Sunday, March 15, 2009

Tuesday Vote Decides Future of Oconee SPLOST Tax

Arguments For and Against

If the past is a predictor, fewer than 2,000 Oconee County voters will go to the polls on Tuesday and join the 398 who already voted in deciding if the county should lower its sales taxes by 1 cent on the dollar or continue the tax at its current rate.

By the end of the day on Friday, only 370 of the 22,090 registered voters in the county had cast their ballots in early voting, which started on Feb. 13 and ended Friday, and another 28 had returned absentee ballots, according to Mary Lane from the county Board of Elections.

In November of 2003, when the county approved the current SPLOST, only 10.2 percent of the 16,695 registered voters cast a ballot.

If that same ratio holds this time around, only another 1,846 voters should go to the polls on Tuesday.

Of course, no one really knows what effects of the month of early voting and the current economic crisis will have on voter turnout.

No group or individuals have come forward to oppose the Special Purpose Local Option Sales Tax, and county leaders and the county’s business community have run a subdued pro-tax campaign.

The county itself is forbidden by law from spending money to promote the SPLOST renewal to be decided on Tuesday, but, the county can provide educational materials so long as they do not advocate for or against the vote.

The county has only three pages on its web site about the SPLOST. Two pages give essentially the same minimal information about how the county proposes to spend revenues from the new tax. On the third page, the Board of Elections lists the sample ballot.

The Chamber of Commerce, local business leaders or even the commissioners acting as individuals could advocate for the tax. All of the commissioners have been involved in the decision to seek the SPLOST extension and voted to put it on the ballot for citizen approval or disapproval.

The Athens Banner-Herald ran a letter to the editor from Oconee County Chamber of Commerce President Charles Grimes in its March 11 edition advocating passage of the SPLOST as "a cost-effective way of completing local projects for the benefit of our county."

Slightly longer versions of Grimes’ letter appear in the March 12 editions of the The Oconee Enterprise and The Oconee Leader.

The Chamber also placed display advertisements of three columns by four or five inches deep in each of the three papers. The theme of the advertisements is that "SPLOST Works" and is endorsed by the Chamber.

Board of Commissioners Chairman Melvin Davis also has used three of his recent columns in The Oconee Enterprise, including the one this past week, to argue for passage of the SPLOST tax vote on Tuesday.

County voters first approved SPLOST taxes in 1985, after the Georgia General Assembly authorized the tax that year, and they have approved renewal taxes in 1987, 1991, 1995, 1999, and 2003.

The state collects a sales tax of 4 cents on the dollar. Local governments can impose another 1 cent tax, called a Local Option Sales Tax. Counties also can impose a SPLOST as well as an Educational SPLOST, but these must be approved by voters and then periodically renewed. Without that renewal, the SPLOSTs expire.

Oconee County has in place a LOST, an educational SPLOST, and the expiring SPLOST, producing a 7 percent sales tax.

So what are the arguments for and against the SPLOST on the ballot on Tuesday?

The legislature approved SPLOST as a way of holding down property taxes, according to a "Special Purpose Local Option Sales Tax, A Guide for Public Officials," produced by Association County Commissioners of Georgia.

The legislation allows county commissioners to identify special capital outlay projects that they feel the county needs and ask voters to pay for them via a sales tax, rather than property taxes. Capital outlay projects are permanent, such as land acquisition and the building of structures. Specifically allowed is road, street and bridge construction.

SPLOST is collected on items subject to the state sales and use tax within the county, including the sale of motor fuels. The SPLOST also is collected on the sale of food and beverages, which are exempted from the state sales tax.

Grimes argued in his letters that SPLOST will provide Oconee County with the money it needs to fund projects so it can "remain great."

Over the years, Oconee indeed has funded a large number of projects through SPLOST. These monies have been used for Heritage Park on U.S. 441 in the south of the county, for the Civic Center on Hog Mountain Road, for courthouse expansion and renovation, for fire stations, and for library expansion. SPLOST has funded road, water and sewage projects.

SPLOST also has helped with two jail expansions and with the huge new Veterans Memorial Park still under construction on Hog Mountain Road.

If Oconee County had gone forward with the various projects it has funded by SPLOST without SPLOST, property taxes certainly would have gone up to pay for them.

SPLOST, nonetheless, has downsides.

First, SPLOST cannot be used for maintenance and operation, meaning that facilities built by SPLOST funds have to be maintained and staffed with funds from other sources, such as property taxes.

The new Veterans Memorial Park illustrates this clearly. It is a very large and very attractive facility with a recreation center, a senior center, a large number of playing fields, tennis courts and paved walking paths, all of which have to be staffed and maintained now that they are built.

The county jail is another example. The jail is larger than required by current needs, and much of it remains unused, though it must be maintained.

