now in the hands of the Georgia Attorney General’s office.

LOST proceeds are not designated as SPLOST proceeds are, which must go only to capital projects. LOST funds go directly into the general fund of the cities and county. Approximately $25 to $30 million annually is divided among them.

LOST also allows property taxes to be rolled back to reflect the amount collected in the tax each year. If the tax ceases to be collected, property taxes will increase accordingly.

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.