Top leaders in county and city government hope mediation will help them resolve negotiations over the 1-cent local option sales tax, or LOST.

According to Cindy Campbell, chief financial officer and interim Dawson County manager, LOST funds go into the county's general fund to pay for government services "to keep property taxes down."

Once every 10 years, Dawson County and the city of Dawsonville must determine a split of the LOST revenue.

Last negotiated in 2002, the current split is 86 percent of the revenue to the county and 14 percent to the city, which through inter-government agreement includes the city paying the county no less than $120,000 annually for police protection and $40,000 per year for fire services, determined through a percentage of LOST collections.

Commission Chair Mike Berg said the inability to reach a consensus involves the county's proposal to be paid a percentage, rather than a specific dollar amount.

"We'd like not to have dollars flowing back and forth. We'd like to have a flat percentage, so you don't have so much accounting work to do," Berg said. "I think it's safe to say that [the city has] gotten more money most of the time than what our contract said."

In 2011, the tax brought in about $5.2 million for the county's general fund, and is expected to pull in about $5.5 million, or 27 percent of the county's general fund budget this year, according to Campbell.

The tax is separate from SPLOST, or the special purpose local option sales tax that was extended in 2007. SPLOST dollars are approved by referendum and can only be used for special projects.

The lengthy negotiation process began in mid-May with a letter from the county to the city requesting an informal meeting to commence the negotiations. A meeting was held May 29, though the city canceled two subsequent meetings on June 29 and July 6, according to Campbell.

The two entities did meet on July 12, but could not reach an agreement.

Acting Dawsonville Mayor James Grogan would not comment on the city's counter proposals, which Berg said would essentially mean more money for the city.

"They presented us with a proposal and then we presented them with our proposal," Grogan said. "This is new for both sides, because none of us were here the last time we had to negotiate. Hopefully, we'll be able to work this out through mediation and not have to take it to court."

Since the two entities could not reach an agreement within the required 60 days, the dispute goes to nonbinding mediation.

Berg said he too is hopeful to resolve the dispute within the next 60 days, at which time mediation goes to arbitration with a binding outcome to be determined by a Superior Court judge.

Similar mediation was involved in 2007 during SPLOST V negotiations between the city and the county.

"We couldn't resolve it during mediation, so I went over and sat down with Joe [Lane Cox, former mayor] in his office and we talked it out and figured it out," Berg said. "We're hopeful we can work it out, because both sides said we'd rather not pay lawyers to do this stuff."