Leaders of Chatham County Government and those of Chatham’s eight municipalities negotiate shares of the Local Options Sales Tax, also known as LOST. The tax is a 1% levy paid on most goods and services purchased in the county.

LOST is commonly referred to as the “fifth penny” in the seven cents charged on every dollar spent. LOST revenue is the only sales tax revenue that goes directly to municipalities for general use. Of the remaining six cents from the tax, four go to the state, one to the county to be spent on designated capital improvement projects (SPLOST), and one to the Savannah-Chatham Public School System for upgrades ( ESPLOST).

Here’s what you need to know about LOST and negotiations.

Learn more about taxes:Savannah Council Approves List of TSPLOST Projects, with Nod to Countywide CAT Expansion

Also:Despite residents’ concerns, Savannah-Chatham County schools pass $775 million budget

What about the calendar? Why now?

The LOST agreement is valid for 10 years and expires at the end of the year following the publication of the US decennial census – December 31, 2022, in this case. The expiration date is intended to force local governments to adjust product shares based on demographic changes as reflected in the census.

How much money are they trading?

LOST 2023-2032 is expected to generate nearly $1 billion over the next 10 years. Stakeholders are working to agree on a percentage split between the Chatham government and the municipal government. At this stage, the negotiators are concentrating on the departmental share and the cumulative share of the municipalities. Once this agreement is reached, the municipalities work together to distribute their share.

Under the current LOST, Chatham County received 23% of LOST revenues while the municipalities shared 77%. The City of Savannah is the largest municipal recipient at 57%, followed by Pooler at 8.8%.

What are the money distribution parameters?

Georgian law lists eight criteria to guide the determination of LOST shares, with a focus on the government entities responsible for providing the services. By law, Chatham County is solely responsible for providing 31 different services, such as the county jail and most of the county court system.

Other criteria include the outlet that generates LOST proceeds, the effect of LOST funds on public debt, and any existing intergovernmental agreements.

What is the impact of LOST on taxpayers?

LOST is a sales tax on goods and services purchased in Chatham County, which means it is paid by residents and visitors. As the center of a metropolitan area and a popular tourist destination, a significant amount of LOST pennies come from consumers who live outside the county. Accounting professionals say up to 40% of LOST funds are paid by out-of-county residents.

Since LOST funds can be used at the discretion of county and municipal governments, the proceeds help reduce property taxes. Savannah’s current share brings in about $55 million a year on a budget of nearly $480 million. Small towns in Chatham are more dependent on LOST – for example, Bloomingdale’s and Vernonburg do not levy property taxes on their residents, funding all of their government operations through LOST and other revenue sources.

What happens now? What happens next?

Stakeholders gathered for the third round of negotiations on Tuesday, with Chatham County Commission Chairman Chester Ellis presenting a proposal and the municipalities, represented by Savannah City Manager Jay Melder and Director of the Town of Pooler, Robert Byrd, offering a counter-proposal. The two parties remain distant, with the county asking for a 50% share and the municipalities proposing the county only receiving 14%.

No future trading sessions are planned. Tuesday’s meeting ended with Ellis telling city officials the county would be in touch to mediate.

By law, negotiations must conclude within 60 days of July 1 or August 30. If no agreement is reached, the parties enter into a mediation or arbitration phase, also limited to 60 days. Agreements reached through mediation or arbitration are not binding. If an agreement is not signed by all parties by December 30, 2022, the LOST expires and collections will cease on January 1, 2023.

What happens if no deal is made and LOST expires?

Property taxes will go up. Savannah city officials’ plan to lose LOST would force a 75% increase in mileage from just over 12 mills to 21 mills. For context, a property with a assessed value of $150,000 would see a tax bill increase of $600; a $300,000 property would require an additional $1,200; a $500,000 property by $2,000.

Chatham property taxes would also rise, by around 1.5 mills, meaning ratepayers would see two increases. Using the same assessments as above, the county maintenance and operation tax on a $150,000 property would increase by $90; a $300,000 property by $180; and a $500,000 property by $300.

Can’t a third party, like a judge, decide the distribution to avoid expiration?

Not anymore. The last time LOST was negotiated, the parties failed to reach an agreement and took the matter to Superior Court. A judge heard arguments from both sides and was expected to rule, but the county and municipalities reached a compromise in the 11th hour.

A U.S. Supreme Court ruling handed down in the decade since the last LOST agreement states that legal action to settle legislative disputes is non-binding, ending the practice of ‘baseball arbitration’ by the courts in tax matters between government entities.

What else do you need to know?

Chatham County has not issued a public notice of the bargaining sessions, and Tuesday’s meeting was the first attended by residents not employed by Chatham or city governments. Three reporters representing two outlets learned about the meeting from sources and showed up at the ballroom at the Savannah Civic Center to attend the meeting.

Invitations to the sessions included instructions on the number of elected bargaining teams. If half or more of a municipality’s legislative body—a quorum—planned to attend the gatherings, a representative from that city was to notify the county and other municipalities so that all could notify the public of the meeting, pursuant to the Georgia Open Meetings Act.

This has led to stakeholders limiting their negotiating teams so that the session does not fall under the notice provisions of Georgia’s Open Meetings Act, which states that a meeting is “the meeting of a quorum of the members of the governing body of an agency at which any official the affairs, policy or public affairs of the agency are formulated, presented, discussed or voted on. »

The law further states that the following does not constitute a meeting: “The gathering of a quorum of the members of a governing body or committee for the purpose of attending company-wide meetings state, multijurisdictional, or regional to participate in seminars or training courses on matters related to the subject matter of the agency or to receive or discuss information on matters relating to the subject matter of the agency on which no official action should be taken by members.

Based on this interpretation of the definitions of quorum and meeting, more than two dozen officials from Chatham’s nine governmental jurisdictions – elected and unelected – can meet to negotiate outside the public eye, so long as no official action is no business.