The special purpose local option sales tax, or SPLOST, became a legal option in 1985 by an amendment to the Georgia Constitution. The purpose was to allow citizens to vote for an added sales tax to fund a specific project list, said U.S. Sen. Johnny Isakson (R-Georgia), who was the Republican Leader in the Georgia House at the time.
“What was happening was people were getting tired of bond referendums and borrowing, and so using a local option sales tax that was voted on by the people like a bond issue, but had a sunset of five or six years, and all the places the money was going to be spent had to be posted on the question, was a lot more palatable to the voters than having a bond issue where you’d authorize the county to go out and borrow a bunch of money not knowing where it was going and having to pay interest on it,” Isakson said.
The decision was given to the people and, for the most part, Cobb’s voters have said yes.
Not including SPLOST votes specifically for education or the ill-fated T-SPLOST in 2012, sales tax referendums have come before Cobb voters eight times.
Five have passed.
On April 2, 1985, SPLOST passed on the very first try in Cobb, with 24,667 votes for and 14,459 against. Four years later, a second sales tax referendum failed with just 11 percent turnout during a special election in April.
Butch Thompson, who represented west Cobb on the county commission in the mid-80s, said the 1985 SPLOST passed in Cobb was the first one approved in the entire state. But by 1989, voters were weary of passing another local sales tax just as the first one was to expire.
“It was the same thing it is now. It’s become more of a crutch than it is a relief,” Thompson said.
“The voters back then said, ‘We just got through with one, and we’re not going to do another one.’”
But the tax passed easily on the next try as part of the 1990 November midterm election, which drew 55 percent turnout.
“People began to see the need again,” Thompson said. “Traffic was beginning to bottle neck. The East-West Connector wasn’t finished yet. … By 1990, they had made up their mind this was a good thing.”
SPLOST passed yet again in 1994 by a wide margin.
The next time around, in 1998, was a different story, said former county Chairman Bill Byrne.
“In 1998, I designed a transit concept and got unanimous approval within the Atlanta Regional Commission,” said Byrne, who is in a runoff with Bob Weatherford for the seat held by retiring District 1 Commissioner Helen Goreham. “Basically, it was a monorail concept.”
The monorail, which would span from Kennesaw to the Cobb Galleria, was designed to run on tracks 18 feet off the ground along Cobb Parkway. Plans called for single cars, which Byrne referred to as a “bullet train.” The SPLOST project list called for $15 million for design and engineering, and voters were not pleased. In total, 88,973 said no, with only 62,019 voting in favor. The whole project list failed, but Byrne places the blame squarely on his transit project.
“There was no doubt in my mind the proposal for the monorail concept along Cobb Parkway was the primary reason voters said no,” Byrne said.
In 2000, with Byrne still chairman, another SPLOST vote failed by a narrower margin.
Byrne pointed out that since the 1994 tax had expired, a big challenge was the viewpoint among some that it was a new tax.
But in September 2005, with state law now allowing for SPLOST votes of more than five years, a six-year SPLOST vote squeaked by, 19,947 to 19,833.
The tax was renewed once again in 2011, this time for four years and also by a small margin. This November, Cobb voters will likely decide on another six-year SPLOST renewal, estimated to bring in $750 million. Commissioners will vote on a final project list July 22.
Because the 2011 SPLOST won’t end until December 2015, the renewal would keep sales tax dollars rolling into county coffers through 2021.
Isakson touted pre-approved project lists, which, for the most part, cannot be altered after the fact, as a strength of local sales taxes.
“People like the idea of knowing where their money is going,” Isakson said. “They like accountability and limited use.”
Roger Tutterow, a Smyrna resident and economics professor at Mercer University, also touted project lists as an important part of the special sales tax concept.
“The original design was, ‘Here’s some special projects that will greatly benefit the county,’” Tutterow said. “Will the voters consent to this sales tax for a period of time?”
By necessity, the concept also calls for predicting the cost of each project and how much money the tax will collect. Calling the correct amounts ahead of time is not easy, as shown by the numbers from previous SPLOST votes.
The original 1985 SPLOST came in just under predictions, bringing in $202.4 million of a projected $206.6 million. The 1990 sales tax came in well over, bringing in $263.7 million when only $226 million was expected.
Estimates for 1994 came close to projections, falling $2 million short of a $377.9 million prediction.
Tutterow said predicting the estimates is tricky, especially if funds fall short.
“No one is concerned about it going over,” he said. “The concern is if you don’t collect enough funds. Do you feel you have an obligation to finance every project on the list? How do you prioritize the projects if you under-collect? That’s one thing about sales tax: It’s cyclical.”
