New LOST proposal: Mayors propose share range for cities, county in negotiations

Credit: Will Peebles

Credit: Will Peebles

In the ever-narrowing window to renew Chatham County's Local Option Sales Tax distribution, the mayors of the eight municipalities in Chatham County have sent a new proposal to Chatham Chairman Chester Ellis.

In a letter dated Nov. 29, the mayors "respectfully decline" the county's latest lost offer of dividing 49% of the collected tax for the county, and the other 51% being split amongst the municipalities.

The counterproposal from the mayors sets a range of splits they would find acceptable, setting the floor for negotiations at 23% of the funds going to the county and 77% to the municipalities, which is the split under the current agreement that expires on Jan. 1. The letter says the mayors would negotiate up to a 31%-69% divide.

"We simply cannot agree to raising taxes on nearly 70% of the county's population," the letter reads, a reference to the percentage of Chatham residents who live within Savannah city limits and those of other incorporated areas.

Credit: Will Peebles

Credit: Will Peebles

Explore Local sales tax negotiations resume. What we know about LOST and the mediation process.

The letter was a response to a proposal submitted by the Chatham Commission on Nov. 22. The plan called for the county's portion to begin at 31% in 2023 and increase by 2% each year, meaning a 49% share by the time the LOST agreement is negotiated next in 2032.

LOST is a 1% levy on most goods and services purchased in Chatham and the distribution must be renegotiated and renewed every 10 years. Projections are LOST will generate approximately $1 billion over the next decade.

The counterproposal from the mayors requests a mediation session on Dec. 7.

"We firmly believe that we should be able to come to a fair agreement somewhere between those two sets of numbers," the letter reads.

112922 LOST Distrubution Pr... by savannahnow.com

Why did Chatham County reject the previous agreement?

In the proposal sent to municipal leaders on Nov. 22, Ellis said the current split is “no longer feasible due to increase in costs of countywide mandated services," such as the court system and emergency services. He instead proposed a counteroffer that would give the county 31% along with a 2% annual increase until the next negotiation period in 2032.

Explore Chatham County LOST counterproposal | PDF

Ellis's latest proposal would eventually raise the county's LOST share to 49%, a split close to the county's initial 50/50 proposition made in July. While that breakdown would offset more county-wide property taxes – a reasoning that Ellis frequently cites – it would lead to major property tax increases in every municipality except for Port Wentworth. Two cities, Bloomingdale and Vernonburg, would likely have to implement their first-ever municipal property tax.

Tuesday's counter from the municipalities is the latest news in a tense round of LOST negotiations that began in July and stalled at an impasse that was followed by two closed-door mediation sessions in the fall. If the county and municipalities do not come to an agreement by the end of the year, the tax certificate will expire, and millions of dollars in annual funding will go uncollected.

Pooler Letter on Lost by savannahnow.com

Earlier this week, Savannah Mayor Van Johnson said the county's proposal "does not make sense," pointing out that a majority of county residents - about 70% - live in cities. Most of the county's businesses are located in incorporated areas as well.

“If we raise the taxes within our city where the majority of the businesses are, they will hurt, they will have to make a tough decision that will affect the bottom line of this community,” Johnson said. “A backdoor tax increase, essentially, will put some of these businesses that are just recovering after COVID in another dire situation.”

Will Peebles is the City Council and County Commission reporter for Savannah Morning News, covering local Savannah and Chatham County decisions. He can be reached at wpeebles@savannahnow.com or on Twitter @willpeeblesSMN

This article originally appeared on Savannah Morning News: New LOST proposal: Mayors propose share range for cities, county in negotiations