How the City Raises Your Taxes . . . Simplified!
I recently received the following comment from a concerned Sandy Springs' Advocate, "I have a question. How and when did the City Council increase our taxes?" Below is my explanation as to the "How." The "When" answer is this year - 2008!
After receiving my response (below) the same person wrote back, "Thanks Jim. I can understand that. You should post this to your blog -- I'm sure most people (like me) have no clue that this is going on. I will share this with my neighbors whose email addresses I have, but how can we get the word out to the rest of the city?"
Sooooo . . . here's my attempt at describing the Increase Tax Scenario for Sandy Springs (as simply as I can) . . .
Year one . . .
1) City sets a budget
2) City establishes a millage rate that is applied against the assessed value of property in the City plus an expected collection rate of taxes billed at that millage rate (4.731 mills (a percentage applied to the assessed property values) per the postcard you included in your previous email). The millage rate has a maximum that cannot be raised without a referendum, but the expected "collection rate" is set low (like 8% lower than the tax collector's historical collection rates).
3) City confirms the budget
4) Arthur Ferdinand (Tax Collector) exceeds the City's budgeted collection rate.
5) The collection of taxes over the budgeted amount goes into a "general fund."
6) The City now has a surplus (even over the amount budgeted as a surplus). Our City Council members decided their constituents wanted them to spend this "extra" money (many millions of dollars) on non-budgeted items.
7) Here's a formula that may be helpful: [A] Assessed Property Value x Millage Rate x Expected Collection Rate = Budget; [B]Assessed Property Value x Millage Rate x ACTUAL Collection Rate = Tax Money Collected; [B]-[A]= Overcollection of budgeted expenditures (aka "Slush Fund").
Year two . . .
1) County Tax Assessor's office reassesses the property in the City (Sandy Springs' property tax digest went up significantly year over year). Home assessments went up moderately from year to year, but the business assessments went up dramatically year to year . . . big problem for business - a potential windfall in taxes for the City Council.
2) City sets a new budget with the same millage rate and collection percentages that produced the overcollection in Year One, but now applied to the higher property tax digest amount. If either (not both) the property valuations or millage rate increases then State lawmakers require the City to disclose this as a Tax Increase because it IS a tax increase. However the City Council only refers to their decision to keep the millage rate the same as though they didn't increase taxes. What should have been done was for the Council to reduce the millage rate to a level that, when applied to the new tax digest, covers the budgeted amount, not the budgeted amount PLUS the overcollection. This would reduce and keep taxes low.
3) Items 2, 3, 4, 5, 6, from Year One and Items 1 and 2 from Year Two are repeated.
Years three, four, five, etc . . .
Taxes keep going up, up, up. Unless the constituency requires the City Council to adhere to strict fiscal policies of spending for necessary services only, refunding amounts collected over the budget, lowering the millage rate for the next year to offset any increased property valuations plus proper/better budgeting which definitely includes setting the expected collections at the Tax Collector's historical rates, not some arbitrarily low number. I'm okay with being conservative on collection rates if they refund any over collection and don't act like a bunch of kids and find something to spend it on.
Okay . . . sorry about my continued rant. If this didn't make sense to you I'll be happy to explain it further. Because this process is complicated to explain and understand is exactly the reason the City Council can easily trap the taxpayers into a cycle of never ending tax increases.
Hope this helps.
posted by For a Better Sandy Springs @ 9:32 PM
2 Comments
2 Comments:
Published response in the Sandy Springs Reporter by Mayor Eva Galambos . . .
Mayor responds to criticism of taxes
by Eva Galambos, Mayor Sandy Springs
September 19, 2008
To the editor:
Jim Buckler's contention that we increased Sandy Springs taxes is wrong ("How the city raises your taxes, simplified," Sept. 5-18). His argument is based on the fact that Sandy Springs estimated a tax collection rate 8 percent lower than previous collection rates by the Fulton County tax commissioner. When we realized a better tax collection rate, he calls this a tax increase.
Since when is it a tax increase when people pay the taxes they owe? Since when is it a tax increase when the tax commissioner succeeds in achieving a better tax collection rate? All he is doing is collecting taxes owed. No more, no less.
