City Council arrived at a compromise on Statesboro’s property tax increase Tuesday evening, approving neither the 9.212-mill rate recommended by the city manager, nor the 6.362-mill rollback rate that would have fully offset inflation in appraised property values, nor the 7.308-mill rate the city had maintained for the last five years.

Instead, the four council members present, by a unanimous vote, adopted a compromise rate of 8.125 mills. So instead of the 44.75% average increase that had been predicted from the 9.212-mill rate compounded by inflation in real estate values, property owners may see about a 27.7% increase in their city tax on average.

A mill is 1/1000th of the value of property as assessed for taxes, and viewed simply in terms of mills, the council approved a 0.82-mill increase instead of the 1.9-mill hike that had been proposed.

City staff members had calculated that the previously proposed 9.212-mill rate would result in $222 more annual tax on a home with a 2022 fair market value of $200,000, assessed at 40% of that value as is standard in Georgia and with the basic homestead exemption applied. The 8.125-mill rate that was actually adopted should result in a $137.50 increase on the $200,000 example house, based on the same formula.

City Manager Charles W. Penny had repeated the staff’s reasons of seeking the increase to a 9.212-mill rate at each of three public hearings, the last held during Tuesday’s 5:30 p.m. regular City Council meeting. That increase, originally projected to yield $2.77 million more revenue than the rollback rate, would cover increased personnel costs – including a 5% across-the-board raise for city employees, plus the third year of a pay-for-performance plan offering additional raises up to 4% – and prepare the city for funding a new pay plan to be implemented beginning next July after a compensation study is completed, Penny said.

Keeping pace on salaries becomes more critical as the city government is facing competition from the new Hyundai Motor Group electric vehicle plant under construction in Bryan County and several new industries locating here in Bulloch, Penny and Mayor Jonathan McCollar asserted.

In addition, the larger increase, Penny said, would have replaced more than $600,000 in previously carried-over fund balance that the city spent last year. The fiscal year 2024 budget, approved by the council in June and in effect since July 1, could have been fully funded without any tax increase, but that would have required spending $2.14 million more of previously accumulated balance, further eroding this “emergency fund,” he said.

In favor, at first

Two of the four council members present – District 3’s Venus Mack was absent – started out making statements in support of the full 1.9-mill proposed increase.

“I am for the millage increase,” said District 4 Councilmember John Riggs. “Take away the emotion of our employees, which are what make the city run. … Just being pragmatic, the growth is on the way, we can’t stop it, we can manage it. From my point of view, from sitting up here and having the powers that I do, this is just the best that we can do.”

After the recent passage of Hurricane Idalia, it was city employees “who kept the roads open,” Riggs added.

“And if we don’t do this now to help them we are going to lose hundreds of years of experience, who kept the roads open that night and will do so the next time,” he said.

“Nobody likes raises in taxes,” said District 2 Councilmember Paulette Chavers. “But my issue is public safety. That is a big issue, and as a representative of District 2, it’s a lot of public safety concerns in District 2, and we don’t have enough police officers to manage the streets. So it’s either we get more police officers to manage the streets or we’re going to have crime galore.”

So, she said she was for the millage increase “for that specific purpose.”

Existing reserve

However, the other two council members noted that the city actually had a sizeable accumulated general fund balance. City Finance Director Cindy West previously said the balance, as of June 30 and unaudited at this point, was roughly $7.2 million. That would be over 32% of the fiscal 2024 budgeted general fund spending, or about 35% of last year’s budgeted expenses.

“I’m not an accountant, I don’t have a lot of background in this stuff, and I rely on city staff, who are telling me conservative practice is you need 25 percent of budget, minimum, in reserve to deal with emergencies. …,” said District 5 Councilmember Shari Barr.

“But we’re sitting on more reserve than that right now, and so, council members, … I think we need to try to relieve the citizens by going up less than what we think it’s going to take to balance the budget, use up a little bit more reserve to try help everybody get over the hump this year,” she said.

District 1 Councilmember Phil Boyum said he thought the staff presentation during the hearings had been a little misleading in “that we only saw the extremes.”

“We only saw what happens if we roll back and only saw what happens if we raise it to 9.2. A very standard practice is to not roll back and keep the rate the same and deal with the fact that folks are seeing a 25 to 35 percent increase in their property values.”

He also noted that, with the current budget, the city also increased its fees for fee-based services.

“I’m with you, Councilwoman Barr, on this, especially since we’ve gone up 10% on water, 10% on sewer, 10% on trash, 10% on stormwater, property valuations have gone up 25%, and the rate that we’re raising it to is paying back the general fund balance,” Boyum said.

But what he actually proposed at first was keeping the millage rate unchanged at 7.308 mills.

Mayor McCollar spoke about what the city did with special federal funds received during the COVID-19 pandemic and economic recovery.

“One of the things that we’ve prided ourselves on as the city of Statesboro, as an organization, is that we took care of our citizens,” McCollar said. “When we received our CARES money, when we received our ARPA funds, we took all $17 million and put it into people.”

That money, he noted, is going to fund a new Food Bank facility, the city’s program for home revitalization and the extension of sewers to neighborhoods previously not connected to city’s system. During and after the pandemic shutdown, the city bought over 500,000 meals to feed families in Bulloch County, not limited to Statesboro residents, he said.

The city also needs to take care of its employees to keep them and to maintain its fund balance for emergencies, he argued.

“What our fund balance does is it allows us to put ourselves back together,” McCollar said, noting that local governments cannot always count on immediate help from FEMA.

He said that if he needed to cast a vote, he would vote for the staff-recommended millage rate.

The compromise

However, Barr noted that the city’s budget, already approved, provides for the employee raises and said the council was only debating whether to do the things in the budget by using more fund balance and less of a tax increase.

Calling it “a compromise between what’s proposed and what we were at last year,” Barr offered a motion for 8.125 mills, and Boyum seconded that motion.

Meanwhile, Riggs said he had been persuaded by the idea that the city would still have a substantial reserve. Boyum noted that the compromise rate should produce about $1 million less revenue, which would still leave a more than 25% balance at the end of the fiscal year.

“The USA was built on compromise, Paulette, what do you think?” Riggs said.  “I can go with it.”

“Well, if you go with it, then it’s over,” Chavers said.

He said he “thirded” the motion, and she cast the fourth vote in favor.