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Why Buford and Hall schools are going to court over sales tax money



Buford City Schools and Hall County Schools are squabbling over sales tax money, and there is little sign at this stage that the dispute will be settled outside of court. 

Buford filed a lawsuit Nov. 18 against Hall for $1.64 million, the amount equal to its remaining share of sales tax money. Hall has refused to pay the remaining balance, and Buford officials say they aren’t sure why. 

Hall County Superintendent Will Schofield told The Times that Buford is demanding more than its fair share, and he is willing to let a judge or jury decide who is right. And it may even be an issue that goes beyond local courts, he added. 

“We’ve probably gotten well beyond the point where somebody, possibly even the attorney general, needs to sit down and take a look at this thing and say, ‘What’s reasonable? What was the intent of E-SPLOST?’” 

The two sides are fighting over a 1% sales tax used to fund capital improvements in public school districts, known as E-SPLOST, an education special purpose local option sales tax. 

Revenues from the sales tax are used to fund much of the construction in Hall County Schools, contributing 30-40% to its $258 million facilities plan. “It’s extremely important for anything we do with construction,” said Matt Cox, director of facilities and construction. 

Collections for E-SPLOST V ended in October, and collections for E-SPLOST VI — approved by Hall voters in 2020 — have already begun. The dispute between Hall and Buford concerns E-SPLOST V revenues. 

Typically, county and city school districts divide revenues based on snapshots of their student populations prior to an E-SPLOST referendum. That is the arrangement Hall County Schools has with Gainesville City Schools. For example, Gainesville’s 8,000 students accounted for 22% of the 36,000 or so students living in Hall, meaning it received 22% of the $195 million in E-SPLOST V revenues. 

But Buford City Schools had an unusual agreement in 2016 with Hall County Schools and Gainesville City Schools that guaranteed Buford $3.2 million up front, as well as two additional payments at the two-and-a-half-year midpoint and at the end of collections in October. If Buford’s student population had increased at those points, it would recalculate its share of the E-SPLOST money and send a bill to Gainesville and Hall.

Buford attorney Gregory Jay explained: “Instead of being locked in for five years based on a prior population, the parties agreed that they would … reconcile at the midpoint and at the end to give fidelity to the true student population at that time.”

Buford did, in fact, add students at both intervals, and both Hall and Gainesville paid at the midpoint. Gainesville made its final payment, but Hall has refused to send its final portion. And that is what baffles Buford officials. 

“He paid the midterm,” said Phillip Beard, chair of the Buford school board, referring to Schofield. “And now he’s bucking on the end.”

Jay echoed that point. 

“That’s part of our argument is, it’d be one thing if we had all this come up at the midpoint but essentially you have performed consistent with our reading of the agreement at the midpoint, so why are you now saying it’s different on the final payment?” Jay said. “Sort of like you pay rent January through November and then all of a sudden in December you’re saying, ‘It’s not a good agreement.’”

The number of Buford City Schools’ students who live in Hall grew from 969 at the midpoint to 1,363 at the end of E-SPLOST V collection in October. Meanwhile, Hall County Schools’ population stayed relatively flat, and Gainesville City Schools’ declined, meaning Buford’s relative population of students in the county grew from 2.6% to 3.7%. 

That 1.1% increase translates to $2.12 million in extra revenue for Buford. 

Gainesville City Schools paid Buford its portion of $477,196. But Hall County Schools is withholding the $1.64 million it owes, equal to the amount Buford is demanding in its lawsuit. 

The dispute between Buford and Hall rests on the question of how many of Buford’s students should be included in the calculation for determining its share of E-SPLOST V revenues.

Schofield made a three-part argument for withholding the $1.64 million, and the main part rests on his claim that Buford is unjustly including out-of-city students when calculating its share of the tax money. 

Buford has 1,380 students who live in Hall, but 421 of those students live outside its city limits and pay tuition to attend its schools. Schofield says including those 421 students violates the “spirit” of the 1996 amendment that established E-SPLOST and allowed local school boards to levy the 1% sales tax. 

