The Habersham County Commission discussed the possibility of bringing a Local Option Sales Tax (LOST) to the voters as early as Spring 2025. A LOST referendum would ask the Habersham County voters for an additional 1 cent sales tax, increasing the current rate from 7 to 8 cents.
The possibility of such a vote has a hurdle to clear first.
That hurdle is OCGA 48-8-6, a state law that State Representative Victor Anderson (R-Cornelia) has introduced legislation this week at the state capital to amend. The law states that “there shall not be imposed in any jurisdiction in this state local option sales tax in excess of 2 cents.”
Currently, Habersham is at its 2-cent cap with the Special Lost Option Sales Tax (SPLOST) and Education Local Option Sales Tax (ELOST). The amendment proposed by Rep. Anderson would exempt ELOST from county jurisdiction, paving the way for an additional penny on the dollar tax.
The amendment would not eliminate the ELOST tax that the Habersham County Board of Education currently collects. If voters approved LOST, it would be in addition to SPLOST and ELOST.
The law would apply to every county in Georgia, opening up the possibility that more counties could expand their local option sales tax revenues if voters approve.
Will it impact schools?
There’s been talk lately in local political circles about the need for the county to take back LOST from the county board of education. According to Habersham County Manager Alicia Vaughn, the county never held a referendum to impose a LOST tax and, therefore, never gave away that taxing authority to the schools.
She says a countywide LOST would provide tax relief for all types of properties. It would transfer a portion of the tax burden to non-residents who visit and shop in Habersham County. The revenue collected would be shared among the county’s seven municipalities. Revenue collected would have to be used to roll back the property tax millage rate.
It is estimated that the LOST tax would generate nearly $10 million in annual revenue for Habersham County. The question is, would it really offset property taxes?
While LOST must be used for millage rate rollbacks, nothing in the law prevents county commissioners from increasing budgets so that, in effect, property owners still end up paying more.
Vaughn says she and county attorney Donnie Hunt approached Rep. Anderson about the law and asked for his help lifting the LOST cap.
Distribution formula
At the commission’s winter retreat Friday, Vaughn told county commissioners that if the amendment passed, there would be further challenges. The county and cities would have to negotiate how the LOST tax would be distributed, using any number of eight potential criteria, including things such as population and contributions to the county tax digest.
Beyond that, more than half of the cities’ total populations would have to agree to the distribution, meaning that at least three of the largest cities would have to be onboard.
Once the different parties develop and approve a distribution formula, then the county could call for a countywide LOST referendum.
The city property owners potentially could see the largest benefit from the LOST tax. Their property taxes would be rolled back on county taxes and on their city taxes. Hunt told commissioners at the retreat the city of Lula has not had a city tax in years due to the LOST tax they collect from both Banks and Hall counties.
If LOST makes it to a referendum and voters approve, then the county could start collecting the tax within 120 days. The county would collect the tax for one full calendar year before providing the mandatory rollback. This full year of collections would give local leaders hard numbers to go by when implementing the rollback.
If the referendum fails, the county would have to wait 24 months before holding another referendum on it.
4 of 5 commissioners support the idea
If lawmakers amend the state law this year, Vaughn says Habersham County could hold a LOST referendum next spring.
Only Jimmy Tench, one of Habersham’s five sitting commissioners, openly opposed the idea. He says he’s an absolute “no” when it comes to adding an additional one-cent sales tax in the county.
Commissioner Bruce Harkness says he thinks it’s “an absolutely great idea.”
“I have never voted to increase anybody’s property taxes, but I may be in favor of a 1% sales tax increase,” Harkness told Now Habersham after the retreat.
He says the sales tax would “spread the cost of doing business here in the county.”
“In some instances, we’ve been given information; a lot of people’s property taxes might even be cut in half if this thing were to be passed. ” However, Harkness clarified such figures are preliminary.
Commissioner Dustin Mealor says LOST “should have a pretty good impact on the citizens” because it would pay for a millage rate rollback. “You’re transferring some of that tax burden to outsiders, and that helps the citizens and the property owners of the county.”
No new taxes
Habersham County voters have openly expressed their disdain for new taxes. In 2022, they defeated, for a second time, a T-SPLOST referendum meant to pay for roads, bridges, and airport infrastructure. Many have voiced their ongoing concern about rising property values and opposition to millage rate increases that magnified the impact of those rising values on their tax bills.
The county is using money from its general fund and SPLOST to pay for road and bridge repairs. Commissioner Dustin Mealor says he hopes that with SPLOST and LOST the county could maintain roads more efficiently.
Commission Chair Ty Akins is also a proponent of the LOST tax.
“I think as a property owner, it seems to me, a lot fairer way to collect taxes and to take the burden off of solely property owners that basically fund the general fund.”
Akins says the cities would benefit from LOST to the point that they potentially could have more revenue and no millage rate in their city.
“This seems like a win to me,” he says.
As for raising the local sales tax from 7 to 8 cents, Akins says, “If I was paying less on my property but paying 8% in sales tax and it was spread evenly amongst everybody, I would be OK with that.”
