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Next step taken on local levy

Split to follow previous agreements

POSTED: October 11, 2012 12:33 a.m.
 

Forsyth County commissioners moved forward Tuesday with plans to collect locally an excise tax on energy that the state will exempt.

State legislators passed a law earlier this year that would start a four-year process toward discontinuing the sales tax on energy charged to manufacturing businesses.

The provision was part of larger changes to the tax code and was meant to make the state more attractive to manufacturers.

Along with the state portion of the tax, the law eliminated the two 1 percent sales taxes local governments collect as part of the local option sales tax, which reduces reliance on property taxes, and the special purpose local option sales tax, which funds special voter-approved projects.

County Attorney Ken Jarrard said the law also gave local governments the ability to continue collecting the sales tax by following certain steps.

In following that procedure, the county and city of Cumming held a joint meeting to discuss the tax in September.

On Tuesday, commissioners voted 5-0 to approve an intergovernmental agreement that is the next step toward locally levying the energy tax.

“This wouldn’t be the actual imposition of the tax,” Jarrard said. “This is an IGA that sets the stage for us to later adopt an ordinance implementing the tax that would become effective next year.”

If the city also signs off on the agreement and adopts its own ordinance, the sales tax would continue to be collected and divided according to the LOST and SPLOST percentage splits, he said.

The law states that half of the proceeds of the energy tax will follow the agreed upon LOST split and the other half, the SPLOST split, Jarrard said.

The current LOST agreement gives 85 percent to the county and 15 percent to the city, while the current sixth SPLOST grants 95.71 percent to Forsyth and 4.29 percent to Cumming.

Working with local electric providers, county finance director David Gruen estimated the impact of the tax at more than $400,000 in electricity costs alone, not including gas.

The impact to the next round of SPLOST, which will primarily fund a new courthouse and jail expansion, could be more than $1 million less if the tax isn’t reinstated locally, Gruen said.

It appears most local governments are poised to continue the excise tax after receiving similar estimates from utility companies, he said.

 

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