Commissioners unanimously approved Tuesday night a resolution to define its policy regarding the Homestead Option Sales Tax or HOST. The proposed HOST will be on the Nov. 6 general election ballot for local voters to consider.
The 1 percent sales tax is used to increase homestead exemptions to qualified properties both in unincorporated Cherokee and in its cities, which reduces the amount of real property taxes paid. The tax would be charged on the same items as state sales taxes, with the addition of groceries.
Under state law governing the tax, 80 percent of HOST revenue can be used for exemptions on homeowner property tax bills and 20 percent can be used for capital improvements.
However, commissioners agreed Tuesday in their resolution to use 100 percent of revenue collected to rollback homeowner property taxes, dubbing the proposal the “100 Percent from Day One” resolution. They said they support a change in the law to allow for the change.
Commissioner Harry Johnston said that by having a county SPLOST already in place, using 20 percent of HOST funds for capital expenditures would be pointless.
In addition, the commission in the resolution committed to using HOST funds to reduce property taxes as soon as possible, although state law allows for the accumulation of revenue from HOST for two years during the implementation of the tax.
Johnston said during Tuesday’s work session that using the funds as quickly as possible would put to rest a lot of concerns that the county intended to “sit on this money.”
HOST is expected to generate about $30 million per year.
“We would take any HOST funds collected up to 30 days prior to the date we set the millage rate and we would calculate a tax credit based on the full cumulative amount of those funds collected,” said Johnston. “That’s what I mean by ‘100 percent from day one.’”
Johnston estimated that if voters pass HOST in November – as commissioners expect – the county would collect just two months of revenue on April 1, before the millage rate is set in 2013. But those two months of collections would still be applied to next year’s tax bills, he said.
“Taxpayers would see a small, partial credit on their 2013 bills,” said Johnston. “We would do the same again in 2014; at that point we would have 12 months of collections, so we’d have a full year of credit.”
Commissioner Jim Hubbard noted that the county would continue using the same process to set the millage rate if HOST is approved.
But HOST would not be used by the county as a substitute for the millage rate, said Chairman Buzz Ahrens.
Because state law doesn’t require the tax credits to be made in the first two years after HOST is approved by voters – giving a priority to homestead exemptions over capital improvements – the county will have to allocate funds pro rata, across all classes of real property during the first two years, said Johnston.
“Some people think that’s a better way anyway,” he said.
In the first year, the county anticipates only a 15 percent credit, said Johnston. He said by the second year, even though 12 months of proceeds would have been received, there would be a 90 percent reduction. In 2015 and beyond, when the HOST program is in full swing, a 100 percent reduction is expected to offset property taxes and a 50 to 60 percent reduction for other properties such as commercial, according to Johnston.
Creation and termination of HOST can only be done by referendum. On the November ballot, voters will be asked two questions: If HOST should be approved and if 100 percent of revenue should be used to reduce homeowner property taxes.
At 8 a.m. Tuesday, a panel discussion about HOST will be led by Chairman Buzz Ahrens at the Northside-Cherokee Conference Center, 1130 Bluffs Parkway, Canton.
The event is co-sponsored by Cherokee Bank and the Cherokee Tribune.
Coffee and pastries will be served 30 minutes beforehand. Admission is free, but reservations are required by contacting cindypoole@cherokeebank.com.
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