Both the park and the jail illustrate a second issue with SPLOST funding. Though a particular SPLOST must be for a specific project, spending in one SPLOST cycle can have impact on SPLOST spending in the future. This makes it hard for voters to ever bring the SPLOST tax to an end.

In 2002, Oconee County voters approved a $12 million general obligation bond to purchase 196 acres across from the existing Herman C. Michael Park for what is now the Veterans Memorial Park. The current SPLOST is being used to retire the bonds, which otherwise would have been paid off through property tax revenues.

The 2004 SPLOST also set aside money for improvements to the park itself. The SPLOST on the ballot on Tuesday continues this pattern by paying $4.8 million against the debt for the park.

In the 1999 SPLOST, the county included $1.5 million for jail expansion. In the 2004 SPLOST voters approved spending $1.3 million more for the jail expansion. And the SPLOST vote on Tuesday earmarks $6 million for paying down the debt on the jail.

Voters are not obligated to continue the use of SPLOST funds for the park or the jail projects, but if they do not, the costs will have to be covered by others sources, such as increases in property taxes.

The current controversy regarding the future of the county courthouse is another example. The current 2004 SPLOST contains $4.6 million for "county facilities." As of Dec. 31, 2008, $4.2 of that amount had not been allocated.

The county clearly wants to get the proposed SPLOST approved before it announces how it plans to deal with proposals that it move at least some of the courthouse activities from the current site.

Regardless of what is done with the $4.2 million, it is not likely to be enough money to cover all future costs of land acquisition and construction for new facilities. While the SPLOST on the ballot on Tuesday does not include money for this project, more money is going to have to be found in the future for renovation or expansion.

Chairman Davis acknowledged in his column in The Enterprise on March 5 that he expects the County to ask voters in 2015 to approve a SPLOST with funds for that project.

The county does have some leeway on SPLOST spending. It must specify projects when the tax is put to the voters, but it can move some money around under some circumstances, and it can generate extra revenue by investing the money collected but not spent, as the county has done with this past SPLOST.

The ACCG interprets current case law as allowing the transfer of funds from one project to another provided all the projects listed in the approved SPLOST are completed, it reports in its Guide. If the SPLOST language says the county is simply going to spend a certain amount of money on roads or recreation projects, however, the county must show it spent that amount of money.

The county does have to give voters a report each year on how it has spent SPLOST funds. It did that on Dec. 18. On Jan. 26, Finance Director Jeff Benko gave a report to the BOC on spending through Dec. 31, 2008. I obtained a copy via an open records request.

I also suggested at the Oct. 21 public meeting on the proposed SPLOST that the county produce as part of the SPLOST campaign a complete statement about what has been accomplished with the 2004 SPLOST as a way of helping voters see the value of the program.

The county has not produced any report other than the legally required one. Such a report, of course, would focus attention on fact that the Board of Commissioners has not yet decided how to spend $6.7 million from the current SPLOST, including the $4.2 million for "county facilities."

This is yet another problem with SPLOST. The categories of funding approved by Oconee County voters have very general titles, giving the government officials a lot of leeway in what actually is done with the funds on hand.

In December of 2008, commissioners found $400,000 in unspent SPLOST funds in the account of the Public Works Department and directed it toward widening of Daniells Bridge Road after residents—myself included—complained that a proposed rezone just east of the blind curve on the road was unsafe.

Public Works Director Emil Beshara acknowledged at the time that the better fix to the problem was to straighten the road, since the widening will not eliminate the blind curve itself. The commissioners opted for what they saw as a short–term "fix" using SPLOST funds so they could approve the rezone.

The money certainly was consistent with the "roads and bridges" category approved by voters in 2003, but it is another question whether voters would have approved spending $400,000 for the widening of a roadway for a rezone request opposed by nearby residents but favored by single developer.

Another problem with SPLOST is that it encourages county leaders to create projects that can be funded by SPLOST, rather than call for SPLOST votes when the county has a special need.

In fact, it is hard to argue that the SPLOST on the ballot on Tuesday is responding to a special need identified by citizens of the county.

According to the ACCG Guide, the county should seek broad citizen input before it makes a decision to put a SPLOST on the ballot.

"A very important aspect of any capital improvements planning process is the involvement of citizens in all phases of CIP development," according to the ACCG guidelines.

Oconee County held two sessions for citizen input before it allocated funding for SPLOST projects on the ballot on Tuesday, but these were held long after county officials had made a decision to seek renewal of the SPLOST. That decision was discussed at least as early as December of 2007, when the Board of Commissioners held a secret meeting in Madison.

The public hearings were held at the Civic Center on Oct. 21 and Nov. 3 of 2008.

Before citizens were given a chance to speak at the Oct. 21 meeting, county department heads and officials gave presentations of their proposed projects, complete with handouts and PowerPoints. The presentations were coordinated by Wayne Provost, director of the county’s Strategic and Long-range Planning Department.

