Effingham County commissioners and the three city councils have agreed on how to split up sales tax proceeds and possibly averted a two-day court proceeding.
Atlantic Judicial Circuit Judge Ronnie Rahn was scheduled to hear deliberations, starting Monday, on how to divide the local option sales tax between the county and the cities. But in separate executive sessions late last week, the county commission and three city councils agreed to a new split of the penny tax.
Commissioners passed the agreement by a 3-2 vote Friday evening, with Phil Kieffer and Steve Mason opposing.
“The board made a decision, and we’ll move on with it,” Mason said.
Springfield’s share, at 5.76 percent in the previous arrangement, was proposed to be cut to 5.46 percent. Because of the city’s preponderance of government buildings that don’t pay property tax, Springfield’s share of LOST was upped to 5.86 percent.
Under a non-weighted population distribution proposal, the county would receive 74.41 percent of LOST revenues, with Rincon getting 16.71 percent, Guyton taking in 3.02 percent and Springfield receiving 5.46 percent. Rincon’s share under the old agreement was 13.84 percent.
Rincon could add $216,000 a year in revenue under the new deal.
“Hopefully, growth in sales in our county will result in greater revenues for the county and the cities,” Rincon City Manager Wesley Corbitt said. “The compromise is an example of the county and the cities coming together for the better good. I particularly want to thank Wendall Kessler for his leadership that was instrumental in bringing the county and the cities together.”
Under the approved formula, the county will take in $5.58 million of a projected $7.5 million in sales taxes, though the sales taxes receipts may come in lower.
With its drop in LOST proceeds, the county will have to come up with about $231,000 to offset its LOST loss. That was a concern to Mason.
“The plan is to try to find somewhere in the budget that we can cut the extra (money) and use that to fund this,” he said. “My position on that is if we can find that, I’d rather give it back to the taxpayers of the entire county.”
Chairman Wendall Kessler said the recent savings on the county prison food service contract could provide suitable cushion. The county spent more than $1 million in food services at the prison and jail and approved a bid from Aramark for nearly $412,000.
The millage rate equivalent to what the county is losing is about .13 mills, Kessler said.
“We’ve saved a lot more than we gave up,” he said, “so we should be able to absorb that into our budget.”
For the county’s fiscal year 2012 budget, it projected receiving 93.5 percent of its estimated LOST revenues, or approximately $6 million. At 77.5 percent of the LOST proceeds, that puts the total LOST collected at approximately $7.7 million, down from $8.4 million for 2010. The county projected taking in 96 percent of its LOST allotment in its FY13 budget.
Litigation elsewhere in the state is challenging whether judges should be allowed to determine how tax receipts are distributed, with the argument centering on that taxing power being reserved for legislative bodies.
Since the county and the cities agreed on their LOST division without going before a judge, officials said their deal would stand and wouldn’t be subject to the result of any ruling from lawsuits on LOST.
The county and cities began their LOST negotiations 11 months ago.
“I’m definitely glad it’s over,” Mason said.
Kessler said he is hopeful that avoiding a hearing before a judge could lay the groundwork for further cooperation.
“Since I’m newly-elected, I have only experienced a small part of the time that’s been put into that process,” he said. “But it was rewarding and encouraging to see the cities and the county come together on Friday. Everybody passed the resolution to accept those negotiations. It puts that behind us and lets us be productive in so many other ways. It does keep us out of court.”