“That’d kind of be like me saying, ‘Well, we got 25 White County students that pay tuition to come to Hall County. White County, we want a portion of your E-SPLOST because we’ve got some kids with White County addresses,’” Schofield said. “I think most people would say that’s just asinine on its face value, yet that’s exactly what we’re doing with the Buford situation.”

He added: “The penny sales tax was designed to provide for capital improvements in the district where the penny was collected.” 

The second part of Schofield’s argument rests on a more minor contention. He said Buford itself broke the agreement by receiving a portion of its money directly from Gainesville City Schools. According to the agreement, he said, that money should have flowed from Hall to Buford.

Finally, Schofield suggested that a 2018 amendment to Georgia’s constitution may nullify the parts of the revenue-sharing agreement that allows Buford to include out-of-city students and to recount its students at the midpoint and at the end. 

In 2018, the state constitution was amended, allowing county school districts to hold E-SPLOST referendums without requiring approval from their city school districts. That was a big change. Up until then, county and city school districts had to agree on how to divvy up the tax money before an E-SPLOST referendum. In Hall, those city school districts are Gainesville and Buford. 

Hall school officials said the 2018 amendment closed a “loophole” in the original 1996 E-SPLOST amendment that allowed city school districts like Buford to hold county school districts “hostage” by delaying a referendum until their demands were met.

From the beginning, Hall and Buford have butted heads over how to divvy up the money, and the long-simmering dispute has finally reached a boiling point. 

“For decades, the city of Buford has held both Gainesville and Hall County Schools hostage in E-SPLOST negotiations and (exploited) a loophole in state law,” said school board member Mark Pettitt. 

“It’s about time that a district with 3% of the students in the county can no longer hold up an E-SPLOST (referendum) and demand whatever they want,” Schofield said, referring to Buford City Schools. 

Under the 2018 amendment, revenue sharing is now based solely on student enrollment, unless a county school district agrees to some other terms. For E-SPLOST VI, for example, Buford City Schools will not be paid any money up front, and it will not receive any additional payments based on recounts of its student population in Hall County. 

But Buford officials counter that the 2018 amendment does not change the revenue-sharing agreement for E-SPLOST V. 

“Nothing in this new law changed our inter-governmental agreement with them,” Beard said. “It says, ‘all students that reside in Hall County.’ (Schofield’s) trying to separate them out and get into this tuition stuff again … but he signed the thing. He agreed.” 

Jay added: “My client’s position is, the local act and the inter-governmental agreement are clear as to each party’s obligations, and we’re just asking Hall County to fulfill their obligations.”

A local legislator who sponsored the agreement concurred with Buford’s reading of the revenue-sharing agreement. “What it reads there, yes, all students would be included,” said State Rep. Emory Dunahoo, R-Gillsville.

But Schofield said that agreement is up for interpretation, especially in light of the 2018 amendment, and he is willing to let a judge or jury decide on the correct reading. 

“We will follow the law if somebody interprets it to say, ‘all students in Hall County,’” Schofield said. “But that certainly is not within the spirit E-SPLOST was developed in the first place.”

Hall County Schools has 30 days to respond to the lawsuit. As of Tuesday, Dec. 6, Hall had not responded. 

Both sides said there have been no negotiations. 

“Yeah, our business folks talk back and forth, and when I say they talk, they send us a bill. That’s what they do,” Schofield said. “I think it says a lot when somebody within less than 30 days of when E-SPLOST even ended is already filing court papers. I mean, that doesn’t feel like much of a neighbor to me, so I doubt there’s a whole lot to talk about.” 

But Jay, the Buford attorney, said they had no choice but to file suit after weeks of “radio silence” from Hall. 

“We really had no other choice than to file suit,” he said. “I mean, we just didn’t roll out and file suit. … We just never got a response.”

Schofield framed his position as standing up for the taxpayers of Hall County. 

“It’s a principle issue,” he said. “There’s an awful lot of people in Hall County that are not aware of where their sales tax dollars have gone — to a Gwinnett County city district.” 

And even if the courts side with Buford, Schofield said, that doesn’t mean it’s morally justified. 

“It was old Wilford Brimley who said in a movie one time, ‘It may be legal, but by God it’s not right.’” 



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