Many local governments are feeling the budgetary pinch of the down economy. Local governments should be aware that Georgia law provides an excellent economic vehicle to fund capital outlay projects during tough economic times called a SPLOST tax. SPLOSTs are advantageous because they spread tax liability to non-residents, allowing them to continue funding improvements without raising property taxes.
SPLOST taxes are created under the authority of O.C.G.A. § 48-8-110 et seq. A SPLOST tax is a 1% sales tax assessed at the time that a consumer purchases certain items within the special tax district. SPLOST taxes can be implemented only for capital outlay projects. Capital outlay projects are generally major, permanent, or long-lived improvements or betterments, such as land, structures, and vehicles. A SPLOST tax can be imposed for no more than six years.
SPLOST taxes can only be passed by a referendum of the voters in the jurisdiction affected. General obligation debt in the form of bonds can be issued in conjunction with the imposition of a SPLOST tax, provided that the general obligation debt is included during the process of creating of the SPLOST tax.