Supreme Court to hear Turner Co. tax case

 Information from the Supreme Court of Georgia-

In this dispute between the governments of Turner County and three cities over how Local Option Sales Tax (LOST) proceeds should be distributed, the county is appealing a superior court ruling which picked the cities' plan for distribution over the county's.

FACTS: Turner County and the cities of Ashburn, Rebecca and Sycamore, GA reached an impasse over how LOST proceeds should be divided. A Georgia statute (Official Code of Georgia § 48-8-89) sets down how joint county and municipal sales and use taxes should be distributed. If the county and municipalities disagree and fail to reach an agreement within 60 days of submitting the dispute to nonbinding arbitration or mediation, the statute, as amended by the legislature in 2010, states that "any of such parties may file a petition in superior court of the county seeking resolution of the items remaining in dispute.

Such petition shall be assigned to a judge…who is not a judge in the circuit in which the county is located." Under the statute, once the petition has been filed, the county and municipalities are required to submit to the judge "a written best and final offer specifying the distribution of the tax proceeds. There shall be one such offer from the county and one such offer from qualified municipalities," the amended statute says. The judge is authorized to then pick one of the offers.

Following the impasse, the three cities filed a petition in Turner County Superior Court. The county did not file a petition but instead filed a motion to dismiss the action, arguing the statute was unconstitutional on several grounds, including that it violated the separation of powers. A judge from another circuit was assigned to the proceeding, and following a hearing, he entered two orders: one that denied the county's motion to dismiss the case and upheld the constitutionality of the amended statute, and the second which adopted the cities' plan as the "best and final offer," versus the county's plan, for distribution of the LOST proceeds.

While the county hoped to maintain the current allocation of the proceeds, the judge's ruling in December 2012 reduced its allocation of the tax proceeds from 65 percent to 50 percent. The county now appeals to the state Supreme Court.

ARGUMENTS: Attorneys for the county argue the superior court erred in denying the motion to dismiss the case because the "2010 amendment violates the separation of powers clause of the Georgia Constitution by conferring upon the judicial branch the legislative function of determining the benefit of the tax."

The statute unconstitutionally "confers upon the judicial branch 'the legislative discretion' of allocating the proceeds of the tax between (a) the county for the benefit of all county property taxpayers and (b) the cities for the sole benefit of city property taxpayers," the county's attorneys argue in briefs. The statute is also unconstitutional because it: "empowers a city to cause a tax to be imposed beyond the territorial jurisdiction of the city in violation of the due process clauses" of the Constitution; "empowers a city to require a county to levy a tax for county purposes in contradiction of the board of commissioners' exclusive jurisdiction over the levying of taxes for county purposes;" and "limits the power of the judiciary by restricting the decision of the assigned judge to adopting the best and final offer of one of the parties."

Under the amended statute, neither the levy of the tax nor the allocation requires the approval of the board of commissioners of the county. Rather, the mayor and city council can cause the tax to be levied, and the judge has the power and authority to allocate the proceeds, the attorneys argue. They contend the judge erred by adopting the cities' best and final offer because he based his order on a consultant's report and failed to include mandatory findings of fact in the order. And the judge was wrong to preclude the presentation of evidence by witnesses, the attorneys argue, ordering the submission of consultant reports and limiting the hearing to argument by the parties' attorneys.

Attorneys for the cities argue the trial judge made the correct ruling in upholding the constitutionality of the statute. The 2010 amended statute made the judge the arbitrator but does not vest in him the power to determine the distribution of the tax. "It specifies that the parties, through negotiation, arbitration and through their respective best and final offers, shall determine the distribution of the tax, and the arbitrator has nothing to do with that process," they argue in briefs. "It is only where the parties submit best and final offers which reflect their disagreement that a judicial function comes into play.

The arbitrator had before him what essentially were two offers, each specifying how the proceeds were to be divided." He then selected the offer which he determined best satisfied the criteria laid out in the statute. The county has misunderstood the nature of this tax, the cities argue. "It is not a county tax," their attorneys argue. "It is a district tax, thus the power granted to the city is to initiate a district tax, not to compel a county to implement tax for county purposes which the county may thereafter not repeal."

Before the legislature amended the statute, if parties did not agree, the tax lapsed. "It thus often developed that a party whose need for the tax might be less than the other parties' imposed its will on the others by threatening to allow the tax to lapse, thus compelling the other parties to give in so as to preserve a much needed source of revenue," the cities' lawyers contend. "This was the evil which the 2010 amendment sought to cure." The county now complains that this has violated "some right it somehow had to have control over LOST," the attorneys argue. "It seems to believe that complete authority over taxation is vested in counties and that the General Assembly cannot divest them of this authority." They also argue that the judge did provide findings of fact, as the statute requires, by determining "that the best and final offer of the plaintiffs the City of Ashburn, Georgia, the City of Rebecca, Georgia, and the City of Sycamore, Georgia more closely comports with the requirements and intent" of the amended statute than the county's offer.

Finally, there is nothing in the record supporting the county's contention that the judge precluded the production of evidence or limited the hearing to attorneys' arguments. The county "made no motions, obtained no orders of the arbitrator, and made no effort whatsoever at the hearing to present witnesses or evidence," the cities' lawyers contend.

Attorneys for Appellant (County): Walter Elliott, James Elliott

Attorneys for Appellees (Cities): Franklin Coleman, III, R. Kelly Raulerson, James Davis