At this point, Statesboro City Manager Charles Penny has not recommended a tax increase of any set amount. But balancing the proposed fiscal year 2025 general fund budget he presented in a work session Tuesday afternoon without a tax increase would reduce the fund’s accumulated balance by an estimated $1.7 million.

That, city Finance Director Cindy West had calculated, would leave a balance equal to about 23% of projected spending. The city administration’s stated policy is to maintain a balance of at least 25% as a rainy-day fund.

A mill of property tax is now generating almost $1 million in revenue from taxable property in the city limits.  So a 1-mill increase in the city’s tax rate, currently 8.125 mills, to 9.125 mills, plus a $700,000 drawdown from the fund balance, would fund the budget and leave a 27% reserve, according to city staff’s calculations.

“I will be very clear, I don’t recommend you use $1.7 million (from the reserve) to balance the budget,” Penny told the mayor and council members. “I don’t recommend that because if we do that, we’re going to violate that policy and we’ll be below the 25% standard. I would recommend that we look at a millage rate increase.

“What that millage rate would be at this point I can’t tell you because we really don’t have the tax digest,” he said. “But at worst case, that millage would be 1 mill. … The only other option would be to start looking at our budget, and we’d have to cut services or cut personnel in order to balance the budget.”

The digest, a valuation of all the taxable property in the city, is determined by the Bulloch County Board of Tax Assessors and staff. The final numbers, Penny said, may not be available until September, after a property-owner appeals process, for the city to set its final millage by October.

A mill is 1/1000th of the value of property as assessed for taxes, and in Georgia  most property is assessed at just 40% of its market value. So Penny’s slide show on the budget included a projection that a 1-mill rate hike would increase the tax on a $200,000 owner-occupied home (with a $2,000 homestead exemption) by $78.

Projected 12% growth

West built a projection of 12% tax digest growth into the revenue estimates for the proposed general fund budget. Property tax revenue, projected at $7,339,700 last year, and initially “requested” at $8,220,465 for the fiscal year 2025 (July 1, 2024 – June 30, 2025) budget, is shown as “recommended” at $9.1 million.

So if the digest growth exceeds the projection, a smaller millage increase would net the same amount  of revenue, Penny noted.

Total general fund revenue is projected to grow by 8%, prior to any tax increase, and general fund spending by 13.5%, from $22.31 million in the current year to $25.34 million for fiscal 2025.

Cost of pay plan

This year in the entire budget, the Penny is recommending adding three new employees: a senior planner for the Planning and Development Department paid from the general fund and a refuse collection equipment operator and refuse collector paid from the solid waste collection fund.

No new across-the-board raise is proposed for city employees, unlike last year at this point in the process, when Penny proposed a 5% raise. But the council in December adopted a new pay plan, based on a study by consulting firm Condrey and Associates, resulting in further raises for 300-plus employees of the city government effective last January.

Those raises were aimed at pushing Statesboro’s city base salaries roughly 5% higher than then-current, adjusted averages for comparable Georgia cities and other surveyed regional employers.

After the city has covered six months of those increased salaries in the fiscal 2024 budget, ending June 30, the proposed fiscal 2025 budget includes a full year’s effects of the pay plan increases. The city is also continuing a system of pay-for-performance raises.

With salary and benefit costs reportedly constituting 62.7% of the general fund budget, the projected increased expenditures include almost $1.16 million in salary and benefits costs. But a $1.2 million transfer from the general fund to the separate fire service fund is actually the largest added general fund expense, and the reasons for this will be explored in a later story.

Other city general fund cost increases include about $97,000 for debt service, $172,000 for liability insurance, $60,000 transferred to Capital Improvement Program projects and $93,000 for the new senior planner, including benefits and payroll tax as well as salary.

Last year’s compromise

The current 8.125-mill tax rate was adopted on a compromise vote by the council last September. Penny had proposed a 1.9-mill increase, but council members approved a 0.82-mill increase. The previous year’s spending had already reduced the general fund ending balance by from $7.94 million in June 2022 to $6.93 million in June 2023, but the city also maintains sizeable balances in other funds.

Slides in Tuesday’s presentation showed that Statesboro’s millage rate is, as Penny put it “middle of the road” for a charted selection of Georgia cities and that Statesboro’s highest rate was 9.2 mills  back in 2000, after the rate had been 8.5 mills for several previous years.

All funds: $104 M

The general fund is the budget that directly receives local property taxes, but the city government has a number of other funds, including those for fee-based services such as water and sewer, natural gas, solid waste, and stormwater, as well as special grant and sales-tax-supplied project funds.

Budgeted expenses for all funds combined are actually projected to decrease by more than $10 million for the next fiscal year, but this is mostly because the city has finished some infrastructure projects and is spending down American Rescue Plan Act funding.

Total expenditures for all budgets, minus transfers between them, is almost $104 million for fiscal 2024, projected to decrease to $93.5 million in fiscal 2025.

Three of the city’s six elected officials – Mayor Jonathan McCollar, District 5 Councilmember Shari Barr and District 3 Councilmember Ginny Hendley – attended the work session, which began at 2 p.m. and was allotted time in the council chambers until 6 p.m.

A public budget hearing is slated for June 4, to be followed by possible adoption of the budget June 18.