Statesboro City Council on Tuesday evening approved a fiscal year 2023 budget that, if current projections hold true, will either reduce the city government’s general fund balance by $2 million or require a 1.5-mill property tax increase to limit the drain on the reserve to $1 million.
The vote was unanimous, with District 4 Councilman John Riggs absent.
City Manager Charles Penny again noted that the budget vote was not a vote to set the property tax millage rate. That vote will be taken later, probably in September, when a series of three public hearings on any tax increase would be held. But as he acknowledged, the budget as adopted came with his recommendation that the council consider a 1.5-mill rate hike.
A budget is required before the new fiscal year begins July 1, but the millage rate is set before tax bills go out in the fall.
“As far as revenues are concerned, it does include a millage rate increase,” Penny said. “However, the council can also have a balanced budget by using fund balance, but again, that will be determined in September.”
The total of the city’s budget for all funds, also including fee-supported utilities, internal transfers and sales tax-backed capital spending, was again stated as $87.2 million. But the general fund, the part that includes property taxes for basic city government operations, totaled a little over $18.1 million in forecast spending for the fiscal year now ending and is projected at $20.6 million in the proposed fiscal 2023 budget, a $2.5 million, or 13.8%, increase.
Regular property tax revenues, budgeted at $5.2 million the fiscal year now ending, are shown increasing by more than $1.6 million, topping $6.8 million for fiscal 2023.
That is roughly a 30% increase, with the suggested 1.5-mill rate hike compounded by a rise of more than 7% in the taxable value of property in the city limits, as gauged by the county tax assessors.
District 1 Councilman Phil Boyum noted that budgeted spending exceeds expected revenue for the year by about $2.1 million and asked Penny to confirm whether his recommendation last month had been to raise the millage.
“I recommended that you consider raising that because, one, as city manager and as a professional, when you start using more than a million dollars of fund balance to balance the budget … the fund balance is a non-reoccurring fund, it is a savings account, and if you spend it this year, that means you don’t have it next year,” Penny said.
For each of the past two fiscal years, a $1 million reduction in fund balance was “used” to balance the budget in the initial projections, but this money was never actually spent, Penny noted. However, his staff and the city department heads reportedly achieved those savings in large part because of continuing or recurrent job vacancies, some intentional and others resulting from turnover and difficulty in hiring.
“But the difference this year is – last year one of our challenges, all cities are having this and private employers are having the same problem – is personnel,” Penny said. “So, if you want to keep personnel, that means you have to pay personnel.”
The budget approved Tuesday includes a 4% across-the-board raise for city employees, as well as a continuation of individual pay-for-performance raises authorized by the council last year. An annual bonus, previously $100, is being increased to $500.
Noting that the national inflation rate is now about 8.5%, Penny said that with this budget the city is doing what it can to help its employees with the cost of living and to retain and attract personnel.
So if the council decides not to increase the millage after adopting this budget, “there is a very good chance we will spend $2.1 million or very close to it” from the fund balance, he said.
Penny noted, as other Statesboro officials have over the years, that Statesboro is one of about eight cities in Georgia that do not receive a share of a Local Option Sales Tax for operating revenue. Under decades-old legislation, all proceeds from Bulloch County’s original 1% LOST go entirely to the Bulloch County Schools.
The city does receive portions of two sales taxes, the Special Purpose Local Option Sales Tax, or SPLOST, and the newer Transportation SPLOST for certain kinds of projects and purchases. But these cannot be used to pay salaries for services such as police and fire protection.
“We don’t have a lot of options about how we raise revenue,” Penny said.
He said the general fund balance is “solid” with currently about $8.5 million as the end of current year’s budget approaches but that this constitutes the city’s “rainy day fund” for emergencies.
“If we had a major emergency, those funds are what we would use to put our city back together again,” Penny said.
Boyum and District 5 Councilwoman Shari Barr both expressed reservations about the potential millage rate increase before voting for the budget.
“I had every intention tonight of coming here and voting against the budget for precisely the reason that we’re going to require a millage rate (increase) with the property values going up as high as they are,” Boyum said. “As the mayor likes to point out, we have a 40, 45 percent poverty rate in this community, not to mention the fact that the homeowners that do live in Statesboro by and large are on fixed incomes. …”
But he then added that he would have a hard time voting “no” at Tuesday’s meeting “since we only have three people and that would cause us a problem, since with only two votes we wouldn’t have a budget next year, so we’d have to do a called meeting.”
“But I will say in September I will be vocally opposed to the millage rate increase because it’s going to hurt the lowest income, the fixed-income folks in this community,” Boyum said.
Of the city’s elected officials, only Boyum, District 2 Councilwoman Paulette Chavers and Mayor Jonathan McCollar were present in person Tuesday. Barr and District 3 Councilwoman Venus Mack participated via Zoom, but Mack’s voice was heard at very low volume and the block showing her name disappeared from the video screens for a time. Barr participated remotely because she was self-isolating while recovering from COVID-19, she reported.
But Mack’s frame had reappeared on the screen by the time the vote was taken to approve the budget, which was done on a motion by Chavers, seconded by Barr. So the vote was 4-0, with Mack participating.
“I also am very much concerned about a millage rate increase,” Barr said before the vote. “But I have to rely on staff that this is the budget that it takes to run our city, and I am sympathetic to this idea that we want to reward the good people we have and have a motivated team providing good service to the people of Statesboro, so I don’t know of a way to cut the budget and have that happen.”
McCollar noted that the city’s current millage rate is 7.308, while the Bulloch County government’s base rate is 11.6 mills.
“We’ve done more with less,” McCollar said. “We’ve really, really worked extremely hard to do more with less, and you can physically see the difference in our community with the work that we’ve done. This is not easy at all.”