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3h ·
Lowering Taxes …
This post is another rather long discussion akin to my articles on lowering the fair market value of your home for tax assessment purposes or providing guidance on how to improve (not solve) our city’s traffic problems and other issues.
Let me explain how we go about lowering taxes. I need to do this because some folks don't understand about the millions in extra revenue we're getting from sales taxes and other sources.
The discussion can be a little complicated to follow if you are not that versed in budgets and how to manage them. I tried to keep it simple so please try to read the whole post. It may take you a few minutes.
City cash reserves are also covered which is now at an astonishing 50% ($20M) of the annual city budget of around $40M. This is the citizen's money and should be given back to them by way of a reasonable tax cut.
Here's how it all comes together. My opponents are welcome to review it, dispute it, submit their own plans, etc. However, debating is how we obtain the best solution.
Let's start with Special Purpose Local Option Sales Tax (SPLOST) and how it can be leveraged with our general fund to "free up" more than a couple million dollars. In the 4th year of SPLOST ending June 30, 2021, PTC was budgeted to receive $7,638,091. We actually received $10,068,254! That's over $2.4M additional revenue than planned.
We are budgeted to receive similar amounts for years 5 and 6 of SPLOST; i.e., $7,764,120 and $7,892,228. I know this because I was on the negotiating team for the city when we worked out the income distribution percentages from SPLOST with the county. We can reasonably expect over $10M again over each of the next two years giving us about $5M extra unplanned for revenue over those two years alone.
I am not so naïve to think a recession is not going to happen. It will. But like the worst recession in our lifetime, back in 2008 and for several years thereafter, our sales tax revenue in today's terms, never went below $8M. I know this because I was on council during the recession time and we had to make our city budget work. We were extraordinarily successful. We would still be ahead over the next couple years even if the biggest recession since 1929 hit us now. This is great news to be in this position.
How do you leverage this extra money with our general fund budget? Easy. Just like with the CARES money (i.e., the COVID relief money from the Federal and State governments passed down to Peachtree City to the tune of nearly $2M); we used it to pay our police and fire department personnel instead of using the general fund. This was an unplanned budget windfall and we took advantage of it by taking $2M that was in the general fund and put it in city cash reserves. That was fantastic and it’s called leveraging.
Now with SPLOST we can do the same thing only with road and cart path maintenance. For example, next year’s SPLOST we can expect again well over $2M more than budgeted and planned for as explained above. SPLOST is currently set up to spend over $5.3M on road and cart path maintenance next year. New paths are budgeted separately. Our general fund is set up to ALSO spend about $7M on road and cart path maintenance next year.
For the last 4 years we’ve poured about $12M/year into road and cart path maintenance. We will continue to do this for at least another 2 years. That will have been $72M into the maintenance program. In two years, we will be just about caught up and can go into a mode of annual maintenance of $7M/year to stay on top of things. This was the plan 5 years ago and we have accomplished it with SPLOST.
Here’s the leveraging part: since we’re getting an additional $2M next year from SPLOST, replace $2M of general fund money for road and cart path maintenance with the extra SPLOST money freeing up $2M from the general fund. Voila! You still have $12M for the year going into road and cart path maintenance but now you now have $2M to spend on increasing police and fire department personnel salaries, lowering storm water bills to once a year and still have enough for cutting the property tax rate 0.5 mills.
Our tax millage rate can be lowered from over 6 mills to about 5.5 mills. Doing it over 2 years with 0.25 decreases is a potential option. It needs to be done. This is important as we have been pricing ourselves out of more industry coming to PTC because they see how easily PTC city council has in the past raised taxes the last three years (not this year of course because it’s an election year).
Industries see our sister AAA credit rated cities of Alpharetta and Roswell at 4.7 and 4.9 mills and would rather go there for the money savings instead of PTC. I would. Yes we have 100 miles of cart paths, but industries are interested in money and profit first. The cart path maintenance requirement is why I would not go much lower than around 5.5 mills because we do need to maintain those paths. Those other cities don’t have this special requirement.
Now for more frosting on the cake budget wise. Let’s talk about Local Option Sales Tax (LOST) not SPLOST. Both are sales taxes. Briefly on the SPLOST which is that extra 1 cent sales tax after the 6 cents per dollar we pay. SPLOST was voted on by the county citizens. I was the biggest champion of that 1 cent knowing how huge a revenue source it would be.
Compared to the property tax mill rate we get over triple the value with SPLOST. For example, 1 mill equates to about $2.8M in revenue right now. It also equates to about $150/average household. All round numbers of course. We actually have council members saying they would raise the mill rate 3 mills (even 4 mills) to obtain “needed” extra money.
Why would anyone do something like that and chase away any remaining business and industry here in PTC and guarantee no new business or industry ever again looks at PTC? However, the 1 cent SPLOST as you now know gains us over $10M/year and costs the average household about the same as only 1 mill. There is no dispute, SPLOST is at least triple the value of the mill.
Now back to LOST. This is the 6 cent/dollar sales tax in Fayette County. The first 4 cents go to the state (about $100M/year). 1 cent goes to the Fayette County Board of Education (this is huge for them). The last 1 cent of the 6 cents gets divided up similarly to the SPLOST tax between the county and 4 cities (Peachtree City, Fayetteville, Tyrone and Brooks) within the county.
Looking at FY2021 (this year) we budgeted last Fall $7,321,045 for LOST revenue. We are on pace to receive over $9.4M. That’s over $2M more than anticipated and again a huge windfall for the city. This is why the finance director “Upped” the budgeted amount of LOST for FY2022 to $9.373M. This is more accurate for the expected revenue.
