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Friday, June 15, 2012 - 11:51am

Cities, Counties Dividing Up Penny Taxes

Millions of dollars are at stake for cities and counties statewide as elected officials negotiate over Local Option Sales Tax distributions.

While the process is going smoothly in most areas, some communities turn to the courts.

Officials in Valdosta say, it's likely the county and its municipalities will end up in litigation over the penny sales tax known as LOST.

All but a handful of Georgia counties have one.

It offsets property taxes and goes directly into county and municipal budgets.

Every ten years, county and municipal officials have to re-negotiate who gets how much LOST based on new Census data.

Savannah Mayor Edna Jackson says, the city could lose millions of dollars if Chatham County officials don't yield their current position.

"When you look at the formula, it shows that all of the municipalities will suffer," Jackson says. "And I believe some of them will end up with nothing at all."

County officials counter that unincorporated residents need more money for services.

They argue that residents who don't live in any municipality get a raw deal out of the current LOST distribution.

Jackson says, the city holds the better hand in that deal.

"People come into our city to work," Jackson says. "They're using the highways. They're using everything that we have to offer. So, the services are here and they are being utilized by a lot of people. And for us to receive tremendous cuts would definitely affect our financial standing."

Officials have 60 days to work things out.

Amy Henderson of the Georgia Municipal Association says, most of them will.

"It varies from place to place how smoothly it goes," Henderson says. "Most cities and counties are going through this right now."

LOST negotiations in Valdosta's Lowndes County have broken down and could go to court.

If officials statewide don't work out terms in 60 days, mediators and judges could step into the process.

LOST differs from SPLOST, Special Purpose Local Option Sales Tax, which is a penny sales tax that funds specific projects approved by voters in a county-wide referendum.

And it differs from E-SPLOST and T-SPLOST, which are similar to SPLOST and are two other penny sales taxes that fund education and transportation capital improvement projects, respectively.