Dalton, Whitfield split on tax agreement

Members of the Dalton City Council and the Whitfield County Board of Commissioners ended Tuesday about $3 million apart.

The groups met in the first discussions about how to split the 1 percent Local Option Sales Tax (LOST). State law requires that agreement to be renegotiated every 10 years after the results of the latest census are in.

“Cities and counties across the state are doing this,” said Board of Commissioners Chairman Mike Babb.

The LOST currently brings in about $17.2 million a year, and under the current LOST agreement negotiated 10 years ago, the county gets 83.24 percent, Dalton gets 14.93 percent, Cohutta gets 0.38 percent, Tunnel Hill gets 0.65 percent and Varnell gets 0.8 percent.

Commissioners presented a plan Tuesday that would split the money for the next 10 years with 69.74 percent to the county, 27.55 percent to Dalton, 0.55 percent to Cohutta, 0.71 percent to Tunnel Hill and 1.45 percent to Varnell.

Babb said that, based on state law, the LOST distributions are based on several factors including population, service delivery agreements and tax equity. He said the county’s offer was based on its assessment of the services it currently provides, services the various cities provide and county officials’ estimation of tax fairness for each resident.

The commissioners’ plan would also:

• Create special tax districts to fund the county fire department and the county’s share of the Dalton-Whitfield Joint Development Authority (JDA), the Dalton-Whitfield Library and the Dalton-Whitfield Solid Waste Authority so that Dalton taxpayers are no longer paying for services that primarily benefit residents outside the city.

• Merge the two governments’ recreation departments.

• And transfer the county’s half ownership of the Northwest Georgia Trade and Convention Center to the city.

But after commissioners made their proposal, the discussion quickly turned into a dispute about fairness.

Babb said that under the commissioners’ proposal, taxpayers in unincorporated parts of the county and in each of the cities would get the same per capita rollback of their property taxes. But he said that if the LOST dollars were split according to population, city taxpayers would get far more of the benefits of the rollback since it applies to both county taxes and their city property taxes.

“The unincorporated county has about 65 percent of the population and 52 or 53 percent of the tax base but it would get just 28 percent of the rollback,” Babb said.

Dalton Mayor David Pennington said he wasn’t concerned about the rollback.

“What citizens need to understand is that this does not roll back their property tax. That (LOST) check comes in and we use it to provide services. That’s where you come up with a lower property tax rate. Everybody doesn’t get an equal rollback unless they are getting equal services, and the city of Dalton isn’t getting equal services,” Pennington said.

City Council members argued that Dalton accounts for 48 percent of the county’s tax base, so city residents are paying for half of county services. They acknowledge that there are several county services that benefit city residents, such as the court system, the health department and the jail. But they claim city residents are also paying half of services that primarily benefit those outside the city such as the county fire department, the county recreation department and the county’s share of joint ventures such as the trade center and the JDA.

The commissioners’ proposals to create special tax districts to fund some of those services and to transfer its share of the trade center to the city were aimed at addressing some of those concerns but did not go far enough for city officials.

Pennington also argued the county’s proposal, which would provide 27.55 percent of LOST funds to the city, gives the city little that it doesn’t already have.

“We are already getting 14.9 percent plus $1.8 million in in-kind services, which goes away with their new offer. That $1.8 million represents a little over 10 percent (of LOST dollars), so that’s 25 percent,” he said.

Pennington said, based on LOST agreements in similar areas such as Rome and Floyd County, Dalton should be getting 45 percent of the LOST dollars. That’s about 18 percentage points, or $3 million more, than what the county offered.

Pennington said city officials will have a formal counterproposal to the county’s plan today.

Some leaders of the county’s smaller cities said they felt left out of the discussions. They were invited and present at the meeting but did not sit at the tables with the others.

“I’m very disappointed that the chairman didn’t even acknowledge the other cities being there. I know that Varnell is small, but I’m disappointed that no one asked us what we thought,” said Varnell Mayor Dan Peeples.

Whitfield County Attorney Robert Smalley said no one intended to slight anyone.

“All of the cities were invited, and they are certainly integral to the process. But the way the law is set up is that you are looking to come up with a county share of LOST funds and a municipal share of LOST funds. Once you have that, the municipal share of LOST funds is to be divided based on the share of municipal population,” he said. “For instance, and I don’t know the numbers off the top of my head, if Dalton has 95 percent of all the people who live in the cities then it would get 95 percent of the municipal share of the LOST.”

Smalley said that since Dalton has by far the majority of the municipal share of the population it will drive these talks.

The county sent a letter to the cities to start the LOST negotiations on June 28. They have 60 days from that date to reach an agreement. If they don’t, they will go through 60 days of nonbinding arbitration. If they still can’t reach an agreement, the matter will go to a Superior Court judge from outside the district who will decide the matter, similar to baseball arbitration, by picking one side’s offer.

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Dalton, Whitfield split on tax agreement

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