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Boro’s city budget now proposed with 20.5% millage rate increase
Officials did not dispute previous ‘won’t raise tax rates’ headline, but Penny was already suggesting increase
penny
Statesboro City Manager Charles Penny

After initially showing the mayor and council a proposed budget that included no increase in the property tax rate or fees, Statesboro City Manager Charles Penny has suggested a 20.5% increase in the millage rate, adding 1.5 mills to the city’s current rate of 7.308 mills.

Compounded by inflation in appraised values, this would increase the tax collected on most properties by about 26%. Without factoring in tax exemptions, the city tax on a property with a $100,000 market value – at Georgia’s 40% standard assessment – was about $292 last year and so would increase by about $76.

It’s early in the process. The city has a public hearing on the budget slated for June 7 followed by a possible council vote June 21 to adopt it for fiscal year 2023, which opens this July 1. But the millage rate proposal triggers a requirement for three tax-increase hearings, which could be held in September.

Partly covering the projected increases in spending, the resulting $1 million-plus in additional revenue would reduce but not eliminate an amount the city would have to draw out of its accumulated fund balance. Previous drafts of the budget showed between $2 million and $2.19 million being spent out of the general fund balance over the next fiscal year, after that reserve has been built up to roughly $9 million over the past several years.

During a work session Tuesday, most council members appeared to support the millage increase, or at least did not speak against it. In a phone interview Wednesday, Mayor Jonathan McCollar confirmed that he supports the budget proposal, including the tax increase.

“A millage rate increase has been something that’s been discussed with the council since I’ve been in office, since 2018, and what we’ve managed to do is use great stewardship to utilize the resources that we have,” McCollar said. “But the space that we’re in right now is that there’s three things that we really are going to have to address.”

 

Mayor’s reasons

The first thing is the city “being able to retain the workers that we have,” he said. The proposed budget includes a 4% raise for all city employees, in addition to any individual raises for job performance. Penny and staff have also proposed increasing a $100 annual holiday bonus to $500 and adding Good Friday as a paid holiday.

A second thing is Statesboro “being able to compete with other cities, not just within the state of Georgia, but across the nation,” McCollar said. The proposed budget includes $75,000 for hiring a business recruiter.

“And last but not least, and I think it’s very important, we have to understand that we have to be able to provide for public safety, and that’s a part of that worker retention piece,” McCollar said Wednesday.

The Statesboro Police Department now has difficulty ever filling its previously authorized 77 certified officer positions, the mayor noted. With this proposed budget, Penny is adding two officer positions and authorizing Police Chief Mike Broadhead to “over hire” for four more if he first obtains the authorized force.

But McCollar says hiring police will remain a challenge when, despite previous raises and the 4% proposed, Statesboro will be paying officers roughly $41,000 a year to start while Savannah and the Georgia State Patrol are paying $50,000 and up.

The city is continuing to budget costs for nine additional firefighters the council authorized one year ago. The proposed budget also includes the first full year of projected costs for eight additional dispatchers authorized in the middle of the current fiscal year.

 

Emergency reserve

McCollar said he prefers paying for these and other added costs with a millage increase in order to preserve most or all of the fund balance for emergencies. He noted the devastation caused by the EF-4 tornado that struck Pembroke in Bryan County on April 5.

“What I’m thinking about is, is what if that’s Statesboro, and right now we have enough in our fund balance that if anything like that was to happen in our community, we’ve got the mechanism to go, and I want to protect that, just in case, whether it’s a tornado, whether it’s  a hurricane or any other disaster …  our city is prepared to act,” McCollar said.

Apparently, Penny had suggested that the council consider a millage rate increase before the conclusion of the earlier, May 10, budget work  session,  the  same session where, as previously reported, he started out telling the elected officials  he was “proud to be  able to say to you that we are presenting a balanced budget with no fee or no rate increases.”

 

Mixed signals

At that time, Penny indicated that more than $2 million of previously accumulated fund balance could be spent to support increased spending while avoiding a tax increase. As also reported last week, he cautioned that spending this amount of reserve was “not sustainable” and could be done for just one year.

The reporter left that May 10 work session still in progress to attend another event. But in a response to a follow-up email the next day, May 11, Penny stated, “The proposed budget is balanced without a millage rate increase.”

The draft budget notebook the Herald requested and received May 11 was also written this way.  In fact, it showed on one summary page a $2,187,653 appropriation of fund balance to the general fund to make up the difference between $18.4 million in projected new revenues for fiscal year 2023 – which will begin July 1, 2022 – and the $20.6 million needed to balance projected spending. Another draft had shown a $20.48 million total general  fund revenue appropriation, of which $2,062,653 was from fund balance.

The only property tax revenue increase indicated then was the estimated 7% growth in Statesboro’s digest, a figure that includes any new construction, but mostly, inflation in appraisals of existing property as determined by the Bulloch County Tax Assessors staff. The digest growth was projected to yield $378,460 in new revenue.

Nor did anyone from the city government contact the newspaper to suggest that the Thursday, May 12 headline, “City won’t raise tax rates or fees, but property tax to rise with inflation,” was incorrect.

But during the work session this Tuesday, Penny told the mayor and council that, as a responsible manager, he had to suggest a millage rate increase. He also indicated that he had said the same thing at the end of the May 10 session.

“At the conclusion of our meeting the other day, I shared with you, and I will say this again, I do believe that it would be just irresponsible of me as a manager not to say to the council that I do believe you should consider a millage rate increase,” Penny said.

He added that he wasn’t saying the council had to do this, but that it might be easier now and would become necessary next year.

 

Built into budget

He mentioned that an increase of even 1.75 mills would still leave a need to spend some money from the fund balance. But a 1.5-mill increase is now being built into the budget proposal, Penny said when asked after the work session Tuesday.

City Finance Director Cindy West confirmed the use of the 1.5-mill increase for budgeting purposes in a reply email that Penny forwarded Wednesday. She also stated the combined result of the proposed rate hike and the digest growth as a percentage.

“Based on what we projected to receive at year end plus the 7% growth and a 1.5 mill increase (approximately $1,039,000) the increase in the property taxes would be 26%,” West wrote.

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