Your LOST is the Cities Gain

Following up on what Conservative posted, I think it is important to add perspective to the debate.  Conservative pointed out that the purpose of LOST is to provide property tax relief to the citizens.  If you take a look at the County’s budget, you will see that that ~41% of the budget (or ~$36.7m) comes from property taxes.   The impact of LOST to the county comes to about $20m.  The rollback we see is about 30%.  If my math is correct the County’s current milage rate is 6.25mills; without LOST it would be about 9.6. 

To see what you pay in property tax, you take 40% of the taxed assessed value of your property, divide by 1000 and multiply by the rate.  So if you have a $300,000 home, your county tax would be $750. If there were no LOST, the bill on the same home would be $1,152.  So the 1 penny sales tax saves the $300k homeowner over $400 per year.  (An argument may be made at this time if LOST is even worth it.  You would have to spend over $40k per year on goods to get a savings, so I would say that it is worth it).    

From what I understand, the current split is about 75% to the County and 25% to the cities.  The cities are proposing that there be a 60-40 split.  Essentially, this would mean a tax increase or drop in service for everyone that does not live in a city.  For those in the cities, it could be a tax increase or drop in service for you as well.  According to the Georgia Department of Revenue, in 2011 the only cities that charged property tax in the county were Gainesville, Oakwood and Flowery Branch.  Buford, Clermont, Gillsville, Lula, and Braselton all had zero property taxes in 2011; so this begs the question, what taxes are being rolled back?  The cities that do not charge property tax are essentially living off of LOST, Insurance Premium Tax, franchise fees and fines.    A gain in LOST revenue by these cities means growth in government since there is no mechanism to roll back money to the property owner; in other words, if there was a property tax, they could roll it back and you may see a savings.  Since there is no property tax, however, the only option is to spend the money.    

As far as Gainesville, Oakwood and Flowery Branch, do you really think they will roll back taxes.  Gainesville and Oakwood recently increased their milage rate and no one uttered a word.  Flowery Branch has been brainstorming ways to spend theirs: 1- they have started a capital improvement plan, 2- they have started a storm water study, and 3- rumor has it, they want to move city hall to the old Habersham Bank Building. 

On the other side, if I were Gainesville, Oakwood and Flowery Branch, I would be a little upset that their share will be split evenly with Clermont, Gillsville, and Lula; “.. Small qualified municipalities can elect to be “absent” municipalities, which mean they may choose not to participate in the negotiation process or are not included the negotiation process. The calculation of distribution of LOST funds for absent municipalities is one of the most complex provisions in state law pertaining to local government revenues. Generally, distributions are calculated based on 1) the absent municipalities’ percent share of the total municipal population in the county; and 2) the municipal share of LOST proceeds in the county (pp. 10).”  Currently the cities share based on population.  So while Flowery Branch, Oakwood and Gainesville offer more services, they receive the same percentage based on population. 

While I hate that we are all paying lawyers and judges to do something that our elected officials should be able to do, it would seem that the parties are stuck in a trench and the only way for this gap to be bridged will be by someone wearing a black robe.  All I can say it, good luck Hall County.

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