The City of Bainbridge and Decatur County may be headed to arbitration in their Local Option Sales Tax (LOST) negotiations.

The LOST is a one-cent sales tax that has been collected since 1975, and it is intended to lessen the burden on property tax payers. Every 10 years, local government representatives must negotiate how those tax payments should be doled out. Approximately $4.5 million is collected each year in LOST proceeds.

The most recent LOST distribution was 2.46 percent to Attapulgus, 41.38 percent to Bainbridge, 1.08 percent to Brinson, 1.63 percent to Climax, and 53.45 percent to unincorporated Decatur County. That distribution was based almost entirely on population.

The negotiating process began June 28. Additional meetings were scheduled to be held July 11, July 19, Aug. 1, and Aug. 9. By law, the parties had 60 days to arrive at a consensus — that deadline was Monday.
According to the law, an impartial arbitrator will soon make a non-binding recommendation. If the parties are still unable to agree after 120 days, the matter will be decided by a non-Decatur County Superior Court.

However, Decatur County Administrator Gary Breedlove said that he, Bainbridge City Manager Chris Hobby, and the mayors of the other three municipalities, plan to meet Thursday in hopes that they can still work out an agreement.

“We’re going to meet to clarify our positions, and chart the course forward,” he said.

Breedlove explained that the entities can agree at “any time” during the 120-day period, even though the first deadline has been passed.

“We’ve got a position, and the city has a different position from us,” he said. “Thursday is sort of a status review, to see where we are, and if there is room for agreement. If not, we move to the next step in the process.”

Hobby spelled out the city’s proposal, in an email sent earlier this month and recently obtained by The Post-Searchlight. In the email to Breedlove and the Decatur County Board of Commissioners, dated Aug. 14, 2012, he proposed an incremental increase in the LOST distributions.

“It is our contention that the City of Bainbridge and the municipalities of Attapulgus, Brinson, and Climax are entitled to a municipal share of 58.7% of LOST proceeds,” he said. “We are however cognizant of the burden that the loss of revenue would pose to the county budget. With this in mind, we would propose that we phase in the municipal share over a period of six years beginning on January 1, 2013.

The current municipal share of 46.55% would be increased by 2.025% annually to reach the final rate of 58.7% on January 1, 2018.”

Hobby’s argument for the increased municipal share was primarily based on the fact that most of the business and retail base in Decatur County is located within the City of Bainbridge. He also noted that the municipalities’ population balloons to 60 percent of the total county population during daytime hours, even though the municipalities’ population is only 49 percent in terms of actual residency.

In an emailed response to Hobby that was sent Aug. 24, Breedlove stated that the county has “extensive or exclusive” responsibility on a number of services —including EMS, E-911 and the court system. He also noted that the county has a larger geographic area to cover, and therefore there is a higher burden and cost to maintain its roads. Ultimately, Breedlove recommended that the county’s share of LOST proceeds should be “in the range of 57 to 59 percent.”

“In the areas of E911 and EMS, last calendar year we had to support these vital service areas with over $500,000 of general fund monies beyond the fees and collections associated with these 24 hours per day functions,” Breedlove wrote. “By the way, 72 percent of 2011 EMS calls were in the City of Bainbridge.

“Therefore, I believe our ‘reasonable share’ of LOST should be in the range of 57-59%. I am open to you and I discussing the possibilities related to this important area for all our government entities.”

In a later email, dated Monday, Aug. 27, Hobby stated his concern that the county was seeking a larger share of LOST proceeds to make up its budgetary deficits.

“The law does not require that we consider the fact that the county has gotten itself into financial distress in addressing LOST allocations and it certainly does not require that the city be penalized as a result of past financial decisions and management shortcomings,” Hobby wrote, in the email dated Monday, Aug. 27. “To allow the poor financial decisions of the past to dictate the LOST allocations for the next 10 years would seem to me to be very poor public policy. …

“We cannot, in good conscience, agree to a distribution formula that reduces our share to the county’s benefit.”