Legislation introduced that will change LOST policies between cities, counties

Published 4:29 pm Friday, February 12, 2016

State Representative Jay Powell (R-Camilla), Chairman of the Ways and Means Committee, which sets all tax policy in the House, introduced House Resolution 1344 and House Bill 1055, a constitutional amendment and enabling legislation, on Thursday.

The legislation would impact negotiations between counties and cities over the distribution of the 1 cent Local Option Sales Tax (LOST), a major source of revenue for many of Georgia’s cities and counties, thus reducing their reliance on property taxes and giving property tax relief to millions of Georgia property owners.

“The way counties and cities are currently conducting LOST negotiations is an inexcusable waste of taxpayers’ hard earned money, often costing hundreds of thousands, or even millions of dollars, in expert fees, consultants, studies, legal costs and litigation fees; monies which would be better spent repairing, maintaining and even expanding infrastructure and our transportation system,” said Rep. Powell. “It is my hope that the possibility of forever losing the benefit of this tax will help local officials focus on reaching an agreement on distribution of LOST proceeds, but if not, I am sure our local school boards would welcome an opportunity to utilize this new funding source while reducing the property tax burden imposed on taxpayers for the support of our schools.”

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Existing law requires that those counties which have enacted a LOST schedule negotiations every ten years to determine how the tax proceeds will be divided among the cities and counties for the ensuing ten year period. According to Rep. Powell, these negotiations often are long-drawn-out, divisive, expensive, and frequently result in costly litigation. To encourage county and city officials to negotiate in good faith and reach a timely resolution of the issues involved in determining future tax negotiations, Powell’s proposal introduces a “nuclear option” in the event counties and cities fail to agree on a distribution formula of the monies generated by the LOST. This nuclear option penalizes those who fail to agree, by terminating the LOST and preventing its reinstitution, or that of a similar tax known as the HOST for a five year period. HOST is the only similar type of tax currently available by statute.

So that taxpayers do not suffer in the event of an existing loss or lapsed LOST, Rep. Powell’s proposal would permit local Boards of Education to call a voter referendum for the institution of an Education Local Option Sales Tax (E-LOST) to continue the 1 cent sales tax. In this scenario, the proceeds would fund education, rather than cities and counties, with a corresponding reduction in the property taxes levied by local Boards of Education, thus giving property owners significant tax relief from the education portion of local property taxes.