Statesboro’s city government, with property tax increase hearings on Aug. 30 and Sept. 6 approaching, is no longer pursuing an increase in its millage rate. But it must hold the hearings anyway, since the city is still not proposing a rollback to offset inflation, averaging about 6.4%, in assessed property values.
That amount of inflationary growth, within Statesboro’s city limits, was actually lower than the inflation in Bulloch County’s overall property values, where it was 9.4% from Jan. 1, 2021, to Jan. 1, 2022. Those percentages do not include real growth from construction and development, which makes the local governments’ gain in revenue higher in each case. Inflation in home prices was also significantly higher than the average for all types of real estate.
Both the Bulloch County Board of Commissioners and the Board of Education also held three tax increase hearings each as required under the state law known as the Property Taxpayer’s Bill of Rights, since the county boards adopted only partial rollback rates, not the full amount required to offset the average inflation.
But in contrast to the county boards, Statesboro officials originally factored an actual millage rate increase, of 1.5 mills, into the city’s fiscal year 2023 budget. Last spring City Manager Charles Penny, while noting that the city budget could be balanced without a millage increase by spending from the city’s nearly $9 million accumulated general fund balance, told the mayor and council that as a responsible manager he had to recommend they consider raising the millage rate.
The fund balance, he noted, acts as savings account for emergencies and can be slow to rebuild once depleted.
Penny and city Finance Director Cindy West predicted in May that without a rate increase, projected spending in the new fiscal year, which began July 1, would exceed available new revenue by $2 million, reducing the fund balance by that amount. But a 1.5-mill increase in the millage rate, from the current 7.308 mills to 8.808 mills, could have generated enough revenue to limit the reduction in fund balance to about $1.1 million, they predicted then.
However, those predictions, and Penny’s recommendation, changed after the city received final tax digest numbers in July from the Bulloch County Board of Tax Assessors staff.
“The City’s numbers looked more favorable than the estimates during the budget process,” Penny wrote in a July 29 memo to the mayor and council. “Based upon the tax digest and provided City Council does not roll back the millage rate, the City’s budget can be balanced using a lesser amount of fund balance.”
Holding the city’s millage rate unchanged at 7.308 mills, the city can collect almost $6.1 million in property tax revenue and maintain a balanced general fund budget by using $1.73 million from the accumulated fund balance, he stated. Penny concluded by recommending that the city’s elected officials “not roll the milage rate back” but also not increase it, and instead draw down the balance by that $1.73 million.
As was also indicated in his memo, the 1.5 mill increase, if that option had been pursued, would have resulted in total property tax revenue of almost $7.33 million, not merely the $6.82 million projected in May.
A 1.5-mill hike would have been a 20.5% increase in the rate itself, but the numbers previously used in the budget showed roughly a 30% increase in revenue, since the rate increase would have compounded the amount resulting from inflation and growth. If the millage hike were still being pursued, the $7.33 million in the revised numbers would represent a 38% surge in property tax revenue from the $5.3 million budgeted in 2021.
Still 6.39% rise
In contrast, the increase from inflation represented by the difference between the rollback rate of 6.869 and the unchanged rate of 7.308 mills Penny has now recommended is 6.39%. So, that is also the average increase in taxes implied by the lack of a rollback.
With most property in Georgia assessed for taxes at 40% of market value and a mill being 1/1000th of assessed value, the city tax on $100,000 worth of property with no exemptions will be about $292, as was already the case. On average, for a property valued at $100,000 one year ago, the lack of rollback to counter inflation would result in about $18.66 more tax this year.
All of the city’s property tax hearings will be held in the council chambers at City Hall. Two are scheduled for Tuesday, Aug. 30, the first at 9 a.m. and the second at 6 p.m. The third tax hearing is slated for 9 a.m. Sept. 6, after which the council can vote on final adoption of the rate.
Fire district revenue
Also considered in Penny’s revised recommendation, digest growth from construction and inflation in the Statesboro Fire Tax District came in higher than the original 14% prediction, he reported. This is the area, outside the city limits but within five miles of Statesboro Fire Department stations, where the county collects an added tax to fund firefighting service by the SFD.
The new projection, based on the tax digest in this high-growth area, is $1,715,829 fire tax revenue, which is about a 25% rise from $1,368,460, which West said was last year’s actual revenue.
“The increase will not completely eliminate the requested increase in the millage rate we requested from the county, but it will help,” Penny wrote.
County commissioners had already said “no” to the city’s request for an increase in the fire district millage.
When the city held a preliminary budget hearing June 7, three owners of long-established, independent Statesboro retail businesses spoke in opposition to the then-proposed millage rate hike, and a fourth business owner spoke on the same theme during public comment time at a later meeting. Noting that, like the city, businesses are contending with inflation and a need to attract and retain employees, the business owners asked city officials to look for other revenue sources.