Citizens were then given a chance to offer suggestions, and Russ Page, a long-time advocate for historic and farmland preservation in the county, teamed with Tony Glenn, also involved in preservation issues in south Oconee County, to give their own PowerPoint presentation.

Page and Glenn asked that $1 million be included in the SPLOST for farmland protection and $1 million be included for historic and scenic site protection.

Four other citizens also spoke, with the common theme being recreation.

At the Nov. 3 meeting, representatives of those making county-sanctioned requests were at the front of the room, and a single summary of their requests was made by the county. Page and Glenn were not included, but their earlier presentation was shortened and incorporated into the presentation.

At a special meeting on Nov. 20, held in the small grand jury room of the courthouse, the Commissioners divvied up the expected $40 million from the proposed SPLOST.

Most of the department heads got what they asked for. The Board set aside only $500,000 for farmland protection, and gave some unspecified amount to the Parks and Recreation Department to use for historic and scenic site protection.

The estimate of $40 million intake from SPLOST, if approved on Tuesday, is likely to be greatly off, given the current rate of tax intake from the existing SPLOST. The county is required to offer some estimate of revenue from the proposed SPLOST, but it has never indicated how it arrived at the $40 million figure.

In fact, the county must collect $40.4 million to have $40 million to spend, as it must pay the Georgia Department of Revenue 1 percent of intake for collecting the tax. The $40.4 million figure is what voters will see on the ballot when they vote for or against the SPLOST.

That ballot does not list amounts of money for any of the projects, but the resolution passed by the BOC on Dec. 16 lists both percentages and estimated amounts, based on the $40 million figure.

The resolution says the money received will be divided based on this allocation scheme, meaning that all categories will be scaled back at the same ratio should the county not receive the full $40.4 million.

One argument that Board of Commissioners Chairman Davis has advanced for approval of the SPLOST initiative before the voters is that at least some of the tax will be paid by people who don’t live in the county.

Davis wrote in the Feb. 19 issue of The Enterprise that his "conservative estimate"is that 50 percent of the tax will be paid by people from outside the county.

The state does not release data to the county even on how much of the local tax comes from a particular retailer, let alone on how much of it comes from people outside the county.

Davis said his "conservative estimate" is not based on a sample–but not a scientific one–of the licenses of cars in at "major establishments on Epps Bridge Parkway."

Conducting a scientific sampling of the licenses of automobiles at retail outlets in Oconee County would be quite a complex undertaking. Another problem is that automobiles do not make purchases. The people who drive them do that.

Predicting the level of spending from the license plate requires an understanding of consumer behavior that Davis isn’t likely to have.

Grimes, in his two letters to the weekly papers last week, also said that much of the SPLOST revenues come from people who live outside the county, but he estimated the figure at 40 percent. He gave no basis for the estimate.

A strong argument, but one not made by Davis or Grimes, is that Oconee Countians pay the SPLOST tax in retail outlets in Clarke, Barrow and Walton counties when Oconee Countians shop there, so it is only fair that residents of these counties pay a similar tax when they shop in Oconee County.

Another argument in favor of the proposed $40.4 million SPLOST on the ballot Tuesday is that most of the revenue will go toward projects that require the county to add little additional money for maintenance and operation.

Preservation of historic and scenic sites may be the exception, but it is not clear how much money is going to be used for that purpose anyway.

Another argument in favor of the current SPLOST is that it involves the four cities in the county as recipient of SPLOST funds directly.

Streets, roads and bridges make up about $11.4 million, or more than a quarter, of the total amount of the SPLOST on the ballot on Tuesday, if the projects of the county and the four cities are combined. (Bogart combines streets and sewers in its single project of $1.6 million, making it impossible to calculate the figure precisely.)

Perhaps the most convincing argument in favor of the SPLOST is that the projects covered are basics, and the county is going to have to have them even if SPLOST is not passed. By passing SPLOST, Oconee Counties are paying for some projects through sales taxes that would otherwise have to be paid for by other sources, such as property taxes.

That argument, how strongly one feels about farmland protection and how strongly one feels about historical and scenic site preservation are probably key for many voters.

Of course, if the past is a predictor, most people in the county will not care enough to even vote on Tuesday. It seems it is easier to complain about taxes and tax policy that it is to do something about them.


I’ve written six blogs on SPLOST in addition to this one. They were on Oct. 17, Nov. 18, Dec. 21, Feb. 4, Feb. 8 and March 4.

In addition, I’ve put five different videos of key SPLOST discussions on my Vimeo site.

Wendell Dawson has written a number of helpful reports on SPLOST in recent weeks as well. The are at his web site.

1 comment:

Mark Fennell said...

Question: Could SPLOST pay for a new county website? Perhaps one that is more informative and useful?