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October 18, 2013FULTON COUNTY, Ga. A last-minute deal between 12 Fulton County cities and hold-outs Atlanta and College Park has local cities breathing a cautious sigh of relief, after the county's sales tax distribution was put in jeopardy.
The Local Option sales Tax (LOST) is collected by the county every year and distributed to the cities, largely based on population.
The bigger the city, the bigger their slice of the pie.
Only in this pie, most of the parties involved have to agree on a distribution. It's not entirely by population.
In September, 12 of Fulton County's cities agreed to the distribution. The idea is that a majority of the county's population must agree to any distribution. With Atlanta and College Park opposed, the other 12 managed to just top 51 percent. When cities and counties cannot decide on a solution, they submit their opposing plans to a judge to decide.
However; the Ga. Supreme Court has ruled the way this was settled is unconstitutional.
"Arbitration took the role of local government and gave that to the court," said Alpharetta Deputy City Administrator James Drinkard. "By creating that arbitration avenue [the Supreme Court] is saying it's unconstitutional to leave it to a judge to decide."
In short, governments are in place to make such decisions, not judges.
The problem comes with the governments of at least 17 counties and their cities that have all agreed to LOST distribution based on this type of arbitration.
After the court's decision, it is now unclear whether the distributions already decided will be upheld.
The risk is "whether the tax continues to be collected at all," said Chris Lagerbloom, city manager of Milton. "A penny tax of $250 million a year would go away. That has really serious implication to local governments and counties."
The cities of Fulton County have held swift meetings in the past week to reaffirm their commitment to the division of the LOST money, in hopes that will hold up in court. If not, there could be significantly less money coming north of the river.
The night of Oct. 17, the deadline to reach agreement, Atlanta and College Park finally decided to join with the other cities to make acceptance of the plan unanimous in Fulton by her cities, hopefully securing the agreement in spite of the Supreme Court's ruling.
"This was the best we could have hoped for," Lagerbloom said. "Our position now is this has come to an end."
The North Fulton cities are poised to receive a windfall in new tax dollars from the arbitration. Alpharetta saw an increase of $1.3 million, Milton saw an increase of $3.8 million, Johns Creek saw an increase of $1.9 million and Roswell was bumped up just under $1 million. In Alpharetta, that LOST money equals about a quarter of its annual revenues. In Milton, it's 20 percent.
With the agreement of all Fulton County cities, the hope is the county has avoided any problems with its taxes, but that is up for the courts and the state to figure out.
"We are cautiously optimistic on where this ends," said Milton City Attorney Ken Jarrard. "[The State Attorney General] understands the significance of this. Not just for Milton but all jurisdictions."
Editor, Milton Herald