The Great Money Grab
As Fulton County negotiates a new sales tax distribution with municipalities, ever present philosophical differences are increasing.
By Tripp Liles
The dysfunctional relationship between Fulton County and its municipalities is growing larger every day. There is the ever-present north/south divide and the drive for greater local control of revenue and services that is slowly acting as a destructive force.
At present, the county is negotiating with municipalities over the division of sales tax revenue. This agreement is negotiated every decade, and amongst the various participants there seems to be little consensus. For the City of Roswell, there are roughly $19 million at stake, which represents 16% of the city’s budget.
The current agreement allocates 15% of all local option sales tax revenues to the county off of the top. The remaining funds are then distributed to municipalities based on their population. For the City of Roswell, that is an attractive scenario – people live here. However, with the economy in a poor state, some entities are looking to grab a bigger piece of the pie. Fulton County wants a greater overall percentage, and the City of Atlanta wants revenue to be allocated by the point of sale, not population. That scenario is not good for Roswell – people far to often shop elsewhere. This also has the potential to be a divisive issue between neighbors. Alpharetta, for instance, would benefit from a point of sale distribution due to its substantially larger retail base.
Overall this divide highlights the growing issue of just how meaningful the Fulton County issue is to the residents of the northern part of the county. Over the past decade, municipalities have been formed, such as Sandy Springs, Johns Creek and Milton, in an effort to provide citizens a local voice they felt was not being heard by living in unincorporated areas of the county.
As these municipalities have been born, however, the size of the county government has not shrunk proportionately. That is the driving issue, which touches so many different areas. Why keep providing the same amount of money to the county when its size should be decreasing? It also highlights the fundamental argument of large versus small government. Perhaps the issue shouldn’t be large versus small, but effective versus ineffective.
“Fulton County has traditionally maintained a strong financial standing. But we are placing our financial health in jeopardy if we don’t make some serious changes in our financial management,” said Commissioner Robb Pitts in a recent press release on the county’s fiscal position. “We are facing a crisis – possibly as soon as 2013, and certainly by 2014 – unless we radically cut our expenses. We can’t continue to balance our budget with smoke and mirrors.”
The Roswell Ace?
The division of funds and those negotiations could be decided by Fulton County and the City of Atlanta with little additional input. Because they are the two largest entities, based on population, they have the most power. However, the City of Roswell has a potential ace up its sleeve.
According to Roswell Mayor Jere Wood, if a municipality is absent, meaning it does not sign off on the agreement, then the default position for that municipality’s share is based on population.
“It says (the law) that if you do not sign the agreement, then you get your population share,” Wood said.
This issue has caught many by surprise (although it shouldn’t have), and legal teams are scrambling for answers. Wood has documentation dating back to 2000, in which he pointed out the loophole to the city’s attorneys.
“We are trying to get a consensus from the city’s attorneys and take that to the state attorney general to get him to confirm that, but I tell you that’s what it says,” Wood continued. “I’ve got cities going into negotiations involving $100 million of sales tax, and I’m not sure they understand the rules of the game.”
If in fact the Roswell position is correct, then the default position would have to be a population-based distribution. But according to Wood, the larger issue is not the type of division, but how much Fulton County is taking off of the top.
“What’s really important for Roswell and Milton and Alpharetta, is not what the formula is between the cities, it’s the split between the cities and the county. The bigger the cities’ pie is, the better we do,” Wood summarized.
According to Wood, if the cities are successful in gaining the upper hand, then there will be greater pressure on Fulton County to reduce its size. All of this is kind of an end run around moving away from Fulton County and reducing its scope. According to Wood, he has long advocated for the formation of municipalities as an effective strategy for diminishing the influence of Fulton County. If the municipalities of Fulton provide a unified front in dealing with the county, they can be more forceful and have a stronger hand to play.
To date, the state legislature has not seriously addressed the Milton County debate. According to many who have been involved in this issue for years, there is not a lot of faith that even a Republican controlled legislature has the will to push this through. State Senator John Albers (R), of Georgia District 56, is suggesting otherwise.
“We are working diligently on Milton County,” Albers stated. “The first steps will happen next year when we (GOP) have the majority control over the Fulton County delegation, allowing us to radically reform Fulton and pave the way for Milton.”
The waiting game continues.
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