DeKalb’s sales tax increase: What you need to know

Here’s everything you need to know about the special purpose local option sales tax (SPLOST), which would raise money for road repairs and other infrastructure.

---------------------

Frequently asked questions

Q. Wait, they’re raising my taxes again? 

Credit: Kent Johnson

Credit: Kent Johnson

A. Only if a majority of voters approve. A countywide referendum will be held during the Nov. 7 election. If the special purpose local option sales tax (SPLOST) passes, DeKalb's sales tax rate will increase from 7 percent to 8 percent.

Q. Why does the government need more money? I already pay enough in taxes. 

A. The sales tax increase would raise money to repave more than 318 miles of DeKalb's worst roads – those that are filled with potholes and cracks. It would also fund new fire station construction, police car purchases, park repairs and other infrastructure.

Resurfacing roads alone would cost $151 million over the next six years, and that’s money the county government doesn’t currently have. It would be difficult to cut enough programs to find $151 million in the county’s current budget.

The county collected $282.6 million in property taxes last year, according to its 2016 audit. That money funds police, fire, the jail, animal services, elections, courts, parks, libraries and other services.

Q. Don’t my property taxes already pay for roads? 

A. Not really.

DeKalb's government budgets enough money to repave about 20 to 30 miles of roads each year. It costs $300,000 to $400,000 per mile to repave a road, and the county budgeted $8.4 million for road resurfacing this year. About half of that money comes from the state, and the other half from the county's existing sales taxes and general funds.

At that rate, the county will never put a dent in its road resurfacing backlog.

Q. But I’m taxed too much already! Why should I pay more? 

A. If you want DeKalb’s worst roads paved, you’ll have to pay for it. If you don’t want to pay, the roads won’t get paved, and their condition will continue to decline.

Q. How did DeKalb get into this mess? 

A. DeKalb County's revenue source for capital improvements has dried up, in large part because of the creation of four new cities.

The county in previous years received as much as $20 million annually for infrastructure from sales taxes, but that amount has declined to about $1.5 million.

Under the county's existing homestead option sales tax (HOST), a convoluted formula allocates a portion of the tax's proceeds to city governments, with the remainder funding capital repairs in unincorporated areas. That formula worked fine in the years after the Georgia General Assembly and voters approved HOST in 1997. But each new city's incorporation cut into the county's share – Dunwoody in 2008, Brookhaven in 2012, Tucker in 2016 and Stonecrest in 2017.

If revenue distributed to those cities this year instead went to the county, it would receive more than $13 million instead of $1.5 million.

Q. Where do my current sales taxes go? 

A. Of DeKalb County’s 7 percent sales tax rate, 4 cents of every dollar goes to the state of Georgia. One cent goes to public school infrastructure through an education SPLOST, one cent to MARTA, and one cent for the homestead option sales tax (HOST). Eighty percent of HOST revenue is used to reduce the county portion of homeowners’ property tax bills, and 20 percent is distributed among cities and unincorporated governments for capital improvements.

DeKalb County’s government, which is separate from its school system, has never had a SPLOST.

By comparison, other counties in the metro area — Cherokee, Clayton, Cobb, Douglas, Fayette, Forsyth, Fulton, Gwinnett and Rockdale — all have local option sales taxes.

Q. How does DeKalb’s sales tax rate compare to its neighbors? 

A. Here’s a look at current sales tax rates across the metro Atlanta area:

City of Atlanta: 8.9%

Clayton County: 8%

Fulton County (outside Atlanta): 7.75%

DeKalb County: 7% (will increase to 8% if SPLOST is approved)

Gwinnett County: 6%

Cobb County: 6%

Q. How would DeKalb’s SPLOST be spent? 

A. The SPLOST would raise more than $100 million annually in sales taxes.

The tax would last six years, bringing in an estimated total of $636.8 million. Its proceeds would be distributed proportionately by population, generating $388 million for unincorporated DeKalb and $249 million for city governments.

The DeKalb Board of Commissioners approved a project list Sept. 19 that calls for $151 million, or 39 percent, of its SPLOST funds to be spent on road resurfacing. Other major projects include fire stations ($41.1 million), a rebuild of the Bobby Burgess Building on Memorial Drive ($27.3 million), transportation projects such as bridges and sidewalks ($25.5 million), a major remodeling of the courthouse complex ($16.5 million) and police vehicles ($5.6 million).

City councils across DeKalb created their own infrastructure project lists.

Q. Which roads will get paved?

A. DeKalb’s project list doesn’t identify specific roads, but the county plans to repave all roads in “poor” condition — those with a rating of 30 or worse. In addition, the county also plans to resurface heavily trafficked roads in “fair” condition.

Q: Where can I find more information about specific construction projects? Some of the items on the project lists are vague.

