As required by state law, Lowndes County issued a letter to the mayors of all the municipalities in the county, requesting they attend a renegotiation meeting Monday, April 9 to discuss LOST (local option sales tax) distributions.
“This has to be done and approved by the end of the year in order to stay in place, so we have to start the process now,” said Commission Chairman Ashley Paulk.
The one cent sales tax has to be renegotiated every 10 years, in the second year following the decennial census, but does not have to be approved by voters. The benefit of the LOST, according to Valdosta City Manager Larry Hanson, is that property taxes are rolled back according to how much LOST tax is collected each year.
“Property taxes are reduced dollar for dollar for the amount of LOST proceeds each of the five cities and Lowndes County receives based on prior year collections. Since we are a regional hub for retail and a great deal of sales taxes are collected from non-residents, this tax is very beneficial in that it significantly lowers property taxes,” said Hanson.
The last time the tax was negotiated was in 2002, and it was a lengthy, very expensive and hightly contentious process as the governments could not reach an agreement. The City of Valdosta disagreed with the amount they would receive versus the county, and asked for approximately $200,000 more per year.
The matter went before an arbitrator who not only ruled in Lowndes County’s favor, but reduced the amount the city would have received if they had accepted the final proposal and not gone to litigation.
In 2002, Hanson stated in a Times’ article that the process was inconsistent in that the arbitrator’s decision was based on total county population, not just the population of the largest city, Valdosta.
According to Chairman Paulk, the population argument is flawed. “There isn’t one citizen in the City of Valdosta that is not also a citizen of Lowndes County. The county is required by law to provide services that cities are not, that benefit everyone in Lowndes County, not just inside the Valdosta city limits.”
Paulk said the county is very hopeful that the renegotiation process goes far smoother this year.
“The last time this was negotiated, it was a huge waste of time and taxpayers’ money that was spent on attorneys and litigation. It was a very acrimonious arbitration, and there’s no reason for that. The commissioners all agree that everybody’s budgets are tight. The county could go for more than we did before, but we won’t. Why take away from the cities when you don’t have to?” Paulk said.
According to Hanson, LOST negotiations are challenging given the difficult economic times. “The pie is one size and the parties must determine how it is sliced. Sales tax collections have decreased over the last three to four years, making the process more difficult. For many governments, sales tax is the largest source of revenue. I feel the parties will attempt to work together and will negotiate in good faith.”
Hanson also stated that there is a new process this year for disagreements, called “baseball arbitration.”
“This means the parties would all submit a best and final offer on the distribution to a judge who would pick one or the other,” Hanson stated. “If the parties do not reach agreement in 60 days, they must submit the issue to non-binding arbitration, mediation, or any other such means of resolving the issue. If this does not result in an agreement within 60 days, the parties may request baseball arbitration.”
According to County Manager Joe Pritchard, the cost of the litigation, arbitration, mediation, financial consultants and attorneys’ fees in 2002 was nearly $200,000, just for the county.
Paulk said, “All of that only adds expense. It’s not being good stewards of taxpayers’ money. We need to get this done so we can get back to business and work on other important issues.”
Hanson added, “I am sure we all hope to resolve the matter through negotiation with each other.”
The final percentages each entity received in the 2002 process were:
Lowndes County: 58 percent or $12,724,490
Valdosta: 38.63 percent or $8,474,949
Hahira: 1.42 percent or $311,531
Dasher: 0.73 percent or $160,153
Lake Park: 0.48 percent or $105,306
Remerton: 0.74 percent or $162,347