When SPLOST came back on the books following the 2005 vote, it was wrecked by the Great Recession. Estimates called for $854.6 million, but only $761.5 million came in, leaving the coffers $93 million short.
Jim Pehrson, Cobb’s finance director, described what happens when estimates are off.
“Any excess goes to the cities and to (Cobb County), and it goes toward the projects that have been identified in case you have excess funds,” Pehrson said. “We have a tier-two level of projects that will be considered after the first level of projects is funded.”
He said the project list was “scaled back” and re-evaluated as the 2005 SPLOST fell short.
“We did amendments to the budgets and the departments, primarily the department of transportation,” he said. “The cities got their guaranteed amounts. The cities had to identify projects that they had to back out on. You have to evaluate the programs and prioritize.”
The current SPLOST is running a surplus so far. Estimates called for $281.7 million as of May 2014, but $302.7 million has come in.
Despite the uptick, Pehrson stressed the county is being conservative this time around. Cobb raised $123 million in the last 12 months though its 1 percent sales tax. The potential SPLOST vote this fall carries estimates of $125 million per year.
The county hopes the new Braves stadium will draw in extra sales tax dollars, but stadium revenues aren’t part of the projections.
“I’d anticipate we’d see an increase in sales tax dollars (through the stadium),” Pehrson said. “They’re not going to start until 2017. We have not built any estimates into this projection as of this time, so we’ll go with $125 million per year and then if there is growth, we’d go to the next level of projects.”
Tim Lee, chairman of the Cobb Board of Commissioners, said the county doesn’t want to count its chickens before they hatch regarding the stadium. He said sales tax votes have to deal in absolutes and he wants to predict based on past history rather than what might happen in the future.
The trick to passing a SPLOST, according to Tutterow, is a good project list. He said a political key is bringing out a few highly visual projects like new parks or transportation improvements at congested areas.
“The key to getting passage is to have a project list and clearly articulate the benefit to citizens of the projects,” Tutterow said. “What you don’t want to do is take them for granted and assume any SPLOST proposal will be supported.”
Three of the biggest projects on this year’s list — which sits at $1.2 billon but must be whittled down to $750 million before the vote — are a $55 million new police headquarters, a $52.9 million police training facility and a $100 million line item for a bus rapid transit system from Kennesaw to Midtown Atlanta.
Each are opposed by at least one county commissioner. Bob Ott, who represents southeast Cobb, disagrees with all three. He feels police would be better served by take-home cars and pay raises than new buildings, and Ott says the BRT isn’t needed.
Commissioner Helen Goreham has defended the police buildings, however, all four district commissioners — Ott, Goreham, Lisa Cupid and JoAnn Birrell — oppose including the transit project in the SPLOST list.
There is fear among some, such as Smyrna Mayor Max Bacon, that including the $100 million BRT will sink the entire project list, dooming $750 million in improvements.
Byrne, the chairman when monorail funds were rejected with the 1998 SPLOST, said it was a clear rejection of the concept by voters. The BRT also was part of the 2012 T-SPLOST, to which 65 percent of voters said no.
Yet Lee insists these are different times.
“We have different demands. We have different study results. We have more people living in Cobb,” Lee said. “We’ve had a shift in attitude toward having options.”
Lee also called the T-SPLOST a different animal.
“That was a new tax, this is an extension of an existing one,” he said. “One was regional, this is just for our county … It’s an entirely different scenario.”
Isakson remains a fan of local sales taxes today. He touts the control it gives voters, the fact projects are paid in cash rather than bond debt, the time limits before renewal votes and the way it spreads the tax burden.
“If you look at what we’ve paid for with SPLOST and figure out what the bond debt would have cost, taxes on property would be a whole lot higher,” he said.
The senator also points out everyone pays the tax: homeowners, renters and people not even living in the area.
“It’s the fairest form for a tax,” he said.
Earl Smith, the Cobb Commission chairman during the first SPLOST vote in 1985, disagrees.
“To me, it’s not what it started out to be,” Smith said. “It’s more of a general fund today. As politics would have it, everybody said, ‘I can slip in that project over there or this project over there.’”
With the exceptions of 1990 and the years between 1999 and 2005, there has been a 1 percent county sales tax in Cobb every year since 1986. Tutterow said this could call into question the word “special” in the SPLOST acronym, however, he said there arguably is plenty of justification to continue.
“In practice, it has appeared to be a little more permanent than maybe the original design was,” Tutterow said. “We do live in a county that still has a fast pace of growth and has challenges in terms of big infrastructure. You would expect to see a SPLOST stick around longer.”