First, let me state that I do not oppose the projects listed for SPLOST No. 10. However, I oppose issuing bonds to pay for them.
Putnam County currently collects four pennies of sales tax. These include LOST (Local Option Sales Tax, dedicated to reducing property tax); TSPLOST (Transportation Sales Tax, dedicated to road maintenance); ESPLOST (Educational Sales Tax, dedicated to the school system); and SPLOST (Special Purpose Sales Tax, dedicated to capital projects).
State law currently limits local sales tax to these four. Excepting ESPLOST, the sales taxes are shared with the city through an intergovernmental agreement (IGA). Except for prescription drugs, local sales tax is collected on everything you buy, including food and gas (note: fuel tax is collected at the distributor, to a maximum of 3 cents per gallon).
In addition to the local sales tax, the state collects a 4% sales tax, bringing the total sales tax to 8%.
The controversy with SPLOST No. 10 began with placing the issue on the Nov. 5 ballot. At the initial meeting (March 12) between the city and county, those two parties agreed to have a six-year SPLOST and an IGA, including the project list, drafted by June this year. Nothing further happened until July.
Eatonton Mayor John Reid signed an IGA, which was later ratified by the city council. Chairman Sharp also signed the IGA, but it was never discussed, approved, or voted on by the county commission. The IGA clearly states that the city will receive 31% of the taxes collected; however, the list of projects assigns only 25% of funding to the town. Note that the IGA is not mentioned in the resolution to place the issue on a ballot.
By state law, every referendum on a ballot requires a resolution. The resolution for SPLOST No. 10 required three versions before it was finally approved on Aug. 22 this year.
The first version, approved by Commissioners Daniel Brown, Jeff Wooten, and Chairman Sharp, was in error. It called for issuing more than $43 million worth of general obligation bonds and would have required the city to pay back more than $11 million. This version was published in The Eatonton Messenger (A5, Aug. 1) and later withdrawn.
The second version, also approved by Commissioners Brown and Wooten and Chairman Sharp and signed by Chairman Sharp, called for issuing more than $32 million worth of bonds but paying back only $11 million. This version was never published.
The third and final version of the resolution, published Oct. 10 in The Messenger (D7) and approved by Commissioners Brown and Wooten and Chairman Sharp, still contains material errors.
For over two decades, capital projects essential to government services have been paid through sales tax (SPLOST) in Putnam County. What makes SPLOST No. 10 different and not just a renewal of the existing sales tax?
The significant difference with SPLOST No. 10 is that the capital projects are tied to issuing more than $32 million worth of general obligation (GO) bonds. The question on the Nov. 5 ballot says explicitly approval of the sales tax also allows the county to issue $32,637,752 worth of GO bonds. To my knowledge, Putnam County has never previously issued bonds to pay for SPLOST projects.
If voters approve the bond issue, it would increase the county's debt to about $60 million, in addition to the $24.5 million already issued bond debt.
Some argue that issuing bonds would allow the projects to be undertaken immediately without waiting to collect taxes. However, as vague as they are, most of the proposed projects will not be completed or even started in year one.
The major jail renovation project will cost at least $8 million. While this project is clearly needed, there are no actual plans or cost estimates exist, and any "groundbreaking" could be years away.
Also, it is estimated that SPLOST No. 9 will collect more tax than is needed for the projects it is slated to cover by some $5 million – more than enough to start the SPLOST No. 10 projects.
A second question concerning the issuing of GO bonds is whether the sales tax will pay for the principal, interest, and fees associated with the bonds. Based on numbers from the County Finance Department, current sales tax collections average about $5.8 million per year, with the county's share (69% per the IGA) being about $4 million annually.
To pay just the principal on the proposed SPLOST No. 10 bonds, the county's share of sales tax collections would have to increase to approximately $5.4 million or more annually, representing an average 35% increase.
Since taxes must pay GO bonds, if the sales tax falls short, the only alternative is property tax.
But could the county issue less than $32,637,752 worth of bonds, as suggested by Chairman Sharp ( The Messenger, A1, Oct. 10)? Yes, but only if the county issues the balance as a second offering. The ballot question clearly states that if the voters approve, the county is authorized to issue bonds "… in the principal amount of $32,637,752 …" – no more, no less.
I believe SPLOST projects and issuing bonds are separate issues that should be voted on separately. For all the reasons listed above, I will vote no on SPLOST No. 10 on Nov. 5.