One-two SPLOST punch?
by Jon Gillooly
March 14, 2014 04:00 AM | 2946 views | 17 17 comments | 9 9 recommendations | email to a friend | print
Cobb Commission Chairman Tim Lee
Cobb Commission Chairman Tim Lee
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MARIETTA — County Chairman Tim Lee is considering asking voters this November to extend the county’s 1-cent special purpose local option sales tax for six years.

Lee is also thinking about asking voters in November 2016 to approve a permanent 1-cent on the dollar homestead-option sales tax, which would apply to all consumer goods, including food, and replace a portion of the property-tax revenues.

The reason is to pay for an estimated $1.4 billion in capital expenses over the next 10 years, Lee said.

“We’re coming up at it from different directions to see what mix makes best sense to us,” he said.

Lee hopes to have a project list for the proposed 2016 SPLOST finalized with the Board of Commissioners this summer. A A six-year SPLOST is projected to collect about $750 million. Of that sum, 74 percent or $555 million would go to county projects and 26 percent or $195 million would go to Cobb’s six cities.

Not so fast, Ott says

Commissioner Bob Ott is waiting to see specific county needs before agreeing to another SPLOST cycle.

One concern is that 99 percent of the county’s transportation department is funded by SPLOST, he said.

“It’s one of the three major mandates that we have as a commission, and I’m concerned it appears to be that DOT expenses are basically passed off to a SPLOST, which means we’re using a special-purpose tax to fund normal DOT functions,” Ott said.

“What happens if it doesn’t pass? So I’m concerned about that.”

The existing SPLOST, which expires in December 2015, was originally planned as a six-year tax, but was chopped down to four.

“There were a lot of wants in there that were not needs, and I just have a lot of concerns that we go year after year with a SPLOST,” Ott said.

State Rep. Rich Golick (R-Smyrna) has used the term “SPLOST fatigue” to describe voters who are tired of a seemingly never-ending cycle of SPLOSTs.

“If it’s supposed to be a special purpose, but you do it continuously, it kind of loses the notion of special purpose,” Ott said.

During a board retreat Wednesday at the Powder Springs Street Senior Center, James Pehrson, the county’s finance director, also challenged the argument that SPLOST advocates have made during SPLOST campaigns, which is that 30 percent of the revenue collected for the sales tax program comes from people who live outside the county. Based on his calculations, Pehrson said the number was only 11.5 percent.

The HOST

A campaign pledge made in Lee’s re-election bid was rolling out a homestead option sales tax, or HOST, although the timeline has been delayed.

In 2012, Lee said he wanted the Cobb legislative delegation to pass legislation this year that would allow for a November 2014 countywide HOST referendum.

“The conversation got shifted to trying to get a fractional penny for the SPLOST, and I felt that was more of an urgent issue to address with the public, and that deadline was coming apart, i.e. when we would have to have an election for the SPLOST versus the HOST conversation,” Lee said of the delay.

State Rep. John Carson (R-northeast Cobb) is trying to get a bill signed into law this year that would allow for a fractional SPLOST.

The current sales tax in Cobb is 6 percent: 4 percent goes to the state, 1 percent to the county’s SPLOST projects and another 1 percent SPLOST goes for the Cobb and Marietta school districts.

A HOST tax would be 1 percent, raising the sales tax to 7 percent. A voter-approved HOST would be collected indefinitely, unless the referendum included a sunset date, or until a separate referendum is approved to end it. Lee indicated he would rather not have a sunset date.

Cherokee County voters rejected a HOST referendum in 2012, which Lee blamed, at least in part, on confusing ballot language. Clint Mueller, legislative director for the Association of County Commissioners of Georgia, has said a HOST creates zero new revenue for the county, though counties can choose to use up to 20 percent of the HOST revenue for capital expenses. Lee said he would like to use 10 percent of the HOST to pay for capital maintenance costs, such as upgrading computers.

“The HOST concept is not necessarily a new tax,” Lee said. “It’s a different method for arriving at the same revenue numbers. It kind of does a good financial modeling where we spread out our risk by using multiple sources of revenue so that we don’t become dependent on any one too large of a portion.”

The residential digest makes up 52.4 percent of the countywide taxable digest, a percentage Lee said is too high from a single funding source.

“So that’s why when I first talked about the HOST, I thought it was a viable option to diversify our funding source in Cobb,” he said.

The owner of a home assessed at $200,000 in Cobb pays $500 a year in property tax toward Cobb County’s general fund. The HOST would eliminate that expense on homesteaded properties.

In Cherokee County, for example, officials had estimated the HOST would generate about $18 million a year. The county needed about $11 million to completely wipe out county property taxes on homesteaded property.

Lee said Cobb County generates $129 million a year through its 1 percent sales tax, and collects about $70 million a year in homesteaded property tax.

Lee hopes to have consensus from commissioners by this summer to move forward with a HOST proposal in order to ask Cobb’s legislation delegation to pass a bill allowing the county to hold a referendum in November 2016.

Promises may cause funding shortfall

Pehrson said the county faces a $32 million funding shortfall by 2024 it moves forward with reducing the millage to pre-recession levels, ends the controversial practice of transferring water revenues to the county’s general fund and implements the findings of a proposed pay-class study, all things commissioners have talked about doing.

But with a HOST and a renewed SPLOST, that gap can be closed, Lee said.

“It’s a win-win method to reduce taxes for the property owners of Cobb County while reducing the vulnerability of our current financing mix,” Lee said.

Yet Ott is skeptical about the benefits of a HOST, observing DeKalb County has one “and it doesn’t work there.”

