'We are not disagreeable.' What to know about Chatham chairman's position on sales tax talks.

The Thanksgiving holiday did nothing to soften Chatham Commission Chairman Chester Ellis's position on the municipalities’ latest proposal to renew the Local Option Sales Tax certificate at the current distribution breakdown.

In a Monday press conference, Ellis reiterated the county's terms laid out in a letter rejecting the proposal dated Nov. 22. Ellis is seeking a significantly larger share for the county from the current agreement, which allocates 77% of tax proceeds for the cities and 23% for Chatham County.

Ellis proposes the county share begin at 31% in 2023 and increase by 2% each year, meaning a 49% county share by the time the LOST agreement is negotiated next in 2032.

No date has been set yet for the next negotiating session between the county and eight municipalities, though Ellis stated that there “will be more meetings because we are not disagreeable.”

LOST is a county-wide 1% sales tax which generates nearly a billion dollars in a 10-year cycle. Funding from the sales tax is used to offset property taxes within each city and countywide.

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Why did Chatham reject the earlier LOST proposal?

In a letter 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.

The counter 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. In all likelihood, an expiration would result in significant property tax increases for all county residents.

More: Chatham sales tax negotiations stall. Why the breakdown poses a threat to property owners

The LOST funding breakdown is based on criteria outlined in state law; however, Ellis argues the current formula fails to account for nearly $54 million in costs incurred by the county government to provide 31 essential services and 19 special services.

“When you look at what it’s costing the county to provide those essential services … the prices keep going up,” said Ellis, “So, therefore, we have to make an adjustment for the price.”

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.

More: Here's how property taxpayers could be affected with proposed sales tax distribution

Savannah mayor stands firm on LOST position, too

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,” said Johnson. “A backdoor tax increase, essentially, will put some of these businesses that are just recovering after COVID in another dire situation.”

The city of Pooler, the second-largest municipality in Chatham County after Savannah, issued their own statement on the LOST negotiations on Monday. Pooler Mayor Rebecca Benton stated the county's proposal would mean property owners in Pooler would pay 32.5% more in annual property taxes -- that's an additional $179 on a home valued at $300,000.

"If we don't come to an agreement by December 31, the tax will go away. This would be catastrophic for Pooler, which relies on LOST -- our second largest revenue source -- to fund basic services," wrote Benton.

Johnson also took aim at the county’s decision to roll back the millage rate by more than 1 mill earlier this year.

“I think the fundamental argument to me is: If the costs went up, why do you reduce your main source of revenue?” asked Johnson.

With LOST funds, the county is able to roll back countywide maintenance and operations millage rates that all county residents pay. However, the county is not legally allowed to use LOST funds to roll back the millage for unincorporated residents.

More: Unincorporated and unappreciated? Why Chatham's special service district matters in LOST talks

The LOST breakdown takes into account a variety of factors, including population, service delivery responsibilities, the effect on being able to pay off short and long-term debt, and where tax revenue is generated. For the four decades that the 1% tax has been in place, the split has hovered around 80% for municipalities.

Based on all of the criteria, Johnson iterated that the municipalities are entitled to a larger share, especially considering the revenue generated by Savannah and Tybee Island as tourist destinations.

“We’ve been doing this for the past 40 years and it’s been the same,” said Johnson. “It (county proposal) puts the city residents of the eight municipalities of this county in a very dangerous and untenable situation.”

Nancy Guan is the general assignment reporter covering Chatham County municipalities. Reach her at nguan@gannett.com or on Twitter @nancyguann.

This article originally appeared on Savannah Morning News: Chatham Chairman Chester Ellis takes position sales tax negotiations