Georgia’s special purpose local option sales tax is an optional 1 percent county sales tax used to fund local capital projects for a county and participating municipalities. Thirty-two years after lawmakers passed the SPLOST law, lessons learned prove the SPLOST is sorely in need of some updates.
Implemented in just 12 counties in the first year it was established (1985) and 15 more the next year, today the tax is imposed in all counties except DeKalb, Fulton and Muscogee, according to the state Department of Revenue. (DeKalb and Fulton have a MARTA tax; all three have an education SPLOST). The tax, which can last up to six years, is routinely renewed; in Cobb County, for example, it has been in effect continuously except for 2001-2005.
The law requires revenues to be spent on the list of projects provided by the county commission to voters, who must approve the tax in a countywide referendum. The list is all-or-nothing; voters can’t pick and choose from projects on the list. Further, SPLOST revenues may not be spent on operations or maintenance of a SPLOST project or any other county or municipal facility or service, except in the case of road and bridge repairs and natural disasters.
Unfortunately, this can result in county commission contortions in order to use SPLOST dollars to cover not-so-special maintenance projects. Reforms are sorely needed to ensure the SPLOST is restored to its "special purpose" intent and that local government remains frugal and focused.
Road resurfacing, equipment and roof replacement and other infrastructure maintenance, including public safety, should be restored to the regular – general – budget and funded by a permanent funding source. A preferable sales tax approach to fund these normal infrastructure items would be a Homestead Option Sales Tax, which also reduces the millage rate for homeowners.
SPLOSTs should start out with a list of actual special purpose projects and the commission should calculate the cost of each item. The total cost for this list of special purpose projects should then be used to determine the duration of the proposed SPLOST.
Projects should include a projected estimate of annual operations and maintenance costs for projects and identify the funding source intended to cover those costs. The county commission should also include a project’s life expectancy so voters are aware when they will be asked to fund replacement costs.
Too many SPLOST elections are in off-election years, when special interest groups are the only groups focused and interested in ensuring passage of the tax. SPLOST elections should be limited to normal, biennial general elections in November. The Association County Commissioners of Georgia should work with the Legislature to shorten the gap between election and implementation of SPLOSTS from the current 80 to 45 days, in order to coincide with the new calendar year for tax collection purposes.
SPLOSTs can cover five years, but six-year SPLOSTs are allowed when there is a county-municipality intergovernmental agreement. But the longer term has the potential to obligate future county commissions beyond a point where all commission seats could hold new commissioners. This funding obligation can inhibit future commissions seeking funds for needs recognized in the interim. For this reason, the ideal funding period for a SPLOST should be no longer than four years.
Tax collections should end once the targeted total is collected and, after all projects are completed, excess funds must be returned to taxpayers as prescribed by law.
With the exception of multi-county SPLOSTS, a county’s SPLOST revenues must be applied inside that county.
Fractional penny SPLOSTs are a necessary tool that should be authorized to help focus local governments on special purpose projects and protect taxpayers from mission creep.
SPLOST revenues should only be used as a match for federal and state grants on projects listed on a county’s Tier-1-equivalent list, typically some of the most expensive projects and most challenging to get fully funded.
The SPLOST has evolved into a mechanism enabling local governments to propose a few desired major projects and intermingling those with politicians’ boondoggle projects. These practical reforms can help update this important tool for funding major projects and eliminate the boondoggles.
Sifen is a community advocate on transportation issues and Dodd is vice president of the Georgia Public Policy Foundation.