Grantville's proposed 248 percent tax increase, plus reserves, to balance budget
By SARAH FAY CAMPBELLsarah@newnan.com
The city of Grantville's proposed tax millage rate increase, along with transfers from the city's reserves and utility fund, are what it would take to balance the city's budget.
The Grantville City Council is considering a 248 percent increase in the city's net "maintenance and operations" millage rate.
Two public hearings on the proposed tax increase were held Wednesday. A third hearing will be held Tuesday, Aug. 21, at 3:30 p.m. at city hall. The council is set to adopt the millage rate at a called meeting to begin at 4 p.m.
The 5 mill increase is "not a for sure figure," said City Manager Johnny Williams on Thursday. "That is just something that has been discussed. We've still got one more hearing to go through and votes to be taken," he said. "There's no telling what it might be, if anything, at the end," he said of the millage rate increase.
There are multiple reasons for the large tax increase.
One is the decrease in property values.
Grantville's "tax digest" — the total value of all taxable real property in the city — has declined significantly in the past several years.
The net digest was $53,021,374 in 2010. It dropped to $46,177,714 in 2011, and is currently at $36,701,042. The reduction in the digest means that each "mill" of property tax brings in less revenue. A mill is $1 of tax for every $1,000 of assessed property value. The assessed value is 40 percent of the fair market value.
But the biggest reason for the proposed tax increase is that the city has been balancing its budget with reserves and utility money for the past few years.
"Grantville has been deficit spending for a couple of years now — in spite of some cuts each year," said Williams, who became city manager in January.
"We have less policemen that we did two years ago, we have less street employees than we had two years ago," Williams said. Even so, the current millage isn't enough to balance the budget on its own.
With the continuing transfers from the reserves and utility funds "we're sort of at the point where something has got to happen now," Williams said. "You can't go on forever" taking money from the reserves and utility accounts, or the city could end up like cities in other states that have had to declare bankruptcy.
Grantville's situation is not that bad — yet.
"We're not a broke city. We have money in the bank," Williams said. But in the last few years, "it's like having to take money out of your savings account to live off of," he said. "The bank account is getting low."
Williams said the city could probably manage one more year of living off reserves without raising taxes "but that is not a good idea. Nor is transferring funds out of utilities," he said. "Because if something goes wrong, that money might be neededâ ¦ it's borrowing from Peter to pay Paul," he said.
"Living off retained earnings and borrowing from your utilities is not a good idea, not if you want to remain solvent," Williams said.
"You shouldn't transfer" any money from various funds, ideally, Williams said. "Your general fund should live on its own just like your utility accounts live on their own. You shouldn't really have to be shifting around," he said.
Grantville's current millage rate is fairly low, as city millage rates go. "We've got one of the lowest anybody has ever heard of," Williams said.
The city of Newnan's rate is 4.39. Coweta County's proposed rate for this year is 6.8 mills for the unincorporated areas and 7.79 for city residents.
Balancing the budget without transfers from reserves and the utility fund would take a tax rate of nine or 10 mills, Williams said. The council decided an increase of five mills "would be the max ... they thought five would certainly be the upper limit," he said.
Williams is responsible for preparing a budget, but then he turns it over to the council.
"There is a budget ... that is balanced," Williams said. "If they don't do the five mills, we are going to go back and do something else" with the budget.
"We'll probably have to make another round of cuts, somewhere," Williams said.
There are no new expenses in the proposed budget, he said. "It's just a bare bones budget," he said.
David Riley was one of several residents speaking out against the tax increase at Wednesday's public hearings.
Riley said he understands the need for an increase, he just doesn't want to see such a dramatic increase in one year.
Riley said he told the council "you had the last couple of years to look at this, and you didn't do anything. Now you want to make it a 248 percent increase all in one shot."
Williams said there was definitely pressure from city residents to not approve the 5 mill increase. "The public seems to think that is too much," Williams said.