“My concern is that you’re moving a sizable chunk of your revenue to a variable revenue source,” Ott said. “Back to my concern about DOT being in a SPLOST, are we going to put essential county services into a tax that is variable, basically a sales tax?”

With no sunset date on a HOST, if hard times hit the county again, the county would be stuck with the sales tax hike and have nowhere to go but raising property taxes again, he said.

“So I have a problem with that. I think essential county services need to be funded by a more stable revenue source. I’m concerned that it could be anti-competitive for business,” he said.

Comments
(17)
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Bottom_Line
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March 15, 2014
To Taxpayer in West Cobb. In order to deduct sales tax, you have to give up your deduction for Ga. income tax. If they raised the money by increasing property taxes instead of more sales taxes, the additional amount you paid could be deducted and you could also keep your deduction for state income tax. They don't want to do it that way because they would have to vote for a tax increase.

taxpayer in W Cobb
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March 14, 2014
And why is it that ALL taxes and Tax increases need to go ONLY to fund the schools....Cobb COunties budget for schools is close to a BILLION dollars a year...this isn't NYC folks...How much money do they need to run the schools?....This county is not just filled with 30 and 40 year olds with kids in schools...there are other services needed for the rest of the population...
Kennesaw Resident
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March 17, 2014
Those services should be bought from the private sector and not provided by government.
netdragon
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March 17, 2014
Kennesaw Resient: Bad idea. The private sector mis-manages critical things because it has no directive to provide for the constitutionally guaranteed "general health" of the citizens. It has a directive to maximize share-holder earnings. Unless the private company is a "B corporation", it'll just steal all the money and run to the hills.
Kennesaw Resident
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March 18, 2014
The constitution DOES NOT guarantee the general health of the citizens. Are you referring to the general welfare clause?

I also am not talking about the government purchasing these services from businesses. I think these services should be purchased from businesses by private citizens. The less government the better.
Ben Twomey
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March 14, 2014
Lee shot off his mouth and committed to something for which we have no money. Now he is scratching in the dirt trying to come up with the money to finance the new Braves Stadium and the required surrounding and supporting infrastructure.

The air is thick with mendacity!
Bottom_Line
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March 14, 2014
This change would cost taxpayers more. Property taxes are deductible, sales taxes are not deductible. So $1 of sales tax actually costs $1, but $1 of property tax costs less because of the tax savings from the deduction.

In addition, because this change would increase federal income taxes of Cobb residents, a considerable amount of money would go from Cobb to Washington, which is obviously a very bad idea.
Taxpayer in W.CObb
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March 14, 2014
technically you can choose to take off sales tax as a deduction...you can even itemize the amount.
Michelle Sollicito
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March 14, 2014
So now we get the TRUTH about how much the Braves is going to cost Cobb County! $1.4bn over the next 10 years! Much more realistic! They will tell you it is for "road / transportation projects" (but most of those are to accommodate more traffic due to the Braves), they will tell you it is about "public safety costs increasing" - well, yes we do need to spend more on public safety (snowedoutatlanta taught me that!!) but if we weren't spending so much on the Braves, we could use that money! Also public safety costs will increase dramatically because of the Braves stadium!

We DO need much more money for Education - we need Tim Lee to do more to directly raise money for Education only - not for his Private Industry buddies like the Braves and John Williams (thankfully he ducked out of the controversial deal where the Commissioners wanted to effectively pay him a bonus for building in our area out of our school taxes!!) and whoever else will benefit from his SPLOST!
Watcher...
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March 14, 2014
Wednesday, Chicago Mayor Rahm Emanuel warned of doubled Property Taxes.

Lee must be taking his lead from one of the most partisan Demoncrats ever.

I suggest that Lee and Hankerson begin a project to reduce the size and the cost of Cobb government.
Matt Stephens
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March 14, 2014
Its funny how Ott will grandstand over this splost proposal, but once the splost is passed he will stretch that money to do anythign with it short of what it was intended for.

Take a look at the proposed concept for Lower Roswell Road because Ott couldnt say no to Kroger or McDonalds? Ott wanted to buy a dentist office at a cost of over $1 million dollars (maybe he used to support Joe Lee). Look at how much additional money was spent on Paper Mill Road Bridge that wasnt needed (Pretty Asthetics were a WANT) not necessary. Calcualte how much staff time he wastes by submitting stupid requests after stupid request. Gee I flew into Dublin the other day and they have a double decker 6 legged roundabout, why dont you folks tell me why I cant have one of those at Cobb Pkwy and Widny Hill?

Please go back to Flying Ott and leave running the County to someone else...
abridgetoofar
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March 14, 2014
Hey, genius, Paper Mill Road Bridge came in under budget AND was completed early. Aren't you embarrassed, now?
Jeff O
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March 14, 2014
I think Ott has done a very good job. He is responsive to his constituents and fiscally conservative. I have no complaints.
Hoagy
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March 14, 2014
Citizens of Cobb, You should have seen this coming when you were S-o-o jubiliant over the Braves move to your back yard!
JJMule
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March 14, 2014
MR Lee is completely satisfied with colleting and spending your money.

Wasteful Lee and Hankerson.

Guess What
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March 14, 2014
Mr/Mrs/Ms Angry Cobb Citizen continues to demand services from the BOC but complains about every method of collecting revenues to pay for them. Those citizens, thankfully in the minority and have no idea how much timer these elected officials and their manager dedicate to finding fair answers to touch questions.

Guess What? I appreciate each and everyone of them, even when I do not agree on each and every decision he or she or the group, makes.
Ben Twomey
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March 14, 2014
Dear Guess What. go see Timmy now snd get your reward for writing your insipid, kowtowing piece of tripe.
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