Georgia State Government Profiting At The Expense Of Local Interests?

Received last night into the Rogue109 Command Center, comes this story from the Tifton Gazette. (Be sure to also read this part of the story, as well).

For the first time in years, Local Option Sales Tax (LOST) money is not increasing in Tifton; indeed, the opposite is happening. In addition, revenue known as pro-rata, which is “unidentifiable sales and tax proceeds” distributed by the state revenue department, has stopped completely. Why?

Basically, the state DOR collects all sales taxes and remits them back to local governments based upon a “magic” formula that few are privy to see. DOR receives as payment for this service one percent of what they collect, which approximates roughly $40 million/year from cities.

There are also funds the DOR receives they don’t know where it should be remitted. These amounts are placed into an “overflow” fund. Every six months, DOR would send back to the county where the funds came from these monies which would be up distributed among municipalities and school systems according to a pre-arranged distribution plan. That law went into effect in 1997 and had a 10-year sunset provision.

Well, the sun has set. The General Assembly didn’t pass the extension of the distribution process of these unidentifiable sales taxes, so now the state keeps all the “moo-la”. This amount averages about $42 million a year that the state can now claim. That was $42 million that local voters approved to go to their schools, roads and infrastructure and to roll back property taxes (LOST and HOST). Now, the state gets to spend it at its discretion.

Sen. Chip Rogers has a study committee looking at privatizing the collection of these funds. Alabama employs this system and collections went up when they did so because of increased accountability. Meanwhile, in Georgia, municipalities suffer due to the lack of foresight of the General Assembly.

[UPDATE 30 July 2008]: It’s been confirmed that the DOR 1% admin fee generated $48 million in FY08, based on  a total of $4.8 billion in total local sales tax collections.  In calendar year 2007 there were $40 million in unidentifiable sales tax proceeds.  Of that amount, $18 million was distributed to local gvts.


  1. Tea Party says:

    NO wonder when I visit folks elsewhere in the State, they state how much they detest Atlanta…

    I think the Gov’t Affairs Cmte ought to take a look-see at this, eh. Rep. Austin Scott?

  2. Bill Simon says:

    Hmmm…one minor piece of fact, Rogue, regarding your “magic formula” statement: My small business collects sales taxes based on the Rate Chart produced by the DOR.

    BUT, we don’t just submit that with a report that says “X amount collected from Fulton, Y colected from DeKalb, etc.”

    It takes my accounting department a weekend to go back to the sales for the quarter, take the sales taxes collected for each county, and break it up according to what comprises it (e.g., MARTA tax, SPLOST, Georgia tax, etc.) and fill-out the Sales Tax form in such a way as to define, for the Revenue Department, exactly how much money was collected in SPLOST, LOST, Georgia, school tax, etc. and then have all that reconciled with the amount of sales that we’ve made.

    In short, their forms demand that we explicitly tell them how the amount we’ve collected needs to be divided, and they, in turn, are supposed to hand-key-in these amounts into every category for every county.

    NOW, I will tell you this: Georgia’s DOR is probably using 25-year-old technology when it comes to doing this. They should have it programmed so that when a chunk of money is recorded as coming from Cobb County, that automatically gets split-up into its 1% SPLOST for Education, 1% SPLOST for Roads, and 4% for the state.

    The point is, the DOR KNOWS how much was collected from what jurisdiction, and they have the breakdown of what comprises that sales tax. If they aren’t tracking it according to their forms, then I smell a good opportunity for people to file a lawsuit to get them to stop doing things via a “magic formula” and adhere to the information they receive whenever a retail business pays them the sales tax they collected.

Comments are closed.