In March, I warned you of the Commission’s plan to raise the tax rate for general operations by almost one-quarter of a mill, yet maintain the same rate as last year. They proposed to “re-align” an expiring bond (debt) millage and add it to the Maintenance & Operations (M&O) rate. I called the proposal what it was– a back-door tax increase.

One day after my article was published, soon-to-be Chairman Charlotte Nash agreed during a candidate forum that the debt millage should lapse and no longer be collected. Her position, which she still holds to this day, put her at odds with the other Commissioners who had tentatively approved the tax hike…. excuse me, “re-alignment.”

Tonight, we will see just how persuasive Chairman Nash can be. She will reportedly ask the Commission to adopt a tax rate of 13.02 mills, which is the same rate as the previous year minus the .23-mill rate for the paid-off bond debt. She will face at least two Commissioners who still support the millage “re-alignment” and one, District 2 Commissioner Lynette Howard, who pushed for a tax increase this year.

(Don’t worry– the county advertised a proposed rate of 13.25 mills. They can adopt a lower rate tonight, but not a higher one.)

“Re-alignment 2.0″

The Commissioners have discussed a millage shuffling of a different sort– continuing to collect the .23 mills (by adopting a rate of 13.25 mills tonight) but using it to pay off another debt, the bonds for the jail, a little quicker. (In recent years, the county has collected a millage for two bonds; last year, it was .23 for the now-retired debt and .24 for the jail, for a total of .47-mills.)

I can understand why the Commissioners would consider the idea. According to Moody’s, a ratings firm, Gwinnett has the third-highest debt load among Georgia counties at nearly $160 million. Paying off the jail bond early could save hundreds of thousands in interest.

I believe, however, that the taxpayers of Gwinnett would rather pay a lower tax rate this year and worry about paying off debt a little faster when the economy is better. Thousands of Gwinnett homeowners, one out of every 256, faced foreclosure in the first half of this year which, sadly, is only about 15% less than in 2010. Our unemployment rate is hovering around 9 per cent and showing no sign of improvement.

Now is the time to reduce the tax burden on Gwinnett property owners. The county has done an admirable job of cutting expenses to make even the consideration of a tax cut possible. The Commissioners should pass the benefit of a lower cost of government to the taxpayers in the form of a reduced tax rate.

If you agree with me that the Commission should lower the tax rate to 13.02 mills tonight, send them an email now at commishes@talkgwinnett.com (it will be auto-magically forwarded to all). You can also use the form here.

More…

• County millage rates, 5-year history

The Commissioners who voted for the millage “re-alignment”—Shirley Lasseter, Lynette Howard, Mike Beaudreau and John Heard—now find themselves in a quandary: when the newly-elected Chairman honors his or her commitment, they will be forced either to reverse their position on the tax hike or override the Chairman’s wishes to keep it.

Chief Financial Officer Aaron Bovos, the likely author of the “re-alignment” proposal, will now be forced to find an additional $4.8 million in budget reductions, which probably isn’t a bad thing:

A recording of the forum will air on Gwinnett County’s government access cable television channel at 8 p.m. Monday, 9 p.m. Wednesday, 8:30 p.m. Thursday and 8 p.m. March 13. The recording will also be available on demand at www.tvgwinnett.com.

Candidates weigh in on property tax

The History

In 1986, Gwinnett voters essentially agreed to tax themselves an additional fraction of a mill* to pay off a loan of sorts… bonds that were issued to generate up-front cash for libraries and road improvements. The debt was refinanced in 2002.

The additional tax has been itemized on your tax bill ever since, separate from the general, M&O millage. It is listed separately for a reason; the additional millage was not only dedicated to debt reduction, but it was temporary… it was to drop off your tax bill as soon as the bond debt was retired. It was with that understanding that voters initially approved the debt in 1986.

The Con

Or, at least that’s the way it was supposed to work. In January, the debt was paid in full. The 2002 bond fund was closed with the dollars remaining shifted to the 2003 bond fund; probably the only option because revenue generated by a bond millage must be used for debt reduction.

The .23-mill assessment should not be assessed this year– the debt is paid. Your county tax bill should drop by .23 mills to 13.02 mills**, barring another millage rate increase.

On Tuesday, however, the Commissioners essentially voted, unanimously, to continue collecting the extra tax but now use the revenue for general expenses. Technically, the vote was to increase the M&O millage by .23 mills, from 11.780 to 12.010. And they did it with no fanfare and no public hearing.

The Setup

Actually, the vote served no real purpose except to provide a setup for the official adoption of the millage rate later this year. At that time, when the millage rate is officially adopted, the Commission will be forced to formally advertise and approve the tax increase, even though the combined county rate is expected to remain the same as 2010, 13.25 mills. However, here’s what you’ll hear:

“No, this isn’t a tax increase! Your total millage rate will be the same as last year. We just ‘realigned’ the tax rate after we paid off that debt, remember?”

The shell game that the Commission is working right now is the quintessential “back door tax increase”… an increase in M&O property tax revenue generated by a mechanism other than a public vote to increase the tax rate.

In other words, the Commission has indicated its plan to withhold from Gwinnett taxpayers the benefit of retiring a 26-year-old debt. Rather than return the money to your pocket as promised, the Commission has quietly decided to use it to reduce this year’s $18 million deficit. By doing it this way, they hope to avoid awakening the public to the second tax hike in three years.

