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City budget input hearing Tuesday with 1.5-mill increase factored in
But millage won’t be set till later; Penny hints amount of hike could be less after values soar
penny
Statesboro City Manager Charles Penny

A public input hearing on the city of Statesboro’s proposed fiscal year 2023 budget, which as currently drafted presumes a 1.5-mill increase in the city’s property tax rate on top of 7% overall growth in the value of taxable property, is on the agenda for Tuesday’s 9 a.m. City Council meeting.

Together, rising property values and a smaller amount of “real growth” from construction, coupled with the suggested millage increase, is projected to yield a more than 26% rise in the city’s property tax revenue over that received for the current fiscal year, which ends June 30.

During two work sessions in May, City Manager Charles Penny told council members that, although he and his staff initially prepared a budget that was balanced with no increase in tax rates or fees, as a responsible manager he had to recommend that they consider a millage rate increase. This was because that earlier draft of the budget was projected to dip into the city’s accumulated general fund balance by more than $2 million in a single year.

To be clear, Tuesday’s hearing is a budget hearing, not a tax increase hearing, and the millage is not being set yet. Separate tax increase hearings would be held later, probably in September.

But local property tax levies consist of two elements, the values of real estate and personal property as determined by the Bulloch County Board of Tax Assessors and staff, and the millage rates set separately by the county commissioners and school board, and for city taxes, the city councils. The Board of Assessors staff sent out notices of newly assessed values dated May 25 to property owners countywide.

Taxpayers have until July 8 to file appeals of the appraisals with the Board of Assessors. Only after appeals are completed will the exact value of the county and city tax digests be known.

“So it depends upon what that final number is,” Penny said in phone interview Thursday. “We might not need the 1.5 (mills increase) in order to reduce how much we need from fund balance, but we still want to limit that fund balance (reduction) to about a million dollars. So, if it takes less of the millage rate increase, that’s what we’ll recommend to council.”

 

 

 

Soaring values

However, successful appeals of appraisals would reduce valuations, not increase them. Based on the notices that went out, Bulloch County Chief Appraiser John Scott reports that the value of taxable property in Statesboro’s city limits increased by 7.39%, which is only a little higher than his 7% estimate the city staff has used for budgeting. The 7.39% includes 6.22% overall inflation, and 1.17% real growth.

But because of soaring home prices in last year’s sales, homeowners, in general, will see larger increases than owners of nonresidential property.

Countywide, the overall increase in the value of the digest, including all types of taxable property, is a little more than 13%, but the valuation of residential properties, as class, increased by about 19%, Scott said. This is an average, with actual increases varying by neighborhood.

“If you’re looking at an assessment notice on a residential home and lot that says it’s up 18 to 20 percent, that’s probably going to be pretty normal,” Scott said.

The rise in values, he notes, is the largest he has seen in his career as a tax appraiser.

Penny said the assessed value of his own home, in Statesboro, increased 14%.

 

Personnel costs

Meanwhile, Penny has recommended, and the city’s proposed budget includes, a 4% “pay adjustment,” or across-the-board raise, for city employees, as well as a continuation of the individual pay-for-performance raises first authorized by the council last year.

A hypothetical $1 million reduction in the fund balance Penny and Finance Director Cindy West used to balance the current year’s budget never materialized. When that budget was proposed one year ago, he said he would urge department heads to avoid spending from the reserve by not rehiring for vacancies whenever possible, and they complied.

The balance actually grew, and is now about $9 million, with general fund spending proposed at $20.6 million. Total general fund revenues are projected at almost $19.5 million, plus $1.1 million drawn from the accumulated balance, in the proposed fiscal 2023 budget.

Property tax revenue, with the increases, is projected at $6.8 million, up from the $5.2 million budgeted last year.

But Penny says that, with the city needing to maintain service levels and facing a tight labor market with rising salaries, he can no longer ask department heads to avoid hiring for vacancies in authorized jobs. He notes that salaries and other personnel costs make up 64% of the general fund budget.

“We’ve been trying to make sure we’re able to continue to provide the services that we need for the city, and right now we’re in a tough job market, labor market, and not just in Statesboro but, I think, all over the country,” Penny said.

The 4% “pay adjustment,” he said, was recommending after consulting the city’s financial advisory firm.

“We’re looking at the inflation rate, and nationally that’s at 8½ percent, but we can’t raise our salaries by 8½ percent, not just as a salary adjustment. …,” Penny said. “Our human capital cost is what is driving our ability to be able to provide services, so in order to stay competitive, we have to continue to reward people for the work they do.”

 

Millage comparisons

Statesboro’s current city millage rate is 7.308 mills, unchanged since fiscal 2018.

If City Council ultimately adopts a 1.5-mill increase, the resulting rate of 8.808 mills will not be Statesboro’s highest tax rate of the past 25 years. That was set with a tax rate of 9.2 mils for one year, in 2000.

But it would be second-highest. After being nearly as high, 8.5 mills, from 1994 through 1999, the rate was later lowest, 6.358 mills, from 2008 through 2017. Then it was increased to the current rate for fiscal 2018 and has remained the same since.

In addition to a chart tracing that millage rate history, Penny’s budget presentations included one ranking Statesboro’s millage among 20 other Georgia cities, some nearby, others similar sized and others simply well known. Statesboro’s current rate of 7.308 mills was higher than nine and lower than 11 of those cities.

The five highest rates among the 21 selected cities were those of Brunswick, with 13.219 mills; Savannah, with 12.739 mills; Waycross, 11.876 mills; Metter, 11.733 mills; and Hinesville, 10.5 mills. The five lowest were McDonough, 3.615 mills; Gainesville, 3.656 mills; Roswell, 4.618; Augusta, 4.845 and Alpharetta, 4.935 mills.

At 7.308 mills, Statesboro’s tax on a property with no exemptions and a $100,000 market value – at Georgia’s 40% standard assessment – was about $292 last year. If increased 26% by a combination of millage and value inflation, the tax on that property would then be about $76 more, without accounting for higher inflation on residential property.

 

 

 

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