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City proposes increase in storm water fee
All other Statesboro fees, taxes to remain unchanged
penny
Statesboro City Manager Charles Penny

Statesboro City Manager Charles Penny is proposing a city budget that includes no tax increases and just one fee increase, but one that would affect almost all of the households, businesses and nonprofit organizations in town.

Beginning July 1 with the new fiscal year, the stormwater fee would increase by $1.05, from the current $3.95 to exactly $5 a month for each single-family residence and by multiples of that amount for other city customers, such as businesses and nonprofits, with large buildings and parking areas.

So for an ordinary household, the proposed increase will cost $12.60 over the course of a year. But for Georgia Southern University – which has Statesboro’s largest expanse of roofs and parking lots – the increase would amount to about $17,000 for the year after earned credits are applied.

To address potential revenue declines from the COVID-19 pandemic, Penny has implemented a conditional hiring freeze, halted about $400,000 of planned new spending and suggested a possible dip of up to $900,000, which he hopes to avoid, into the city’s general-fund reserve.

But the stormwater fee increase is not part of that calculation, he said in an interview Friday.

“What we want to do is build up our stormwater fund so that we can address some drainage issues throughout the city, and this fund has only been in place for about five years, but eventually that fee will need to go up more so that we can address some major issues,” Penny said.

He and Assistant City Manager Jason Boyles and Finance Director Cindy West presented the proposed budget to Mayor Jonathan McCollar and City Council members during late-afternoon work sessions Wednesday and Thursday. Two more budgeting sessions were originally slated for next week, but the officials decided that these will not be needed.

Instead, the budget will next be presented at a 5:30 p.m. public hearing on June 9, before proposed adoption by City Council at its June 16 regular meeting.

 

Drainage needs

One of the issues that Penny hopes to address with the stormwater fund in future years is the maintenance of ponds or small lakes that are currently private property. These help provide drainage for the city, he said.

“But what happens is those private ponds impact citizens and they’ve been built by developers, but once the developer is gone, someone has to maintain them, and so most citizens are going to call us when they have issues with those ponds,” Penny said Friday.

For example, residents near a pond on Fletcher Drive contacted the city earlier this year with concerns their homes might be flooded during a period of heavy rain.

The fund has also been discussed as a potential source for repaying the state line of credit on the Creek on the Blue Mile project. But that is not a consideration for fiscal 2021, Penny said.

Stormwater fees for businesses and other nonresidential properties are based on their area of impervious surfaces, such as roofs and pavement, measured in “equivalent residential units,” or ERUs, multiplied by the residential charge. So besides Georgia Southern, companies that own shopping centers are some of the largest fee payers.

To fulfill the city’s needs for drainage and flood control, the fee should probably be raised to about $10 per ERU in future years, Penny told the council.

 

Fee on the untaxable

Because the stormwater fee is considered a service charge and included on city utility bills, the university and other government entities and nonprofit organizations are not exempt, as they are from property taxes. Even churches are charged the stormwater fee on their water bills.

Penny also presented information about the portion of tax-exempt properties in what would otherwise be Statesboro’s tax base in his slideshow for Wednesday’s session.

Of the 8,873 real estate parcels in Statesboro, 420, or about 5%, are nontaxable. But these include properties of above-average value, so 9% of the $1.99 billion value of real estate and personal property in the city limits, or more than $183 million worth, is non-taxable.

Also on the slide was a note that the city of Statesboro does not receive any of Bulloch County’s original Local Option Sales Tax. Bulloch is one of just eight Georgia counties where that tax goes to the school system instead of into city and county operating budgets.

Although the lack of a general fund sales tax is a year-after-year disadvantage, it has upside this year, Penny acknowledged. While the pandemic shutdown has decimated sales tax revenues or at least made them very unpredictable, the sources the city relies on for operating funds are projected to remain relatively flat.

He and West are projecting about a $100,000 gain in property tax revenue, to $5.15 million, about 2% growth over last year’s.

But they project a possible 30% drop in sales taxes, hitting the city’s shares of the multipurpose Special Purpose Local Option Sales Tax, or SPLOST, and the Transportation SPLOST. Those taxes, placed in budgets of their own, fund capital projects, such as sewer improvements, vehicle and equipment purchases and street paving. Officials discussed funding purchases and projects from other sources and already accumulated SPLOST funds.

 

Spending still up

Spending from the general fund, which is funded in part from property tax, utility franchise fees and an insurance premium tax, is projected to grow 7.4% over last year’s budget, to almost $17.5 million. But 63.9% of general fund spending is for salaries and benefits, and the city needs to maintain its ability to retain and attract talented workers, Penny told the council.

So with the fiscal 2021 budget, he plans to follow through with the third phase of employee raises planned from a study completed early in 2019 and the upgrades to the city’s retirement system approved by the council in December.

The hiring freeze is conditional, with exceptions possible when department heads demonstrate a necessity to fill vacancies and especially to maintain the police and firefighter forces, Penny said.

Previously proposed items for which he has halted spending include $100,000 for hiring a small-business recruiter, $45,000 for a branding effort to promote Statesboro and a $200,000 transfer from the general fund for capital projects. Funding for a digital recordkeeping upgrade has been reduced by $35,000.

But the mayor and council members asked that he restore $100,000 for development of a downtown master plan.

With spending running about $400,000 less than projected in the current year’s budget, the city should start the new fiscal year with a general fund balance of about $6.7 million, a more than 38% reserve. But Penny said he still hopes to avoid the possible $900,000 reduction in the reserve over the next year by encouraging staff to reduce spending by that much.

Taken together, the city’s budgets – including the water and sewer, stormwater, natural gas, fire service, solid waste collection and disposal funds, as well as the general fund and capital funds – are projected to increase 3.25%. Spending, including transfers between these budgets, was projected at roughly $61.1 million for the current fiscal year and is proposed at $63.1 million for fiscal year 2021.

 

 

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