A. DeKalb County departments and city governments presented their project wish lists in public meetings. Not every proposal made it to the final project list, but the following documents include projects under consideration:

Q. How do I know DeKalb’s government won’t waste this money? 

A. Georgia's SPLOST law requires annual auditing, separate from the rest of the county's finances.

The county must report on every project’s cost so far, its original cost, its total estimated cost, the amount spent in the prior year, the amount spent in the current year and estimated completion dates.

In addition, DeKalb last year hired an independent auditor, John Greene, to keep watch over taxpayer money.

Q. How much will SPLOST cost me if it passes? 

A. The sales tax increase through the SPLOST is part of a broader DeKalb County tax overhaul plan that has been in the works for more than three years.

The SPLOST alone will raise an average of $106 million a year for local governments. That works out to a cost of $150 a year on average among DeKalb’s 707,655 residents outside the city of Atlanta, which isn’t included in the SPLOST. However, because as much as 30% of sales taxes could be paid by people who live outside the county but shop in DeKalb, the average cost to county residents could drop to just over $100 per person annually.

But SPLOST is only part of what voters will decide. Another measure on the ballot would reduce homeowners’ property taxes.

Q. What is this other measure on the ballot?

A. A second referendum on the Nov. 7 ballot will ask residents to change the homestead option sales tax (HOST) so that 100 percent of its proceeds are used to reduce DeKalb residents’ property tax bills. Currently, 80 percent of HOST goes to property tax relief, and 20 percent goes to capital improvements.

The SPLOST and HOST are paired together on the ballot so that both must pass to be enacted.

If voters reject either one of these changes to DeKalb’s tax structure, they both fail and nothing changes.

Q. Who wins and who loses? 

A. The impact will be felt differently by residents in unincorporated DeKalb and its cities.

The changes in HOST will primarily benefit city residents, who will receive greater property tax relief by putting them on equal footing with unincorporated residents.

People living in unincorporated DeKalb, who have benefited more from HOST than their city neighbors in recent years, would see improvements in government facilities from SPLOST rather than a significant decrease in their property taxes.

Overall, the HOST changes would increase property tax relief for city homeowners by an average of $437 per parcel, while unincorporated residents would see a $147 per parcel tax break, according to an analysis by the county.

Q. Aren’t sales taxes like SPLOST regressive?

A. Yes. Because sales taxes tax everyone at the same rate, they cost people with lower incomes relatively more than people with high incomes.

However, DeKalb's SPLOST exempts unprepared food and medicine in an attempt to partially mitigate the tax's regressivity. The exemption for grocery items was included at the request of DeKalb CEO Mike Thurmond in Senate Bill 156, sponsored by Sen. Fran Millar, R-Atlanta.

Q. How will SPLOST money be distributed? 

A. SPLOST proceeds amounting to an estimated $636.8 million will be distributed over the next six years based on 2016 population estimates:

Avondale Estates: $2.8 million

Brookhaven: $47.2 million

Chamblee: $25.5 million

Clarkston: $11.5 million

Decatur: $20.5 million

Doraville: $9.4 million

Dunwoody: $44 million

Lithonia: $1.9 million

Pine Lake: $688,000

Stone Mountain: $5.7 million

Tucker: $31.8 million

Stonecrest: $47.8 million

Unincorporated DeKalb: $388 million

Q. Whew, that’s a lot of information. How did we get here? 

A. The effort to change DeKalb County's sales tax structure began in 2014, when Interim CEO Lee May formed the DeKalb Operations Task Force, which was ordered to assess the effectiveness of county government. Among the task force's recommendations were the changes to HOST and the enactment of SPLOST.

Then in the 2015 legislation session, DeKalb's delegation to the Georgia General Assembly supported the tax overhaul plan and other changes to county government. The plan was enacted through House Bill 215, sponsored by former Rep. Mike Jacobs, R-Brookhaven, and backed by all of the county's 23 representatives and senators.

But last year, the issue never came to a vote because of a major problem in the language of related legislation. A mistake in the language of House Bill 596 would have eliminated a property tax break for homeowners, known as the frozen exemption, if voters had approved HOST. Once the DeKalb Commission learned about the error, they abandoned efforts to pass HOST or SPLOST last year.

This year, the Georgia General Assembly passed two bills that allow the county to move forward.

Senate Bill 143, sponsored by Sen. Emanuel Jones, D-Decatur, corrected the language problem. And Senate Bill 156, sponsored by Millar, allowed the SPLOST but with the restriction that it can be used primarily for transportation and public safety. Part of the SB156's purpose was to prevent the county from using SPLOST funds on a new government administration building, but 15 percent of SPLOST proceeds may be spent on repairs of existing structures.

Then Gov. Nathan Deal signed the bills into law and the DeKalb Board of Commissioners created a project list.

Now voters will have the final say.

Got a question? Email me at mark.niesse@ajc.com and I'll try to answer it for you!

Latest coverage of DeKalb’s sales tax from The Atlanta Journal-Constitution: