After feathering back a proposed 2-mill increase in the city property tax rate to a 1.9-mill increase, Statesboro officials are heading toward a series of public hearings on a total advertised property tax increase of 44.75%.

The first two hearings will be held Tuesday, Sept. 12, at noon and 6 p.m. in the council chambers at City Hall. The third hearing is set for Sept. 19 at 5:30 p.m., which is also the time of the second regular City Council meeting of the month. The council could then vote to adopt the proposed millage rate or change it.

That 44.75% number, from the city’s own published notices, includes a 26% increase in the millage rate itself, atop more than 17% inflation in the assessed value of taxable property in the city limits. The Bulloch County Tax Assessors and their staff gauge the property values based on the past year’s sales, but the mayor and council set the city’s millage.

Of course, increases from relatively small amounts look larger as percentages. If raised from 7.308 mills – which was the rate for the past five years – the city of Statesboro’s resulting tax rate of 9.212 mills will still be smaller than the Bulloch County government’s recently adopted 12.85-mill rate or the millage rates of a number of Georgia cities.

But Statesboro’s proposed new rate would roughly equal the fiscal year 2000 rate of 9.2 mills as the city’s highest millage in the past 30 years. The 2000 rate spike was preceded by several years of an 8.5-mill rate and followed by stepped reductions to a full decade – fiscal years 2008-2018 – when the city’s rate was only 6.358 mills.

Those historic numbers are from a city-produced graph used in a May budget presentation, when City Manager Charles W. Penny was recommending a 2-mill increase. The fiscal year 2024 budget, adopted by City Council on June 20, has been in effect since July 1. It included a 5% across-the-board raise for city employees, projected to cost $915,000 this first year, as well as $540,000 continued backing for pay-for-performance raises.

The additional revenue will also help the city deal with rising costs of materials and services and prepare for future years, Penny said.

1/10-mill easing

Last month when he announced the dates of the tax hearings to the council, Penny reduced the recommended rate increase by a tenth of a mill.

“In the budget what we recommended to you was a 2-mill increase to balance the budget, but after looking at the growth and we’ve got the tax digest information from the county … at 2 mills we would end up with about $110,000 more than what we anticipated in revenue,” he told the mayor and council Aug. 15. “So, at 1.9 mills we would end up at a little more than $18,000 more than what we need.”

Penny, who arrived as manager of Statesboro’s city government in the summer of 2019, said this year would be the first in his tenure “that we’ve actually had a balanced budget that we did not use any fund balance.”

During some of those previous years, a certain amount of deficit spending from the accumulated fund balance, or reserve, was built into budget projections by Penny and Finance Director Cindy West but not realized. Instead, certain staff vacancies were left unfilled as department heads reduced spending from budgeted amounts when possible, as Penny directed. But that was not the case last year.

Upward pressures

“I know people don’t like to talk about raising taxes, but this is my fourth year with the city of Statesboro, in fact I’m just starting my fifth year … and the first time I ever presented a budget to you [in 2020] I told you that in my opinion, professionally, we needed to increase our tax rate. …,” Penny said. “There are outside pressures that you can’t control that we’re going to be dealing with.”

He noted that personnel costs make up about 70% of the city’s general fund spending. Now, he said, the Hyundai Motor Group’s electric vehicle and battery manufacturing Metaplant America, under construction in Bryan County, is putting upward pressure on area labor costs. He also noted that the city has budgeted a pay study to be completed before the next fiscal year. It is being done by the human resources consulting firm Condrey & Associates.

“We can’t do the work we do without personnel, and so these increases are tied to personnel,” Penny said. “We are in the process of a pay study so that next year we make sure our salaries are competitive so we maintain our work force. I’ll also just share with you, Hyundai is already impacting our workforce. We’ve already lost an employee to Hyundai.”

The millage rate increase is meant to be “proactive to next year” for implementation of the new pay plan, he said.  Penny also reminded the elected officials that during a planning retreat earlier this year they said they wanted to “lead the pack” in competing for employees instead of to “just maintain” or to be “in the middle of the pack.”

After not drawing from the fund balance this year, “we can use some fund balance next year to ensure that we can implement our pay plan,” Penny said. “And so with that, I would recommend to you that we not set our rate lower than the 1.9-mill [increase].”

The combination of millage rate increase and digest growth is now projected to produce $2.9 million in new revenue, boosting the city’s property tax income from $6,079,080 last year to $8,985,290 this year. Property tax is a major funding source in the city’s $22.3 million general fund budget, but just one source in its overall budget, which totals more than $91 million when transfers between funds are excluded.

Cost to taxpayers

A mill is 1/1000th of the assessed value of property, and most property in Georgia is assessed for taxes at 40% of market value.

The city’s tax increase notices state that the proposed tax increase for a home with a fair market value of $200,000 amounts to approximately $222.15 and that the proposed increase for a $200,000 non-homestead property would be approximately $227.84.

Under the Georgia law known as the Property Taxpayers Bill of Rights, local governing boards must roll back their millage rates to compensate for inflation in property values or announce a tax increase as a difference between the proposed rate and rollback rate. This year’s rollback target rate for the city was 6.364 mills, so the city announced an “increase of 2.848 mills” in an Aug. 31 notice in the Statesboro Herald.

But the difference between the proposed rate and last year’s actual rate is 1.904 mills.

Actual increases in assessed property values varied by property tax and property type, so the total tax increases would as well.

This year’s one-time state-funded exemption of $18,000 in the assessed value of owner-occupied homes will partly offset city and county increases for homeowners, but the exemption does not apply to rental and non-residential properties.