Updated history of Fayette’s sales taxes

Claude Paquin's picture

It was four years ago that I provided, in these pages, a history of our Fayette sales tax.

There have been interesting developments since then, such as a renewed and heightened interest in taxation by some of our citizens styling themselves as the Tea Party.

We have also had a few more tax votes such as on the recent regional T-SPLOST, on July 31, which was defeated two-to-one in the Atlanta region that includes Fayette.

It is also worth noting that we now have public officials, in our Fayette school and county governance, who have not been with us long and may be unaware of important aspects of our tax history.

People come and go, but our history remains, evolves, and influences what may come next.

The first sales tax in Georgia, and thus in Fayette, was imposed in 1951, with a rate of 3 percent. Think of how brave, or desperate for revenue, our legislators had to be when they did that.

It seems the state survived nicely enough on that rate until 1989. Budget difficulties not unlike those we have been seeing in recent years motivated the legislature to raise the statewide sales tax to 4 percent on April 1, 1989.

Notice, by the way, how taxes go up in odd years, right after elections in the fall of even years.

Four percent is what the statewide sales tax rate has been ever since, though an exemption for groceries was carved out along the way (in 1996, and only for the state portion of the total sales tax).

In 1989 some Georgians were already paying an extra 1 percent in sales tax to support the Metropolitan Atlanta Rapid Transit Authority, or MARTA.

When MARTA was established, in 1971, the residents of Fulton and DeKalb counties voted to tax themselves an extra 1 percent for seven years, with the tax to drop to one-half percent afterwards, in exchange for much improved bus service, the construction of a rail and subway system, and a fare of 15¢ until the subway was ready.

I remember riding the bus for 15¢. I also remember the one day when the bus broke down and I hitchhiked my way to my destination with a good Samaritan’s help. (No refund on my 15¢, LOL.)

When the rail system became ready to roll, fares went up to a normal level, but the Georgia legislature had by then modified the law so as to keep the MARTA sales tax at 1 percent.

The Fulton and DeKalb citizens never got to vote on that. They still pay the 1 percent MARTA tax today, 40 years later. They can expect to pay it almost indefinitely, because as MARTA could not issue bonds without a guaranteed source of revenue for the entire duration of the bonds the legislature extended the 1 percent tax until 2047.

Note that when the statewide sales tax was raised to 4 percent in 1989, the Georgia legislature stated that part of the tax increase was intended to provide property tax relief. That same justification has been offered over and over, and it is still offered by sales tax proponents to this day.

In 1975, the legislature adopted the Local Option Sales Tax Act, giving each county in Georgia the authority to adopt a 1 percent sales tax (called LOST) so long as there is agreement between the county and the cities in the county on how to split the tax. The purpose of the tax was, you guessed it, property tax relief. In 1980, the law was amended to require one-time voter approval in all counties that had not yet imposed the tax.

By a vote of 1,684 to 1,026, in a special election held on May 26, 1981, when its population was 30,000, Fayette County adopted this tax, with collections starting on Oct. 1, thus making the basic tax in Fayette County 4 percent, until the 1989 statewide increase when the sales tax in Fayette rose to 5 percent.

The Georgia Department of Revenue lists only Cherokee, Cobb, DeKalb, Gwinnett and Rockdale as counties that have not adopted this LOST tax.

An opportunity to get rid of this tax comes every 10 years, as the cities and county must renegotiate their splitting formula after the federal decennial census. If they can’t agree, the tax goes away. After some political huffing and puffing, in the end they always agree, and the citizens have no say. This tax, too, can be considered indefinite.

You may note, by the way, that our LOST negotiations are taking place right now and must be satisfactorily concluded by the end of 2012. Perhaps we’ll hear more about them. It is doubtful the county commissioners who live in cities fight hard for the residents of the unincorporated area.

After LOST came an extra law to authorize the Special Purpose Local Option Sales Tax, or SPLOST, in 1985. A countywide tax requiring voter approval, this tax was designed for special projects, with its application limited to five years (and then later to six years).

