Clayton County withheld some MARTA funding for eight years, records show

Unlike the very public dispute between MARTA and Atlanta over funding, this issue slid under the radar for years until after Clayton made good on nearly 100 missed payments. It was acknowledged in just one line on the transit agency’s recent budget documents, to explain why this year’s vehicle tax revenue came in significantly above budget.

Emails show Clayton officials questioning the amount owed to MARTA dating back to late 2016. Clayton began withholding payments the next year. Transit officials made efforts to collect the delayed payments through March 2017, after which written communications over the issue ceased until 2024.

MARTA officials and current Clayton County Tax Commissioner Danielle Smith said they couldn’t speak to what the prior tax commissioner’s concerns were, and he could not be reached for comment.

Records show the former Clayton County tax commissioner had concerns about how the percentage of title ad valorem taxes owed to MARTA was calculated, according to a letter he sent the state in February 2019. He said it resulted in an “astronomical” and inequitable total and alleged Clayton was paying a larger share than other counties.

He proposed using his own “simplified” calculation.

The state revenue commissioner at the time, Lynne Riley, vetoed that proposal in a March 2019 response and explained how the share was calculated based on state law.

The portion owed to MARTA from ad valorem taxes is based on the sales and use taxes collected in each county in 2012 and is calculated the same for DeKalb, Fulton and Clayton counties, Riley’s letter states.

“I trust you see why the department cannot sanction your proposed alternative distribution proposal,” Riley wrote. “Any change to the methodology would first require a change to the statute.”

Officials from the state revenue office said they had limited knowledge of the dispute beyond Riley’s letter.

“We stand by Commissioner Riley’s letter,” spokesperson. Joe Snowden said in an email.

Public documents from MARTA and Clayton County don’t show any further written communication about the issue until last fall, when Smith reached out to the transit agency after she was elected in November.

Smith told the AJC she wanted to resolve the issue while also doing her due diligence to ensure Clayton’s share was fair.

“I can’t speak for the administration prior to me in terms of why decisions were made, but I’ll say this, in terms of being fiscally responsible, the numbers need to make sense prior to us issuing checks,” Smith said in an interview.

In a follow-up email, Smith said she had concerns that Clayton’s payment, which is calculated by the state, varied from month to month when it should have been consistent. She said that issue has now been fixed.

Records show that to resolve the outstanding balance, Clayton agreed to pay the monthly amounts calculated by the state from July 2019 to present. Clayton agreed to pay the current monthly payment amount, $276,355, for the remaining months, January 2017 to February 2019.

That’s higher than the average monthly payment Clayton was making initially, to which the former tax commissioner had objected.

MARTA Chief Financial Officer Kevin Hurley said the transit agency has been able to work around the missing payments because they are a relatively small portion of the budget.

“We’ve been able to plan around it over the years,” Hurley said in an email, adding that other revenue sources have been strong.

It’s unclear how the transit agency would have spent the money if it could have counted on Clayton to pay what it owed. At least as early as 2023, MARTA stopped budgeting for Clayton’s share, Hurley said.

Next year’s proposed budget factors Clayton’s share, with MARTA projecting roughly $3.3 million from the county.

MARTA is in the process of finalizing the budget, and officials have proposed about $2.5 million in cuts. The budget is conservative in light of unpredictability around ridership and the overall economy.

Hurley said he could not be certain if there would have been more cuts if MARTA weren’t able to count on Clayton’s share. A few options would have been considered, including reducing or delaying a cost-of-living raise for nonunion employees.

“There are several levers we can use to fine-tune and balance out the budgets,” he wrote.

Vehicle title tax revenue is a relatively small portion of MARTA’s funding, representing 5% of this year’s $654 million operating budget. The bulk of the budget, about two-thirds, comes from sales tax revenue.

Clayton County voted to join the MARTA system in 2014, becoming the first new county to do so since the agency began operating in the 1970s. The county didn’t have its own bus system at the time.

MARTA finished the first phase of a new transit hub in Jonesboro in 2020 and is pursuing two rapid bus lines in the county, along with other capital projects. They’re funded through More MARTA Clayton sales tax revenue, not the vehicle title tax revenue.

The vehicle taxes go toward operations across the entire system.

Hurley said there have been no other issues with payments from Clayton County. The county has made its regular monthly vehicle tax payments since January.

Editor’s note: This story has been updated with a statement from the Georgia Department of Revenue that was provided after the story’s initial publication.