Let me repeat: The County Commission proposes to increase the M&O millage by .23-mills to help pay the county’s 2010 general expenses.

The Lie

At the risk of boring you with repetition– the debt millage rate CANNOT be “re-aligned,” as the Commissioners and Finance staff have claimed.. There is no statutory mechanism by which a millage charged for bond debt can be “re-aligned” and reallocated to another purpose. It can only be eliminated.The Commission proposes to eliminate the bond millage but INCREASE the general fund tax rate by .23-mills, rather than work harder to cut the cost of county government or maximize non-tax revenue sources.

What You Can Do

Remember the outrage in 2009 when former Chairman Charles Bannister proposed a 25% tax hike? At least he had the testicular fortitude to announce it and defend it in public. You should be equally outraged by this Commission’s attempt to sneak a smaller tax hike—excuse me, “realignment”– by you.

You can contact every Commissioner at once by sending a single email tocommishes@talkgwinnett.com. Your message will be automatically forwarded to each one.

Tell them that you are not a fool and that you know what they are doing. Tell them that, with the bond debt is paid, you expect them to honor the promise made in 1986 by reducing the total 2011 county millage rate by at least .23 mills. Tell them that if they need to raise taxes to balance the budget, at least have the cahonas to do it on top of the table, face-to-face.

Finally, tell them that you will hold them responsible for anything less.

[3/3/11 15:00 - This article updated with numerous changes.]

In the News

Gwinnett on track to eliminate $18 million deficit | ajc.com
BOC intends to realign property tax rate | gdp

Footnotes

* A “mill” represents one dollar of tax on every $1,000 of taxable value.

** In 2010, your county tax millage rate consisted of four separate rates: 11.780 M&O, .23 2002 bond debt, .24 2003 bond debt (jail) and 1 mill for parks and recreation; total county tax millage 13.25.

Additional Resources

2010 tax rates
What is the millage rate?

The vast majority of the 120,000 residential property notices issued in the first batch will show an average value decrease of 17 percent or $35,000 of market value, Pruitt said. The sum of all decreases for residential property totals approximately $4.2 billion of market value.

As I explained in “Tax Digest Time Bomb,” the lower tax value may not necessarily translate into a lower tax bill. In fact, as a result of the 2009 tax increase that is being continued for 2010, you will probably pay a lot more than in previous years.

Gwinnett property owners may get good news  | ajc.com

Budget `Bait and Switch`

Bannister presented his 2010 budget to the other Commissioners and to the public on December 1, as required by law. The law is designed to give the public ample opportunity to review the document prior to its adoption. The required public hearings were also held.

A day or so before Christmas, however, Bannister sent the Commissioners a revised budget which increases spending by $6.3 million. Not only that, but Bannister juggled a number of capital projects, fast-tracking a park development in his home city of Lilburn while postponing a new park a few miles from the home of Mike Beaudreau, the only Commissioner to vote against the 2.28-mill tax increase.

Even worse, Bannister’s unilateral revision of the published budget may be illegal.

Some of Bannister’s changes:

• $500,000 subsidy to Partnership Gwinnett;
• $82,000 related to the county’s AAA bond rating;
• $6,500 for the County Administrator’s attendance at various conferences.

Bannister proposes to pay for these additions by transferring $500,000 less from the operating budget to the capital budget later in the year, as has been the usual practice. The artful number tweaking allows Bannister to increase non-capital spending without adjusting the operating budget’s bottom line by a single dollar.

Capital spending will increase by much more than the $6.3 million that Bannister proposes to add to the budget. He will make up the difference by deferring other projects including the Harbins Community Park in the Archer school cluster.

Bannister wants to postpone the engineering phase of the District 3 park from 2010 to 2013. He will instead spend that $1.2 million on the Lion’s Club Park in Lilburn this year, rather than in 2012 as planned. There appears to be no justification for this swap except to punish Beaudreau for his continuing stand against wasteful spending and tax increases.

Other additional capital spending:

• $250K for an airport feasibility study;
• $500K for a “nuisance abatement project;”
• $7.6M for fire stations #31 and #10 (relocation);
• $110K for a police aviation fuel truck.

The revision will also postpone development of the Rabbit Hill Park from this year to 2013.

Bannister proposes to increase the budget despite the county’s expectation that 2010 will be worse economically than previously projected.

Budget Deception

State law appears to prohibit the revision of the published budget proposal, except by a majority vote on an amendment during a public meeting… or by starting the public hearing process anew.  The Chairman cannot simply change the budget published on December 1 on his own.

The Chairman’s plan to adopt a budget different from the one that was presented to the public is tantamount to a lie. But then, deception appears to be Bannister’s stock in trade.

After the  2.28-mill tax increase was adopted, the county’s finance director announced that the additional revenue might be spent to reduce the county’s accrued liabilities, even though the increase had been sold as necessary to fund police officers, fire stations and recreation. Apparently, a decision on what the money will actually be spent has not been made.

I strongly encourage you to contact the Commission and send Bannister a message similar to the following:

Commissioners, I do not want you to approve a budget different from the one for which public hearings were held, except by amendment in a public meeting. I do not want you to increase spending. Chairman Bannister, I insist that you honor the expectations created by last year’s millage increase hearings and budget hearings.

To be effective, you must send your email before the Commission’s 2 pm meeting today.