LOST negotiations now lost? Court ruling hurries a LOST decision; county offers keeping current allocations

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County Proposal Following Tuesday’s executive session, the county suggested keeping former LOST rates through Dec. 2014. That means Madison gets 22 percent; Rutledge, 4 percent; Bostwick, 0.6 percent; Buckhead, 0.4 percent; and Morgan, 73 percent.

By Nick Nunn, Staff Writer

On Sept. 17, Morgan County and the City of Madison went before Superior Court Judge Robert S. Reeves in order to obtain a judicial decision, which would settle the Local Option Sales Tax (LOST) negotiations that have been going on between the county and the city since last year.

Now, however, that judicial hearing and preparation leading up to it have been rendered null and void after a decision by the Supreme Court of Georgia on Oct. 7, which stated that settling LOST negotiations is “not a permissible scope of judicial review.”

LOST is a 1 percent special purpose tax. Governing bodies must renegotiate tax fund distribution by a specified deadline before filing for a renewed certificate. Without the renewed certificate, governing entities will not be able to collect LOST funds.

The Official Code of Georgia Annotated (OCGA) 48-8-89 (d)(1) states that certificates must be renewed by Dec. 31 of the second year after the 10-year census – Dec. 31, 2012, following the 2010 census.

The OCGA allows options for governing bodies to extend that expiration date provided they are working toward negotiating the LOST allocation formula.

A 2010 amendment to LOST legislation provided governing bodies with the last-step option of petitioning the superior court so that a judge, charged with the task of conducting hearings and deciding on the parties’ best and final offer, may be assigned to mediate the dispute.

However, in Justice Robert Benham’s written opinion, dated Oct. 7, concerning Turner County v. City of Ashburn et al., Benham stated that “…absent an abuse of discretion or other showing of illegality, the allocation of tax proceeds by and among the political subdivisions of a LOST special district is left to the discretion of those entities and is not a matter for judicial determination.”

Benham’s opinion, which earned concurrences from the remaining six Georgia Supreme Court Justices, concluded that the procedure created by the 2010 amendment “violates the separation of powers doctrine of the Georgia Constitution of 1983, Art. I, Sec. II, Par. III.”

The violation nullifies the portion of the LOST legislation that allowed for judicial mediation in LOST hearings.

“Judicial review may not be expanded to substitute the court’s decision for that of the parties,” said Benham in his opinion.

That is, the limits of what a judge can decide on may not be increased in order to make a decision about LOST allocation.

In the final paragraph of the opinion, Benham notes that governing bodies, by way of supplemental briefs, have urged that the Supreme Court should “fashion an equitable remedy that permits them additional time to renegotiate a new tax certificate” should judicial review of LOST negotiations be deemed unconstitutional.

Benham replied to the urging by saying, “It is not the role of the courts, however, to legislate alternative procedures to replace those promulgated by the General Assembly…”

In essence, Benham’s opinion offered no recourse or advice to the counties and municipalities currently undergoing judicial review who have not yet filed for renewed certificates, including Turner County and the cities of Ashburn, Rebecca, and Sycamore and then Hall County and Gainesville, among others.

The Georgia Department of Revenue (DOR) issued a two-paragraph informational bulletin on Oct. 10 stating that the decision of Turner County v. City of Ashburn is “not final until after the 10-day period during which the parties can file Motions for Reconsideration, and then any additional time the Court takes to decide a Motion, if filed.”

In the second paragraph of the bulletin, the DOR stated that it will “continue to handle local option sales and use tax collections and distributions in accordance with the statues as enacted by the General Assembly” until that the 10-day period mentioned above has elapsed.

That 10-day period expires today, Oct. 17.

Both the Morgan County Board of Commissioners (BOC) and the City of Madison Mayor and City Council held executive sessions Monday night to discuss their positions regarding their situation related to the LOST funds.

During a telephone interview Tuesday afternoon, City of Madison Attorney Joe Reitman cited Thursday, Oct. 17, at 4:30 p.m. as a deadline for filing a renewed LOST certificate, as that will be the end of the 10-day period left open for motions for reconsideration.

Reitman indicated that the deadline could be pushed back by a motion for reconsideration but that any motion would not provide any certain period of delay for filing a renewed certificate.

Reitman stated that he is currently working with other municipalities on filing new certificates without the “taint” of judicial arbitration before the deadline, but he could not say whether or not the City of Madison and Morgan County would be able to come together to file a certificate by Thursday.

Following an executive session Tuesday night, the Morgan County Board of Commissioners issued a letter – at 10:15 p.m. – to Bruce Gilbert, mayor of Madison, proposing the retention of the current allocation of LOST funds until Dec. 31, 2014, giving the General Assembly a chance to respond to the state Supreme Court’s ruling and create a solution for governing bodies. The county’s letter indicates Rutledge, Buckhead and Bostwick’s understood approval of the proposal.

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