Many cities would feel the impact of losing more than $50,000 in sales tax revenue, but for a town the size of Resaca, it’s a staggering blow.
It could be a reality if Gordon County and the qualified municipalities of Fairmount and Calhoun adopt a proposed Local Option Sales Tax (LOST) agreement that calls for a reduction to Resaca’s share of the tax revenue from $135,000 per year to $84,000.
“It’s a lot of money,” Resaca mayor Samuel Allen said. “We have made a plea to the county and the city of Calhoun that we have a new sewer system in the works and we need the funds.”
The LOST funds are dispersed to Gordon County, Calhoun, Fairmount and Resaca based upon population numbers, based no prior, state-mandated negotiations.
LOST agreements are renewed every 10 years in accordance with changes in census figures.
Resaca’s population decreased during the last decade by roughly 200 people, Allen said. As a result, the town’s share of tax revenue would decrease under the new agreement.
Under the previous agreement, Resaca received 1.75 percent of the $8.4 million collected in total LOST revenue. The new agreement cuts that by .75 to the minimum one percent allowed by law.
Though the loss is significant, Allen said he does not expect it to bankrupt the town.
Town leaders will look for ways to offset the loss, he said, which could include enacting business licenses, trimming staff or — as a last resort — raising property taxes.
“When we got into the LOST program (in 2009), we were just glad to get in,” Allen said. “Don’t get me wrong, we want what’s coming to Resaca, but the county and Calhoun have really been good to us and we have worked together.”
Resaca Town Council members agreed unanimously on Thursday to approve a balanced budget for the fiscal year May 1, 2012-April 30, 2013 that does not take into consideration the $50,000 shortfall that the new LOST agreement would create.
Members said they would meet again to amend the budget if the new LOST agreement is accepted.
Included in the budget was $18,000 in abandoned money that had been tied up in the courts. The money could serve as some relief to the city if the LOST dollars are decreased. The budget called for $391,580 in total revenue, equal to the total amount of expenditures.
“We want to provide the same services for the people of Resaca that we have been providing,” said councilman Brant Talley. “We want to do it economically.”
Talley has championed the idea of adding business licenses to the revenue stream of Resaca and he expects them to be a reality before the first of the year.
“There are ways to make up what we would lose in LOST dollars,” he said.
Resaca is not alone in its objections to the proposed agreement. Fairmount is set to lose more than 47 percent of its LOST revenue due to a decreased population.
Under the proposed agreement, Gordon County would see a .35 percent increase in LOST revenue and Calhoun’s share would go up 2.35 percent, both reflecting increases in population in those areas.
In a meeting between the county and municipalities on Tuesday, July 24, negotiations stalled and Fairmount leaders indicated they would seek arbitration if no equitable agreement was reached.
The arbitration process involves submitting the complaint to the superior court which then assigns the petition to a judge from another circuit who ultimately makes a final ruling.
Allen and the Resaca council members present Thursday said they were unsure if the town planned to pursue arbitration.
State law requires that the county and qualified municipalities reach an agreement within 60 days of July 1, 2012 or submit to arbitration.