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Big Tax Increases on the Horizon?

The county is on the precipice of setting in motion a serious of events that could substantially raise your property taxes.

It has come to light that if the county puts a SPLOST referendum on the ballot this November, and it passes, the property assessment freeze will cease to be in effect.  We know this now based on a recent review by legislative counsel of HB 596.  The legal opinion concluded that:

“…HB 596 serves to suspend the homestead valuation freeze currently in effect in DeKalb County if the new HOST and a Splost are approved in the November election.”

That means that 10 years of increases in your property value, which have been shielded from county and city taxes, will instantly become taxable.  You will be providing the county and cities with a sales tax and property tax windfall.

As you know, I have expressed my opposition to the SPLOST because the county’s project list shortchanges real needs (paving and public safety) while spending heavily on pet projects.

Now, the stakes are even higher.  At this point, even if the project list was perfect, bringing this SPLOST forward for a vote in November is irresponsible.  To go forward would mean a devastating tax increase on 10 years of property value growth that has been shielded.

Unfortunately, the county has asked the cities to support the SPLOST referendum.  I have been disappointed that, even before the HB 596 problem became apparent, many cities have already agreed to support the county.

If the county can get every single city to agree, they can extend the tax for another year – 6 years in total.  Many city council members from cities in District 1 have expressed to me that if they agree to an “Intergovernmental Agreement” (IGA), they’ll get a more favorable distribution of the SPLOST tax revenue.  The members often tell me that they have suggested the county improve its project list.  I’m sure the county has taken their suggestion seriously.

Keep in mind, for every dollar of sales tax collected, 75-cents will go to the county and 25-cents will get divided up between the cities (Decatur, Lithonia, Pine Lake, Chamblee, Clarkston, Doraville, Tucker, Brookhaven, Dunwoody, and Stone Mountain).  For example, Brookhaven and Dunwoody will receive approximately 7-cents from each dollar of SPLOST.  Nonetheless, they believe it is in their cities interest to get a small increase in their SPLOST revenue, even if 75% of what you are paying is going to the wasteful county project list.  It’s like thanking a pickpocket for giving you a stick of gum while he takes your wallet.

But now, we are a long way from haggling how to divide up a few cents on the margin.  We are at the point where enacting a SPLOST will trigger a massive property tax increase.

Enter the Intergovernmental Agree (IGA) issue.  The only city that has yet to sign on and execute an IGA is Dunwoody.  If Dunwoody, agrees to move forward with an IGA, then your risk for a sustained property tax increase just got bigger.  If Dunwoody agrees to the IGA, the county can call the SPLOST referendum in November, and because all cities will have agreed, the term of the sales tax will be extended to 6 years.

Dunwoody City Council will meet on Monday, July 18th, to decide whether or not to sign the county’s IGA.  Those that want to sign the IGA have suggested that it’s good for Dunwoody because it improves their SPLOST revenue by $1.5 million over the 6 year period – the county’s “sweetener” to get the city on board.  I have heard the suggestion that this problem can get “fixed” in the next legislative session.  Are you willing to “hope” that this gets fixed?  Are you willing to take that risk with so much of your money on the table?

If Dunwoody signs the IGA it allows the city to be used as a pawn by the county in a game that has serious wasteful and taxation implications. Worst of all, if this goes forward to the ballot and passes, your property taxes will go through the roof.  And, Dunwoody will have agreed to give them an extra year on that one, all in exchange for a few more of your dollars over 6 years.

Please let your Dunwoody councilmember hear you on this matter.  We cannot encourage the county to move forward with such a risky and flawed proposal.  We cannot support the removal of the assessment freeze.  I hope that you will join me in my efforts to oppose this.

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County SPLOST Proposal – Unacceptable

I have been asked to share my thoughts on the proposed SPLOST list. In its current form, the proposed SPLOST list is unacceptable to me. To sum up why:

  • The county’s current proposed SPLOST project list is filled with “wants” while shortchanging “needs”.
  • Less than 50% of the SPLOST list is focused on the original intent of the legislation – funding road paving and infrastructure repairs.
  • The current SPLOST list proposes to use almost 10% of all SPLOST collections to fund a new, large government center complex.

Here’s how your sales tax in DeKalb is currently assessed:

DeKalb Sales Tax is 7%. Here’s the breakdown:

4% is a State of Georgia sales tax
1% is an Education SPLOST that goes to the DeKalb school district
1% is a tax that goes to MARTA
1% is a HOST (80% goes to property tax relief / 20% goes to infrastructure funding)
7% Sales Tax in DeKalb

So – why is there a proposal to add another penny?