In the November 1992 election, Fayette County tried one of these to raise $4 million for a new county library. The voters took the bait. In April 1993 the county sales tax went to 6 percent for nine months, and then reverted to 5 percent.

It was not until 1996 that the legislature allowed county school boards to raise money for schools through a SPLOST, now called E-SPLOST. That allowed counties to have two SPLOST projects going at the same time, one for the county and one for the schools, plus the LOST, making the potential sales tax as high as 7 percent.

Fayette County’s sales tax was then 5 percent. But it didn’t take long for neighboring counties to get to 7 percent, perhaps making the residents of these counties envious of Fayette residents, especially as Fayette people bought cars at out-of-county dealerships.

While Georgia’s sales tax applies at the place of purchase, there is an exception for cars, where the owner’s residence determines the tax rate. Thus a Fayette buyer at a Clayton car dealership could get a $25,000 car for $500 less than a Clayton County resident.

Fayette was experiencing rapid population growth at the time and its school officials were under pressure to replace unpopular school trailers with permanent school buildings.

Thus it didn’t take long for the Fayette school board to latch onto the idea of using the new law to pay for new schools, in spite of the obvious delay in collecting the tax money. After the board arranged for a special election, scheduled for March 17, 1998, some residents wondered publicly, largely through The Citizen, why school bonds had not been proposed as a better solution.

This first school board SPLOST effort failed. As the law requires that 12 months pass before another SPLOST vote can be had, the school board had an opportunity to regroup.

After promising its bond business to investment banker A.G. Edwards, now merged out of existence, in exchange for that firm’s support of its SPLOST vote effort, the board scheduled another special election for Sept. 21, 1999, seeking to raise $90 million. But that failed again, with 5,580 yes, 6,015 no.

Eventually, after a change in school superintendent, the board scheduled a school bond vote with the general November 2000 election, and that easily passed (the business going to A.G. Edwards). Another school bond vote was later scheduled with the general November 2004 election, and that too passed.

All that left Fayette’s sales tax at 5 percent, until the voters approved raising their tax another 1 percent for five years, this time for road improvements allegedly designed to secure federal matching funds, in the Nov. 2, 2004 general election.

The vote was 26,155 to 24,876. The tax rate became 6 percent on April 1, 2005, and that tax had a scheduled expiration date of March 31, 2010.

Then in the fall general election of 2008 the school board got up the nerve to ask for a SPLOST one more time, for minor projects and to retire bonds early. This time it succeeded, by a vote of 28,948 to 27,731, causing the Fayette sales tax to go up to 7 percent on April 1, 2009.

If this was a strategic move to get ahead of a possible attempt to renew the road SPLOST due to expire on March 31, 2010, it worked.

To continue with more road projects (and also keep the 7 percent tax rate to which people were becoming accustomed from going down), the county commissioners needed an extension of their existing road SPLOST in the fall of 2009.

After hastily putting together a bunch of projects, they asked for six more years of SPLOST, piggy-backing upon the municipal elections in our cities but causing a special election in the unincorporated area.

On the night of Nov. 3, 2009, the 6-year SPLOST was beaten back by a vote of 2,853 in favor and 8,939 against.

That meant Fayette would revert back to paying a 6 percent sales tax after paying 7 percent for the April 1, 2009 to March 31, 2010 period. That’s where we are today, and how we got there.

The current school SPLOST is due to end on March 31, 2014. One can be sure that somebody somewhere is trying to think of a way to get it to continue through some special election in 2013.

Stay tuned. History will forever continue to be made.

[Claude Y. Paquin, a Fayette County resident, is now a retired actuary and lawyer who, in 1999, had the State Ethics Commission’s own attorney prosecute the school board before the commission for the board’s arrangement with A.G. Edwards, but as the hearing before the commission took place after the board had lost the election the commission decided to do nothing. It is illegal for the school board to spend public money in support of SPLOST votes.]

heatjam
heatjam's picture
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Joined: 07/29/2007
Year off

Claude- You were a year off of your prediction. ESPLOST is on the November,2012 ballot.