The Ga. Dept. of Revenue (DOR) is reviewing an Oct. 7 decision by the Ga. Supreme Court that determined the portion of the Local Option Sales Tax (LOST) Act pertaining to a judicial resolution in a LOST distribution dispute between counties and municipalities to be unconstitutional. The ruling is not expected to affect ongoing local LOST collections. To be on the safe side, Fayette County and its municipalities are meeting this week to re-adopt the LOST distribution agreement reached in January.
Fayette County Administrator Steve Rapson on Tuesday said in the wake of the Supreme Court ruling both the Association of County Commissioners of Georgia and the Ga. Municipal Association suggested that cities and counties re-adopt their current LOST agreements. LOST negotiations are held after each census.
The court’s Oct. 7 ruling pertained to Turner County vs. City of Ashburn. In that case, the county and city did as others, including Fayette, have done and exercised the portion of the LOST distribution allocation process that sends the dispute to superior court.
“The parties to this appeal, and the various entities that have filed [friend of the court] briefs, show that problems have arisen when the governing entities cannot agree to changes in the distribution formula for purposes of renewing the certificate,” the ruling said.
The Oct. 7 ruling noted that the eligible political subdivisions are required to commence negotiations no later than July in the year the tax will expire and to submit to arbitration if a dispute arises. The General Assembly amended the law in 2010 to read that, in the event of an impasse, a county and municipalities can take the matter before a superior court judge.
In the Turner County vs. City of Ashburn case, the county and cities followed the procedure. The Supreme Court, however, maintained that the procedure for judicial resolution violates the separation of powers doctrine in the Georgia Constitution and declared that portion of the statute to be void.
“It follows that the issue of whether an existing tax should be renewed or permitted to expire is a legislative issue that is properly left solely to the discretion of the elected legislative body. To the extent the 2010 amendment to the LOST Act permits judicial resolution of the issue of whether LOST should be renewed and the governing bodies of the special district should be required to levy and collect the tax, the amendment violates the separation of powers doctrine of the Constitution,” the ruling said.
“In summary, such a determination is a political one, not one that may properly be made by a judicial officer. Due to the unique nature of the joint taxing authority of the political subdivisions within the LOST special district, at least as currently drafted, this determination must be a joint one. In any event, it may not be delegated to a judicial officer,” the court said.
The court noted that it was not invalidating a tax or striking the long-standing LOST Act. The court’s decision affects only the 2010 amendment, ruling it unconstitutional and void.
Meantime, DOR Communications Director Nick Genesi on Oct. 10 said the department is studying the decision and, for the time being, will continue to handle local option sales and use tax collection and distributions in accordance with current legislative statutes.
