By Charles Oliver
Whitfield County is one of just 15 of Georgia’s 159 counties that doesn’t have some sort of exemption on inventory taxes. And it is the only county north of Atlanta on I-75 that doesn’t exempt at least some taxes on inventories.
Some local officials say that makes it hard to bring in new investment. On Tuesday, the Dalton City Council and the Dalton Board of Education announced a move they say will help make the city more competitive.
Mayor David Pennington said the City Council will vote on Monday to place a referendum on the November ballot asking voters to approve a 20 percent exemption for all classes of inventory. The exemption tax would take effect on Jan. 1, 2010.
“We are here to support them. We think it is good for the community,” said school board chairman Steve Williams. “We recognize that Dalton is not the same as it was 10, 15 or 20 years ago. We’ve got to do business differently.”
Pennington noted that most of the cities and counties that surround Dalton have some type of inventory tax exemption.
Citizen Troy Smith asked if the exemption would generate business.
“That’s why we are doing this,” said Pennington.
A report prepared earlier this year for the Dalton-Whitfield Joint Economic Development Authority found the area’s inventory tax is a major impediment to attracting certain types of business.
“It is an issue, particularly with those (businesses) that have any type of substantial inventory,” said authority chairman Chuck Dobbins. “It definitely comes up. It definitely puts us at a competitive disadvantage.”
But officials said the exemption should help level the playing field.
“One of the first things that industry asks if they are going to come into the area is ‘Do you have an exemption, a freeport exemption?’ and we have to say no,” said City Council member George Sadosuk. “Now, we can say we have an exemption (if the referendum passes).”
But the exemption will reduce revenues to the city and the school system, at least in the short run.
Pennington said the city would lose about $360,000 annually and the recreation department, which currently has its own dedicated 1 mill tax, would lose about $156,000. Dalton voters will decide in November whether to continue to have a dedicated property tax for the recreation department or to allow the City Council to decide its budget as it does other city departments.
Williams said the impact on the school system from a freeport exemption would be more substantial, with the school system losing about $1.3 million annually.
Can the school system absorb that loss without increasing taxes or cutting services unduly?
“That is our full intention,” he said.
He noted that each year for the past six years state austerity cuts in education funding have cost Dalton Public Schools about $1 million.
“If we can avoid that austerity cut from the state, we’ll be OK,” he said.
Can they avoid more austerity cuts?
“It’s hard to tell. The governor has promised to restore some of them, and we did restore some in this last session. Not nearly enough to bring it back up to what was cut,” said state Rep. Roger Williams, R-Dalton. “But I don’t know about this economy. (The governor) has already cut $245 million out of the 2009 budget. He’s asked department heads to telecommute and do a lot of other things to cut down on the state budget. But I’m hopeful we can put an end to some of these austerity cuts in education.”
Rep. Tom Dickson, R-Cohutta, says he isn’t sure if any of the austerity cuts money will be restored.
“We’ve not got any definitive word yet on what budget projections are for next year,” he said. “But the revenue figures that have been coming in for the last few months indicate that revenues are severely down. That typically means there are going to have to be cuts.”
But Dickson said Gov. Sonny Perdue has said several times that his goal is to protect health care and education as much as he can.
“I would be hopeful that we can minimize cuts in those two areas, but it is going to depend on what revenue does for the next five or six months,” he said.
So what if the austerity cuts do continue?
“Then we’ve got to look at some other things,” Williams said. “But this watching the budget and watching revenues is a daily thing. We are always watching. We’ve got a year and a half to get ready for it, and I think we can.”
City Council members said they also believe they can sustain their revenue loss without raising property taxes.
Council member Charlie Bethel said he believes the city can cut its property tax rate 20 percent, as council members have been working to do, and sustain the effects of the 20 percent exemption for inventory.
“I also believe that without this sort of action it becomes more and more difficult for us to increase our tax digest, to promote new investment in our community,” he said. “We’ve got to do it to have the sort of growth that will sustain our government in the long term. We’ve got to have growth.”
The exemption would not affect county or county schools revenue.
