On November 1, 2016, the Department of Community Affairs for the State of Georgia notified all local governments in Lowndes County that they were no longer eligible to receive state funding or permits. This is because the Service Delivery Strategy (SDS) implemented in 2008 between the County and Cities had not been renewed. As a result, the required number of Cities in Lowndes County have adopted resolutions approving the temporary extension of the existing SDS so that citizens will be protected from sanctions imposed by the State while the negotiations to review and revise the SDS continue. Unless the County agrees to the extension approved by the Cities, however, local governments will remain ineligible to receive state funding or permits until the negotiations are complete.
A SDS is a series of agreements that specify the manner in which all governmental services will be provided and funded within a particular Georgia county. The purpose of a SDS is to ensure that funding equity is provided to all county citizens by eliminating double taxation and reducing the unnecessary duplication of governmental services. By law, all local governments, including the county and any cities located therein, are required to establish a SDS. Naturally, the law also requires periodic review and revision of a SDS so that changes which occur over time can be reflected in the SDS, such as a shift in population trends or fluctuations in the available revenue sources.
In 1999, following the passage of House Bill 489, Lowndes County and the five cities negotiated and reached an agreement on the first SDS. In 2008, the County and Cities renegotiated that SDS to incorporate changes to the way in which governmental services would be provided between 2008 and 2016. With information from the next Census becoming available in 2012, comprehensive data on growth and other factors would be available for the required update in 2016, which coincided with the updates to the Comprehensive Plan for Lowndes County required by law. Updates to the Comprehensive Plan also trigger the requirement to review and revise the SDS.
In May of 2016, the parties met to initiate the mandatory renegotiation of the SDS. As expected, many changes had taken place in the community since the previous SDS agreements were reached. One major change was the growth patterns in Lowndes County. The Census data provided to all local governments in 2012 revealed that the County’s growth pattern had drastically changed. Unincorporated Lowndes County had grown by 10.5% over the previous decade while the incorporated area population (cities) had grown by 26.15%. In fact, Hahira’s population grew by 68.33%, Valdosta’s by 24.69%, Lake Park’s by 33.52%, Remerton’s by 32.59% and Dasher’s by 9.35%. The population distribution had also shifted with the unincorporated Lowndes population now at 45% of the county population and the municipal population now 55% of the county population. Population changes result in revenue changes meaning more of Lowndes County’s revenues were being generated in the cities.
Population changes often result in development growth as well, which, in turn, typically expands the property tax base within the geographical area experiencing such population changes. Lowndes County is no exception. In fact, 53% of Lowndes County’s property tax revenue is generated in cities, while 47% comes from the unincorporated area. It is estimated that over 80% of Lowndes County’s sales tax revenue comes from cities. The majority of Lowndes County’s residents live in cities, the majority of its tax digest is in cities, the majority of commercial and retail trade is in cities, and the majority of industrial and manufacturing is located in cities. In fact, of the 46,662 jobs in Lowndes County 80.37% or 37,500 are located in cities and 19.63% or 9,162 are in the unincorporated area. As a result, service delivery issues had to be reviewed and revised as necessary to reflect these changes. The Cities expected Lowndes County to negotiate and consider changes, just as changes occurred in the 1999 and 2008 SDS negotiations.
Despite Lowndes County’s singular contention that the current SDS agreement has not expired, the state of Georgia notified Lowndes County and the Cities that the SDS has expired and all local governments are out of compliance. Lowndes County is, therefore, not only at odds with all five cities, but with the state of Georgia as well. Lowndes County then petitioned the state of Georgia regarding the non-compliance of all local governments outlined in the letter from DCA dated November 1. DCA has since responded to Lowndes County in a letter dated November 9 and rejected the county’s position that the local governments are not out of compliance and that the present agreement remains in place. All of the cities wish to resolve remaining service delivery issues and while that process is ongoing, the cities are passing resolutions to extend the existing SDS agreement until June 30, 2017. Doing so will prevent any local government from being out of compliance and being ineligible for grants, loans, or permits. It is the position of the Cities that unless a local government wishes to cause harm to local citizens or to use non-compliance as a measure to harm other local governments, an extension would quickly be approved by all governments. With passage of this extension already completed by the required number of cities, it is only Lowndes County preventing all local governments from being in full compliance. Denying an extension will send a strong message of an unwillingness to negotiate to resolve differences in the best interest of all citizens.
The SDS statute requires local governments to eliminate double taxation and requires that services provided primarily for the benefit of the unincorporated area be paid for by those in the unincorporated area. The Cities have identified several areas for negotiation, some of which represent tax inequities which the SDS requires to be addressed and resolved. These include Road Maintenance, Conference Center funding, Arts Center funding, and Water and Sewer service areas.
Regarding Road Maintenance, most citizens are unaware that Lowndes County maintains a road system of 808 miles, of which 802 miles are located in the unincorporated Lowndes County and only 6 miles located in the incorporated area of the five cities. This equates to 99.2% of Lowndes County’s road system being in the unincorporated area. Recall that of Lowndes County’s two largest sources of revenue, 53% of its property taxes and over 80% of its sales tax is generated in cities. Therefore, residents and businesses located in cities are primarily funding road maintenance in the unincorporated area. These residents and businesses in cities are also the sole funding source for roads located in cities. This creates both a tax inequity and double taxation, both of which the SDS statute requires local governments to address. Lowndes County has a road maintenance budget in excess of $4 million. Resolving this tax inequity would result in taxpayers of cities receiving a significant and justified reduction on their county taxes. We believe services such as Lowndes County’s road maintenance, which are taxed countywide but provided primarily to the unincorporated area, should be paid by those in the unincorporated area who are receiving the service. Unincorporated residents face no such tax inequity or double taxation issue related to maintenance of city streets.
Regarding water and sewer, the Cities simply wish to follow and adhere to the Georgia Constitution. Furthermore, the Cities support consumer choice, meaning citizens should have the right to choose their water and sewer provider based on what is in their best interest. It is no secret that the availability of water and sewer service stimulates economic growth by attracting commerce and industry, which creates jobs. In particular, Valdosta has the ability to provide both services outside of its city limits. Nevertheless, the County proposes cities, such as Valdosta, ask for permission from Lowndes County to serve customers who request service from cities but own property outside a city. This gives Lowndes County veto rights over the right of a property owner to choose a service provider based on his or her best interest.
Regarding the Conference Center and Arts Center, the city of Valdosta has provided 100% of the local government funding for the past eight years, despite the County’s acknowledgment that both of these important community assets serve the entire countywide population. The Conference Center in particular was jointly and equally built and is operated by a jointly and equally appointed Authority. It is used by all citizens of Lowndes County, thus it is an unfair tax burden for taxpayers of Valdosta to provide substantial funding while Lowndes County provides none.
For taxpayers, there are millions of dollars at stake in these negotiations. With unresolved issues of tax inequity and double taxation, the Cities believe costs associated with achieving tax fairness and tax equity for the next ten years are justified. From the start of this process, cities have negotiated in good faith within the spirit and intent of the SDS legislation. While negotiating these services is difficult, it is important to taxpayers and as such, should be done in a spirit of fairness to achieve tax equity.
We the cities call upon Lowndes County to join all of us in adopting the extension so that the citizens and taxpayers are not harmed while negotiations continue. First and foremost, it is our elected duty and civic obligation to serve all of our residents and citizens and avoid any action that would cause harm to our community. We look forward to working together to resolve any remaining issues recognizing changes have occurred in the past and will do so again in the future.