The 2014 DeKalb County Operations Task Force recommended that our DeKalb County Legislative Delegation pass a bill allowing for the county to call a referendum to correct a growing inequity in the distribution of the HOST tax proceeds. Increasingly, due to the way the funding formula works, the majority of that 20% for infrastructure was going to cities. The county struggled with the loss of these funds and road maintenance suffered. The motivation behind the legislation (HB 215) that allows for the SPLOST referendum was:

  1. To give even more property tax relief to homeowners (convert the HOST property tax penny to 100% property tax relief) and,
  2. To create more infrastructure funding by adding another penny sales tax – all subject to the approval of voters in a countywide referendum.

Why I oppose the current SPLOST proposal:

In theory I favor replacing property tax with sales tax. I am also sympathetic to the unfortunate skew in HOST fund distribution. I am strongly in agreement with the motivation of legislators to help fund a robust road paving program. Sadly, as the county prepares the referendum question for the ballot, the proposed list of SPLOST projects has grown to include pet projects and monuments to government bureaucracy. This includes new parks, libraries, and an exceedingly large new government center – a Taj Mahal monument to ineffective government.

In addition to mission creep in the SPLOST list, important and defensible public safety improvements receive less funding than needed. Our police and fire departments both need new training facilities, yet SPLOST only proposes to fund 40% of this need. Fire Stations located within the city limits of any city have been removed no matter their current state of disrepair. Keep in mind, most fire stations within city limits serve areas that include multiple jurisdictions including multiple cities and unincorporated DeKalb. You should also note that you pay fire service tax to the county to protect life and property even as the county refuses to build or rebuild stations that are necessary to protect you.

I hope that elected officials in the county, the cities, and our legislature won’t be distracted by or focused on “wants” but rather “needs” as they evaluate the SPLOST proposal. I hope that our partners in city government won’t support a county referendum that provides them a new source of tax dollars for their city while burdening DeKalb’s taxpayers in all of the county, including cities, with a project as wasteful as a new government center. I hope that all elected officials will understand the county must focus on repairing the broken infrastructure that everyone must endure instead of adding more capital (Government Centers, parks, libraries, etc.) to an inventory of assets that are already poorly maintained.

We can consider a SPLOST that is serious about paving roads and addressing public safety. We must adhere to the original rationale for this proposal – paving and repairing roads and infrastructure. I will not support a SPLOST, raising your taxes, to fund pork barrel spending of any sort.

New “Pension Legacy” Tax Proposed – Urgent Legislative Alert – House Bill 711

Double Taxation – the fallacy of pension legacy costs.

I am writing to alert you to a potential property tax increase coming from the Georgia General Assembly.  House Bill 711, sponsored by Rep. Mary Margaret Oliver (D-Druid Hills), seeks to add a special tax district to cities formed after 2005.  Rep. Oliver believes that newly formed cities owe, what she refers to as, “pension legacy costs”.  The notion that these legacy costs exist is false and here’s why.

  1. Newly formed cities continue to pay fully into the General Fund and the Fire Fund. Embedded in these funds are the costs for benefits, including pensions for the employees providing these services.
  1. Newly formed cities continue to pay fully into the self-sustaining funds of Sanitation and Watershed. Embedded in these funds are the costs for benefits, including pensions for the employees providing these services.
  1. DeKalb County lowered the millage rate for the Police Fund (a fund newly formed cities do not pay into) in the 2015 budget.
  1. DeKalb County did not reform the pension benefit system until December 2015 – 7 years after the formation of Dunwoody.
  1. DeKalb County used unrealistic actuarial assumptions that negatively impacted funding.

If DeKalb County believed there was a crisis in the pension plan, chiefly driven by the new cities no longer paying into the police fund, why would the county lower the police fund millage rate in 2015?  If the county believed that the crisis was caused by newly formed cities, why did pension reform not occur until just a few months ago in December of 2015?

House Bill 711 is only directed at newly formed cities.  It is punitive, based on false assumptions, and is not congruent with the facts.  Make no mistake about it, it is a discriminatory tax aimed at Brookhaven and Dunwoody.  It is a bailout that would allow DeKalb County to continue poor fiscal management.  It creates a liability for new residents and business for a service they never received.  Imagine an entirely new property tax layered onto the commercial engine of the region – the Perimeter market – and the affect that would have on business, growth, and sales tax revenue to the county, schools, and state.  House Bill 711 is wrong and would have dire economic consequences for the region and state if passed.

*******

House Bill 711 is currently in the House Governmental Affairs Committee.  Here is a list of emails for the members of that committee and the committee staff.

bruce.williamson@house.ga.gov

tom.taylor@house.ga.gov

betty.price@house.ga.gov

jay.powell@house.ga.gov

alanpowell23@hotmail.com

mmo@mmolaw.com

howard.mosby@house.ga.gov

john.meadows@house.ga.gov

ronnie.mabra@house.ga.gov

eddie.lumsden@house.ga.gov

rusty.kidd@house.ga.gov

dustin.hightower@house.ga.gov

hughfloyd@mindspring.com

barry.fleming@house.ga.gov

amy.carter@house.ga.gov

darlene.taylor@house.ga.gov

buzz.brockway@house.ga.gov

erynders@bellsouth.net

craig.foster@house.ga.gov  (Policy Analyst)

michelle.spearman@house.ga.gov (Admin. Assistant)

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Understanding DeKalb’s Millage rate system

First, DeKalb County’s millage rate isn’t one millage rate that funds all aspects of the county.  DeKalb’s total millage rate is actually the sum of various component millage rates.  I often refer to these individual rates as “buckets”.  Here’s a list of some of the “buckets” for which you may pay a millage rate:

  1. General Fund – This funds services that are provided county-wide like the court system, sheriff, libraries, etc.. It is the largest fund and every resident in DeKalb, including all cities, pays the rate for this fund.
  1. Fire Fund – This funds the Fire Department that is used by the unincorporated parts of the county, as well as most of the cities, included Dunwoody, Brookhaven, Chamblee, Doraville, etc.
  1. Police Fund – This funds the DeKalb Police Department for unincorporated DeKalb and any city that elects to use this service.
  1. Roads and Drainage – This funds roads and drainage services to the county and any city that elects to use this county service.
  1. Parks and Recreation – This funds parks and recreation services to the county and any city that elects to use this county service.
  1. There are also debt service rates that are apportioned county-wide and otherwise pursuant to their issuance.
  1. House Bill 711 proposes to add a new “bucket” that would be filled only by cities formed after 2005.

Sanitation and watershed services are self-sustaining and charge a fee-for-service for unincorporated county residents as well as residents of cities.  Newly formed cities have all continued using DeKalb as their sanitation service provider.  Water is only provided by the county so all cities use, and pay, for this service.

Planning and Sustainability is a self-sustaining, fee-for-service fund that provides the plan review services to residents and builders who need permits.  This area also handles business licensing services.  Dunwoody and Brookhaven now provide this service as a city.

Since the incorporation of Dunwoody and Brookhaven, residents of these cities have continued to pay fully into the General Fund, the Fire Fund, the appropriate debt service, and they continue to pay into the self-sustaining funds of sanitation and watershed.  So, the only services that these cities no longer receive, or pay for, from the county that are funded by property tax millage rates are: (1) Police, (2) Roads and drainage, and (3) Parks and Recreation.

 

 

 

Mid-Year Budget Update – Millage Increases and Waste

I voted against the mid-year budget because it did not: (1) incentivize efficiency, (2) reform wasteful departments, or (3) improve DeKalb competence levels.  Furthermore, it increased the the millage rate for the General Fund by 2.17 mills, thereby increasing the DeKalb County millage rates paid by all the cities.  Taxpayers are getting hit again with significantly increased property assessments.  Even though the assessment freeze gives residents relief on county and (for Dunwoody and Brookhaven) city taxes; your bill for school taxes is not subject to the assessment freeze.  As your property assessment value increases, so will your school taxes.

Pursuant to state law, counties are required to give a public notice when they are increasing your taxes.  Click here to view DeKalb County’s Official 2015 Notice of Property Tax Increase.

Here are the DeKalb County millage rates:

FY 2014 Proposed FY15 Change % Change
FY14 – FY15
Avondale 12.79 15.01 2.22 17.36%
Brookhaven 13.57 14.67 1.10 8.11%
Chamblee 12.36 14.57 2.21 17.88%
Clarkston 14.63 16.45 1.82 12.44%
Decatur 9.58 11.92 2.34 24.43%
Doraville 12.17 14.41 2.24 18.41%
Dunwoody 13.57 14.67 1.10 8.11%
Lithonia 14.95 16.75 1.80 12.04%
Pine Lake 15.38 17.14 1.76 11.44%
Stone Mountain 12.61 14.83 2.22 17.61%
Unincorporated 21.21 20.81 (.40) (1.89%)

 

City* Millage Rates Proposed County Millage Rate Total Millage
Brookhaven 2.795 14.67 17.465
Chamblee 6.4 14.57 20.97
Dunwoody 2.74 14.67 17.41
Doraville 8.75 14.41 23.16
*most current rates available

(** If you live in Dunwoody or Brookhaven, you pay a lower combined millage rate than unincorporated DeKalb. Both cities have far more aggressive paving and infrastructure programs, as well as more park improvements.)