As for the increase in the digest, primarily because of reassessments of commercial properties in Sandy Springs, this would have been a windfall in tax collections — if it had materialized. However, the vast majority of these reassessments have been put on hold by appeals, so it appears there will be no windfall.
By the way, at the time of the millage rate discussions, I unsuccessfully urged the council for a partial rollback so commercial properties would not have been affected as much. As it turns out, it appears they will not be affected anyhow.
Readers also need to know that the Sandy Springs charter prohibits a millage rate increase without a referendum of the people; homeowners' tax assessments cannot rise more than 3 percent per year or the rate of inflation; and the city of Sandy Springs' tax rate is among the lowest for all of Fulton County.
Published response in the Sandy Springs Reporter by Councilman Tibby DeJulio . . .
City doesn't waste tax dollars
Guest Column
by Tibby DeJulio, District 5 Sandy Springs City Council
September 19, 2008
I read with interest the commentary written by Jim Buckler in the Sept. 5-18 issue of the Sandy Springs Reporter. I thought I could clarify a number of points since I've been involved with the beginnings of the city of Sandy Springs since 1987.
As you know, we worked for the independence of the city from Fulton County's Special Services District for many years. During that time we often emphasized and communicated to the citizens that the principal reason for an independent city was not financial. It was twofold: One, the tax dollars that were being collected for the Special Services District and collected in Sandy Springs were not being used for the betterment of Sandy Springs; secondly, there was a lack of accountability to the citizens of Sandy Springs.
You may recall that Fulton County estimated that more than $55 million in taxes were collected in Sandy Springs and that the county was spending only $25 million to provide services to Sandy Springs. The rest was being spent in other parts of the county.
In the early 1990s Eva Galambos and myself twice brought suit against the Fulton County Commission because it was spending Special Service District money in the city of Atlanta. In both cases Fulton County agreed to stop the practice, but it did continue to spend money collected in Sandy Springs in other parts of the unincorporated area.
From the beginning we were clear in our mission. It was not a financial mission; it was one of accountability and spending our money for the good of the citizens of Sandy Springs.
Since the incorporation of the city, we have experienced something new. We have government in the sunshine, where all decisions are made in an open forum and with the input of our citizens. All money that is being spent is being spent in and for the benefit of the citizens of Sandy Springs.
Mr. Buckler suggests that the money is being spent on "pet projects" of the City Council. Well, these "pet projects" are things like paving our streets, adding sidewalks near schools, upgrading our traffic signals, and adding police and fire units to our city.
An example: When we first incorporated, we had all 355 miles of streets within Sandy Springs surveyed as to their driving condition. On a scale of 0 to 100, our streets were rated below 30. Streets below 30 need not only to be resurfaced, but to be rebuilt.
In 2005, the last year that Fulton County was in charge of road repairs in Sandy Springs, the Special Services District spent approximately $600,000 on our roads. We have spent $6 million to $7 million per year on roadwork, and we are only about 30 percent through.
Also, as you may be aware, Fulton County had about 40 officers assigned to protect our citizens. We now have about 130 police officers. Fulton County had a time in the summer of 2006 when one of our fire stations was answering fire calls in an ambulance because there was no working fire equipment. We now have an exceptional Fire Department with all new equipment and an EMS department that is on its way to becoming the envy of other cities. We have just committed approximately $400,000 to increase ambulance coverage by 40 percent.
This last year we ran a surplus in our operating budget. Revenues were above expectation, and we were able to operate more efficiently than we thought. After careful consideration and in public hearing, the City Council decided to put part of that surplus in a contingency fund for the future and to spend part of that money to fund additional capital projects. We did not spend any of that money on recurring operations.
Now let's talk about this year's budget and tax increase. We started the budget process in May and soon realized that residential homeowners would not have a tax increase because few residential assessments increased. There were increases in our digest, but they were commercial. We had the option to decrease the millage rate for all taxpayers. Our staff calculated that if we did a full rollback of the millage rate, there would be a tax savings of $80 on a house valued at $600,000.
My first inclination was to roll back the rate and save our homeowners the $80. The feedback we received from our residents was to keep the rate unchanged and to invest in long-delayed capital improvements.
The people of Sandy Springs saw two things they liked: accountability and responsible spending. They saw firsthand what a responsible city government could do.
I'd be delighted to discuss the matter further with Mr. Buckner or anyone else.
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