Statesboro's mayor and council held a public hearing on the proposed fiscal year 2025 city budget Tuesday, but no citizens signed up to object or ask questions.
The general services fund portion of the budget shows about a 13.5% increase in projected spending. City Manager Charles Penny last month predicted that it may require either a property tax rate increase – he suggested a 1-mill hike – or spending down the accumulated general fund reserve by as much as $1.7 million.
Tuesday's budget hearing, which was part of the 9 a.m. regular City Council meeting, was not followed by any vote on the budget. But the council is expected to vote on adopting the budget June 18 for it to be in effect at the July 1 start of the fiscal year. Action to set the millage rate could follow as late as September.
At the start of Tuesday's hearing, Penny noted that the city's proposed overall budget totals $108,973,791. But this almost $109 million figure includes internal service funds and transfers where the city is paying itself. The overall budget for all funding categories, minus those internal payments and transfers, is actually decreasing, from almost $104 million in fiscal 2024, which ends June 30, to $93.5 million projected for fiscal 2025 because some grant-funded projects have been completed.
But that $93.5 million includes purchases and projects paid for with local T-SPLOST and SPLOST sales taxes or state and federal grants, as well as budgets for the city's "enterprise funds" with their own fees, such as water and sewer, natural gas, stormwater and solid waste disposal.
"All of that is not the operating budget," Penny said. "The total operating budget is about $55 million."
Just part of that "operating budget" is the general fund, which he noted, "this year, FY 2025, has grown and it's about $25 million."
In fact, the general fund's projected revenue for fiscal 2025 is $24.6 million. In the "operating budget" he included, besides the general fund, those fee-based enterprise funds mentioned above.
"The majority of city employees operate out of the general fund budget," Penny said, meaning that a majority are paid from there, "and that's also where our (property) tax dollars come in, to the general fund. However, when you look at the amount of (property) tax dollars that we will receive, a little over $8 million, that amount of tax dollars is less than the total budget for the Police Department."
Paying for past raise
Salaries and other payroll and benefit costs make up about 63% of the general fund, Penny noted again, as at previous meetings. Although no new across-the-board raise is proposed for city employees with the fiscal 2025 budget, a major portion of the increased general fund spending is the new pay plan the council adopted last December after a compensation study, resulting in raises in January 2024 for 300-plus city employees.
Only with the new budget will the city government see a full year's cost – July 1, 2024-June 30, 2025 – of the pay-plan raises, and the city is also continuing a system of pay-for-performance raises, with costs varying annually.
All of the raises and three added positions contribute to a $1.16 million expected increase in spending for salaries and benefits.
Other operating costs, such as fuel and electric power, are also paid from the general fund, Penny noted.
"As far as the recommendation for a tax increase, what we've said is you can balance this year's budget by using general-fund fund balance; however, you would end up having to use in the neighborhood of $1.7 million," Penny reminded the council. "Under the current general fund, if you use that amount of money to balance the budget, you would then go below our city's, your, policy."
That informal policy, also cited by the county and other local governments as a budgetary guideline, is to keep an amount at least equal to 25% of budgeted spending on hand as an emergency reserve.
September reality
"So what we've asked the council to do is between now and September when you have to set the tax rate, we will have received our tax digest, and once we receive the full tax digest, we will see what kind of growth we have in our tax revenue," Penny said.
The digest is the value of all of the taxable property in the city limits, as determined by the Bulloch County Board of Tax Assessors and staff.
It is possible the city may not need a millage increase, or need a smaller one, to cover the spending and maintain a 25% reserve, "but we won't know until we actually get that tax digest information," he said.
If the city accepts increased revenue resulting from inflation in assessed property values, it will still count as a tax increase, requiring three more public hearings. Only a rate rollback to counteract the inflation would prevent this.
Besides the raises, another thing affecting the city's general fund budget is the separate fire fund, for which the city receives revenue that the county government collects for the Statesboro Fire Department's service to areas outside the city limits within five miles of its two stations. The SFD added nine firefighter positions with city funding beginning in 2021, and 12 more beginning a year ago with a federal Staffing for Adequate Fire and Emergency Response grant. The SAFER funding continues to pay the 12 salaries for three years.
"Although we received $2.3 million from the county in fire tax for the fire district, that budget will still fall short almost a million dollars," Penny said. "So we're going to have to account for that so we have a balanced budget with all of the fire operations."
Indeed, in the proposed city budget as presented last month, a $1.2 million transfer from the general fund to the fire service fund is actually the largest added general fund expense.
The city's current 8.125-mill tax rate was adopted on a 4-0 compromise vote by the council last September. Penny had proposed a 1.9-mill increase, partly in anticipation of pay-plan raises for at least police and firefighters, but council members approved a 0.82-mill increase instead.
District 2 Councilmember Paulette Chavers, the last to agree to that September 2023 compromise, on Tuesday expressed regret that the council didn't approve the larger increase then.
"Now we're jacking up taxes again, and I'm feeling some type of way about it, because what I indicated is happening," Chavers said. "A second time we're jacking up taxes. We should have done that the first time and been done with it. Now we've got to do it again. We're going to be the villains now. I just want everybody to know, we're going to be the villains if we have to raise taxes again."