Lumpkin County and the city of Dahlonega had their first day in court over LOST (Local Option Sales Tax) last week. LOST is a one percent county sales tax that is shared with cities based on a number of criteria, including population, services provided, point of sale which generates the tax and other factors. Much like the first meeting between the two when LOST was first discussed, nothing of consequence occurred at last week’s hearing. In that first meeting, held in July 2012, both sides had consultants present what each side believed its percentage of the sales tax should be and the reasons why. There was no conversation between either party. The city’s consultant proposed Dahlonega should receive 40.04 percent while the county’s consultant said the county’s share should be 89.33 percent. The split has been 25 percent for the city and 75 percent for the county for the last 20 years, ever since collections began. The city and county never sat down across the table from each other to try to hammer out their differences. No face-to-face negotiations were ever held. Instead, the two went straight to mediation, hiring special mediators to carry offers and counter offers back and forth between the parties. That was in October 2012. When no agreement was reached through mediation, rather than go to arbitration the city and county opted to go directly to Superior Court for a decision. The first appearance in court was much like the first meeting back in July last year—non-consequential. “Nothing happened,” said county attorney K.C. Horne. “It was all statutory,” said city attorney Doug Parks. “It was arguments about angels dancing on the head of a pin,” Horne said. Neither Horne nor Parks are representing the county and city in the LOST hearings. The county’s attorney of record is Howard Kaufold out of Vidalia. The city’s attorney is Andy Welch from McDonough. Two issues were presented to Judge Martha C. Christian, retired judge out of Macon who is hearing the case. One deals with whether a phrase in the Supplementary Powers Clause of the Georgia Constitution limits how LOST is used. A second deals with whether the insurance premium tax (IPT), as currently administered by the county, is a subsidy that would need to be addressed in LOST. The city claims the county has been using the tax incorrectly, both to provide services primarily for the unincorporated area of the county and to roll back unincorporated taxes. “It is the city’s position that it is [a subsidy],” Parks said. If that is the case, he added, it would change the city’s and county’s offers. The county, however, claims it provides three of the six services to be considered in LOST—police, fire and library—to all the citizens of the county, not just the unincorporated residents. Therefore it should be able to use the IPT to roll back unincorporated residents’ taxes. The city also gets an insurance premium tax on those living within the city limits. That money is put into the the city’s general fund. So far the city has spent $31,577 in consulting fees and $4,767 for the attorney representing them in Superior Court. The county’s consultant has cost taxpayers $38,750 and its attorney $13,807. These, however, are just the direct costs. Much more has been spent by both in the hourly wages or salaries of employees researching, gathering documents, attending meetings and other tasks dealing with LOST. And more fees will be coming down the line. An evidentiary hearing is scheduled in August.