County seeks to avoid others’ mistakes on optional sales tax
by Marcus E. Howard
mhoward@cherokeetribune.com
September 26, 2012 12:24 AM | 3319 views | 0 0 comments | 7 7 recommendations | email to a friend | print
Commission Chairman Buzz Ahrens, left, listens as Clint Mueller, legislative director of Association County Commissioners of Georgia, answers a question. Citing the opportunity for more flexibility, the Cherokee County Board of Commissioners signed a resolution Tuesday supporting a fractional SPLOST bill introduced by state Rep. John Carson (R-Marietta).
A fractional SPLOST bill would allow counties to collect Special Purpose Local Option Sales Tax revenues at a fraction of a percent. Currently, SPLOST money can only be collected through a 1 percent sales tax. Cherokee Tribune/Samantha M. Shal
Commission Chairman Buzz Ahrens, left, listens as Clint Mueller, legislative director of Association County Commissioners of Georgia, answers a question. Citing the opportunity for more flexibility, the Cherokee County Board of Commissioners signed a resolution Tuesday supporting a fractional SPLOST bill introduced by state Rep. John Carson (R-Marietta). A fractional SPLOST bill would allow counties to collect Special Purpose Local Option Sales Tax revenues at a fraction of a percent. Currently, SPLOST money can only be collected through a 1 percent sales tax. Cherokee Tribune/Samantha M. Shal
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CANTON — Cherokee County will attempt to avoid the mistakes of two other counties that already have the Homestead Option Sales Tax that local voters will consider in November, said Buzz Ahrens, chairman of the Cherokee Board of Commissioners.

Ahrens led the discussion at a forum Tuesday morning about the proposed 1 percent sales tax on the Nov. 6 ballot designed to reduce homeowners’ property taxes.

The event was held at the Northside Hospital-Cherokee Conference Center and was attended by about 45 people, including state Rep. Calvin Hill (R-Canton) and Commissioners Harry Johnston and Jim Hubbard.

Cherokee Bank president Dennis Burnette and Cherokee Tribune Managing Editor Rebecca Johnston moderated the forum, which featured audience questions after Ahren’s presentation.

Another forum is scheduled at 6 p.m. Oct. 4 at the Chambers at City Center in Woodstock. Both forums are sponsored by Cherokee Bank and the Cherokee Tribune.

Not long after HOST was created in 1995, Rockdale and DeKalb counties became Georgia’s only two counties that have HOST. Most of the 159 counties have a similar Local Option Sales Tax, which was created before HOST.

State law prohibits counties from levying more than three local sales taxes, including the Special Purpose Local Option Sales Tax.

The law governing the tax allows a minimum of 80 percent of HOST revenue to be used for exemptions on homeowner property tax bills and 20 percent toward capital improvements. However, Cherokee commissioners decided on Sept. 18 to use 100 percent of revenue for property tax relief because SPLOST is already in place for capital expenditures.

“Both chose the 20 percent upfront capital and both guessed wrong on the direction of the residential and commercial growth they had,” Ahrens said of Rockdale and DeKalb. “So they got a spike in residential, basically, and have had a real struggle to provide 100 percent exemption on homestead residential properties.”

DeKalb does not have SPLOST and pays a MARTA 1 percent tax.

In Rockdale, properties taxes increased with the last decade’s residential boom while sales tax revenue that went toward offsetting property taxes began to decline in the recession, said Clint Mueller, legislative director of the Association County Commissioners of Georgia, who also answered questions at Tuesday’s forum.

“That was probably a unique situation where we probably had the highest real estate values that we’ve ever seen in the state of Georgia back in 2007, and then right after that, the economy tanked and sales taxes went into the basement,” said Mueller, a Cherokee resident.

“There would have to be a lot of big changes happening in Cherokee — a whole lot of new residential home property and then the sales tax would have to not grow nearly as fast — there would have to be a lot of factors for what happened in Rockdale to occur here.”

Cherokee, Cobb and Gwinnett counties do not have a LOST. Asked why the county isn’t considering a LOST — which applies to all county properties and does not allow for receipts to be used toward capital expenditures — Ahrens said HOST is “simpler” and “clearer.”

He said a LOST would require renewable, intergovernmental agreements between all five of Cherokee’s cities, which have resulted in litigation over how to divide revenue between other governments that already have a LOST.

HOST can only be created and terminated by referendum.

The proposed sales tax will be on the Nov. 6 general election ballot for local voters to consider. 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.

In order for HOST to pass, both questions must be answered in the affirmative, said Ahrens.

Presently, property owners pay property taxes and not those residents who rent, Ahrens said in his presentation. He said HOST would be a benefit to Cherokee because everyone who makes a purchase in the county would be contributing to the cost of county operations.

He said the tax is revenue neutral in that the county is currently collecting a total of $35 million annually from property taxes. But under HOST, he said an estimated $30 million in revenue would come from sale taxes while just $5 million from property taxes.

According to the county, the average homeowner of a $160,000 home would receive a $332 HOST credit on his or her property tax bill, which would eliminate exactly the same amount they would pay for county maintenance and operations if sales within the county continue at current levels. That would leave a final tax bill of $1,468, instead of $1,801.

The average senior who owns a $160,000 home would also receive a $332 HOST credit and a final tax bill — including a senior school tax exemption — totaling $274, according to the county.

If approved, HOST would become effective on April 1, 2013, and generate an estimated $30 million per year, according to officials.

However, because commissioners last week also voted to credit 2013 and 2014 tax bills for the amount of HOST revenue collected before setting the millage rate next July, residents would see the credit on their property tax bills before the state-imposed deadline of 2015.

County officials estimate that HOST tax receipts would total $5 million for 2013 tax bills and $30 million for 2014 tax bills. For 2015 tax bills, $16.8 million of the estimated $30 million in HOST revenue would first go toward eliminating homeowner property taxes and the remaining $13.2 million for other real properties.

Ahrens said HOST would be a shift to a consumption tax.

When asked in a question whether or not such a tax would be fair to a “single mother with no financial support,” Mueller said a non-homeowner would likely not benefit from the sales tax increase from 6 to 7 percent.

“Let’s say there is a single mother renting a piece of property Ć they probably won’t get anything out of the HOST,” he said. “This is really a policy issue here on how people will vote on this thing. In that situation, that single mother who’s renting probably, financially, is not better off under a HOST.”

While the present commissioners have committed to using 100 percent of revenue for property tax relief, Ahrens said future boards of commissioners cannot be required to uphold that commitment. The commission’s approved resolution does request that future boards maintain 100 percent property tax relief.

“Without a change in state law … the current Cherokee Board of Commissioners cannot legally bind future boards of commissioners,” Ahrens said.

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