 

DeKalb Doubles Down on More Taxes – County and Schools

This week the interim CEO for DeKalb County, Lee May, presented the Board of Commissioners with a mid-year budget.  As luck would have it, most of us received our Annual Notice of Assessments in the mail.  The overall tax digest has increased almost 10%.

The most important facts to note about the mid-year budget are:

  • If you live in a city, DEKALB COUNTY raised your DEKALB COUNTY millage rate for 2015.
  • Property values are higher than initially expected, netting $36.6 million more in taxes from you.
  • DeKalb County intends to spend and keep most of the unanticipated tax revenue rather than trim the size of the county government and rolling back your taxes.
FY 2014 Proposed FY15 Change % Change
FY14 – FY15
Avondale 12.79 15.01 2.22 17.36%
Brookhaven 13.57 14.67 1.10 8.11%
Chamblee 12.36 14.57 2.21 17.88%
Clarkston 14.63 16.45 1.82 12.44%
Decatur 9.58 11.92 2.34 24.43%
Doraville 12.17 14.41 2.24 18.41%
Dunwoody 13.57 14.67 1.10 8.11%
Lithonia 14.95 16.75 1.80 12.04%
Pine Lake 15.38 17.14 1.76 11.44%
Stone Mountain 12.61 14.83 2.22 17.61%
Unincorporated 21.21 20.81 (.40) (1.89%)

 

City* Millage Rates Proposed County Millage Rate Total Millage
Brookhaven 2.795 14.67 17.465
Chamblee 6.4 14.57 20.97
Dunwoody 2.74 14.67 17.41
Doraville 8.75 14.41 23.16
*most current rates available

(** If you live in Dunwoody or Brookhaven, you pay a lower combined millage rate than unincorporated DeKalb. Both cities have far more aggressive paving and infrastructure programs, as well as more park improvements.)

 

DeKalb County citizens should recognize that an increase, on average of 10%, in property values will result in a tax increase.  If you had any increase in your property assessment, you will be paying more in 2015 than 2014 in property taxes.

The county will be growing government.  The county has not come to terms with the reality of new municipal governments.  Citizens have formed cities and asked for services to be delivered via these city governments.  As cities have taken on the delivery of services, the county must recognize that their balance sheet must be recalibrated.  Indeed, the county has less tax revenue because more now accrues to the cities.  It’s called a “balance sheet” for a reason.  As revenue exits the county, so does the liability to provide those services and DeKalb must subtract that liability to “balance”. This means that DeKalb must reduce the size and scope of county government.  At this time, I have seen little evidence showing that the administration understands this principle.


School Taxes

Taxpayers should also note that they will, likely, be paying substantially more in school taxes.  Taxes that are paid to the county are kept in check by the assessment freeze that holds your property assessment value at the 2007 level, unless sold or renovated.  However, the assessment freeze is not applied in your school tax calculation.  So, as your assessment grows, so do your school taxes.  DeKalb County has the second highest school millage rate in the state.  Click here for a list of the millage rates for every school district in the state.  Most school districts have a cap of 20 mills for their school tax.  DeKalb is one of a few counties that have a cap of 25 mills.  The reason?  Many years ago, DeKalb had 5 additional mills available because they had the liability of running DeKalb College; which was founded by the DeKalb Board of Education in 1958.  In 1986, the Board of Regents of The University System of Georgia accepted DeKalb College as a member institution and assumed liability for its operation.  DeKalb College is now run as Georgia Perimeter College and Georgia Piedmont Technical College under the University System.

Once again, as with the formation of cities in DeKalb, we have a “balance sheet” issue.  As the liability for the operations of DeKalb College left the school district, so should have the ability to tax past the 20 mill limit of school districts around the state.  Both the county government and the school district need to adjust their operations and budgets for the reality of the services they need to provide.

DeKalb, both county and school district, has bloated bureaucracy and poor performance delivery.  You’re paying for a 2015 Mercedes-Benz S and you’re getting a 1971 Pinto.  Adjustments in both costs and outcomes must be made.  We should be paying less and getting better results.

Keep in mind that DeKalb County schools does not even meet the state requirement of spending 65% of the budget in the classroom (on “direct instructional expenses”).  Click here to read an article on this problem.  The new budget for the upcoming fiscal year beginning on July 1st (FY16) isn’t going to hit the 65% mark either.

We are all pleased that property values are rebounding but your investment in bad government just got bigger.

You can appeal your property assessment.  Stan Jester has already published a blog on this.  Click here to read it.