The new budgeted amount is still hopefully a lower amount than what we will actually wind up with but that’s what you do in budgeting like this. No budget is ever 100% spot on unless you are dealing with fixed amounts. You plan for lower revenues and higher expenses than expected. This is just the way we do things in the budget world. We try to be relatively close but no one is ever 100% accurate.
Now add in the $2M CARES money we got in FY2021 and that’s over $6.5M MORE than anticipated ($2.5 SPLOST, $2M LOST and $2M CARES). Oh, how I wish I were on city council right now. This is the exact opposite of the problems Vanessa, Doug, Kim, Don and I had to deal with on city council back in 2010. In our city’s 5 year financial model, we were about $22M in the red! Our city budget was only about $25M/year at the time.
It took 5 years to dig ourselves out of the hole to where we had a balanced budget, i.e., no tax increases nor use of city reserves in the 5 year model. This is why I voluntarily stepped down from council deciding not to run again for another 4 year term in 2015. I had accomplished what I set out to do. I said, “No, it’s time for someone else to have the privilege and honor of being a council member.” You cannot name a single council member in the last 10 years who has voluntarily stepped down. It seems they all want to be career politicians.
With all this money rolling in, anyone who says we can’t afford a tax cut is simply a defeatist. We have so much money now in city reserves, plus the extra money we know is coming in that is not budgeted, we can afford a half mill tax cut.
I want to lower our city reserves to around 35%, not keep it at 50%. 35% is still way higher than our ordinance requires but this is YOUR money and I believe you know how to spend it better than the government. Anyone care to debate that?
Giving you a tax break, cutting our stormwater bill, making sure our city employees, especially police and fire department (in fact, all of our city employees) are the best paid is important to me. We have the money, let’s do it. With proper financial oversight it is not that big a risk. Everything has risk but with our huge city reserves the risk is acceptable.
I foresee at least 10 years in the future of lower tax rates while still keeping our reserves above 35%. I see our sewer bills being lowered because we will be paying off one of the huge multimillion dollar loans in a few years. Look for that around 2024 if not earlier. Turn me loose with the budget with the collective wisdom of our city hall financial staff along with others on council and we can leverage (there’s that word again) the economy of scale of having both a public works department and Water and Sewer Authority (WASA) capital assets to lower the sewer bill for you.
Yes, we can do all this. The choice is yours on November 2nd. Turn the city over to those without a financial background or you can ask me, a professional program manager, to lead the way to do all this … without being paid!
That’s right, I will not accept the mayor’s salary over 4 years of $86,400 and instead donate it back to the city. I consider being on city council a volunteer job not requiring pay. Peachtree City has given me and my family so much, it’s time to give back.
It seems some of my opponents are upset that I'm going to donate the mayoral salary of $86,400 over 4 years back to the city if I'm elected Mayor. I'm sorry they feel that way. I would rather give back to my city than take away from it. I think public service is that ... public service akin to volunteering. (And for a very LIMITED time.)
Just so you know:
Airport Authority members volunteer. They do not receive a salary.
Planning Commission members volunteer. They do not receive a salary.
Convention & Visitors Bureau (CVB) members volunteer. They do not receive a salary.
Water Sewer Authority members are volunteers. They do not receive a salary.
The Finance Committee of Peachtree City are volunteers. They do not receive a salary.
The head of Keep Peachtree City Beautiful (KPTCB) is a volunteer. He does not receive a salary.
When I was on the Recreation Commission as a member, I did not receive a salary.
There are many other examples of citizens stepping up and volunteering to make our city better. A lot of these folks work way harder and volunteer way more time than a city council member sitting there on the dais twice a month. (Yes, I know they do other things.) If you need the salary, take it. It's what our charter/ordinances say. But one is not forced to accept it.
I hope all the candidates for office and current council members read this essay. I’m sure they will have learned a lot and realize the powerful position and potential of our wonderful city. It’s up to the city council to set the policy in the future, not city staff. Anything I can do to make Peachtree City better is what I’m all about. Bottom line, “I find ways to get things done, not excuses not to.”
Don Haddix
Since you directly referenced other candidates I will respond. The SPLOST expires in March 2023, so there is not five or six years of scheduled receiving funds. Nor can the tax be spent on anything other than the approved list. Nor is it part of the city budget, it is a completely separate fund. You cannot transfer money into the general fund.
You need to be honest when you make the tax sound like free money because it is not. People should estimate how much taxable sales they spend during a year then multiply it by .01 to calculate what this tax costs them each year. It is at least $200 a year on top of LOST, property tax, stormwater, VAT and other fees and taxes.
Your traffic plan is going nowhere. Tyrone and Coweta have already said no. My plan works. Nor does the city have any say on lowering the FMV of your home. Additionally, contrary to your claim, your property tax increase or decrease is based on your property value, so 1/4 mill decrease in the millage rate only lowers your tax bill one quarter if the property value remains the same. We have seen repeatedly decreases in the millage rate that still resulted in tax increases because property value increased greater than the reduction. It is also amazing that your plan back in the recession was totally raising taxes. As for your so-called windfall there was a price attached. We only got the money if there after we paid the salaries from the general fund.
In basing employee salaries on a 10 mile radius is the way it used to be and doesn't work. When a job pays higher more than 10 miles away the employees move.
WASA board members are not volunteers. They are mayor and council. The finance committee are mayor and council. So they do get paid. As far as you donating your check, I do not believe you will actually do it. I heard things like this from you before. And I remind everybody you are asking for contributions to your election.
https://accg.org/library/legal/SPLOST 2016.pdf
