Statesboro City Council will hold a series of three “tax increase” hearings on the next two Tuesdays because the city government proposes to keep a 2.2% rise in property tax revenue that resulted from inflation in assessed values.
On average, the increase amounts to $7.54 additional tax on a $125,000 home with the homestead exemption, or $7.85 additional tax on a non-homestead property with a previous fair market value of $125,000. The values of individual properties are determined by the county tax assessors.
The first two hearings will be held Aug. 31, when the first is scheduled for noon and the second for 6 p.m., both the City Hall council chambers, 50 East Main St. The third hearing will be held Sept. 7 at 9 a.m. That coincides with the next regular City Council meeting, during which the council can act to set the final millage rate.
The city is not increasing the rate, which is proposed to remain at 7.308 mills for the fifth year in a row. But under the state law known as the Property Taxpayers Bill of Rights, a local governing board must roll its millage back to compensate for inflation in property values or announce a tax increase and hold three hearings.
A mill is $1 tax on each $1,000 assessed value, and property in Georgia is generally assessed at 40% of “fair market value.”
Statesboro’s rollback rate, to avoid the tax increase hearings, would have been 7.151 mills, or 0.157 mills less than the current and proposed rate.
“In order to balance this year’s budget, we used a million dollars of our fund balance, but our goal should be to not be balancing out budget utilizing that fund balance because … once you spend it, it’s gone,” City Manager Charles Penny said in a phone interview.
The balance then wouldn’t be available when or if unexpected needs arose, he noted.
“So this small increase, and basically it is growth in the property value, will give us some increase in our revenue. …,” Penny said. “This additional revenue will help us be less dependent on our fund balance to balance our budget.”
Five-year history
The city’s five-year property tax levy history, also published as a paid notice in Tuesday’s Statesboro Herald, estimates a net revenue increase of $155,483 to the city, resulting both from the inflation in values and any recent construction. That revenue gain is the smallest in at least five years.
A different mayor and council majority last increased the actual millage rate in 2017, from 6.358 to the current 7.308 mills, to fund a raise for police officers.
This year, the property tax is projected to generate $5.65 million for the city’s $18.1 million general fund. This is up from $5.49 million from property tax the previous year. When enterprise funds such as those for water and sewer, storm water and natural gas services plus the various special tax and grant funds are included, the city’s budgets total more than $44 million.
The fiscal 2022 budget, previously approved by the council and in effect since July 1, includes a 3% raise for all of the city government’s approximately 310 employees plus additional raises of 2% to 4% for those who qualify based on annual evaluations. It also includes funding for nine additional firefighters.
Including other taxes, various fees and transfers from the enterprise funds, the general fund was originally budgeted with projected revenue of a little under $17 million, but also drawing $1.15 from its carried-over fund balance.
What about ARPA?
Last year, the city received $1.7 million of special federal funding under the Coronavirus Aid, Relief and Economic Security Act as a reimbursement of public safety expenses. Now the city expects a further $12.3 million in special federal money, half of which has been received with the other half slated for next year, under the American Rescue Plan Act.
So a question to Penny was why the city isn’t using CARES Act and ARPA funds to still provide a rollback.
“First off, I would never recommend to council that they use those funds in our operating budget, because when you do that eventually those funds will go away,” he said. “You only get a chance to spend those one time, and in the case of ARPA funds, you can use those for salary enhancements, but you really can’t use those to operate the city on.”
The city used some of its CARES reimbursement to provide one-time “pandemic hazard pay” of $500 each for all its employees, plus some utility bill, rent and mortgage relief for residents and aid for small businesses. It also purchased some more police cars, and now plans to use some of the remaining CARES money for vaccination incentives.
Final rules have yet to come down on how the ARPA money can be used, but Penny is recommending that the mayor and council spend it on long-term projects such as a housing rehabilitation program and extension of city water and sewer lines to unserved areas inside the city limits.
“Infrastructure is something that you can use those funds to take care of, and this is an opportunity that the city can get those water and sewer services to people who’ve been in the city for a number of years,” he said.