Following a second budget workshop, Peachtree City Council appears to be moving in the direction of a $33-million budget that includes no millage rate increase and uses the city’s cash reserves to at least triple the level of road maintenance over the prior year.
Interim City Manager Jon Rorie has emphasized the need to invest in “brand and infrastructure,” both of which would be served by accelerating the city’s road maintenance schedule which is well behind the pace it should be.
Rorie has observed that neglected street maintenance during the recession has left the city six or seven years behind on road maintenance. If repaving were to be done at a minimum level of five miles per year, Rorie has estimated the city would not complete all necessary projects for 35 years.
In Monday’s workshop, Rorie noted that the longer the city goes without expanding its paving efforts, the more roads fall under the level at which they are added to the list for repaving, so that “we chase our tail,” Rorie said.
To address the needed funding for repaving, staff recommended a 0.65 mill property tax increase for the coming fiscal year, which would have brought in roughly $1.2 million in extra revenue on top of an estimated $1 million additional revenue that is expected to be collected due to anticipated increases in the tax digest of around 9.5-percent.
As Rorie has explained, the city not only needs to find money for increased road paving, it needs to do it without a familiar funding source. Around $2 million per year from a 2005-2010 SPLOST had been doled out over the last five years for road maintenance, but this year that funding ran dry.
The original staff recommendation for a tax increase would have directed $2.575 million toward road maintenance, while also paying for an added detective position for the police department (around $79,000) and a 2.1-percent pay increase for employees (around $300,000).
After some feedback from council, staff returned again Monday with a new budget proposal that would keep the millage rate flat, while dipping more into cash reserves to fund road maintenance.
The new proposal would use around $770,000 in cash reserves as opposed to $425,000 and would only fund road maintenance to the $2 million. As part of the five year projection, the proposal also anticipated the city would need a 0.25-mill tax increase by Fiscal Year 2020 in order to keep the city’s reserves above its 25-percent reserve rate policy.
The new proposal tossed out the 2.1-percent pay increase for employees, and the council seemed to be in agreement that an increase should not be considered this year. Most employees received a pay raise last year as a result of a pay scale restructuring done in response to a study from consulting firm Condrey & Associates. Those pay raises added over $600,000 to the city’s expenses. Condrey recommended the city keep pace with increases in cost of living with regular pay raises based on the Employee Cost Index, but council appears unlikely to include those increases this year.
Multiple options were floated on Monday which showed different variations in millage rates and in use of cash reserves. Rorie and Finance Director Paul Salvatore have cautioned against dipping too heavily into reserves to pay for road maintenance given that unexpected costs tend to arise.
Salvatore noted that the city only budgeted for the use of around $400,000 in reserves last year, but ended up using a little over $2 million, thanks largely to the added salary costs following the Condrey study and to more than $600,000 in rolled-over road maintenance costs. Other unexpected costs came at fire station 82 and ongoing costs for Lake Peachtree.
Council Member Eric Imker floated his own version of the budget, which would include a 0.25-mill decrease this year. His budget called for the restoration of that 0.25-mills in FY 2018.
“We’re already at an all-time high in our millage rate. I can’t possibly see us going higher,” Imker said of the city’s 6.75 rate. He later said, “This is probably our one and only chance to actually reduce the millage rate in the city and still have a decent model.”
Residents will already be paying more in taxes due to increased property valuations. Imker said the partial rollback of the millage rate would help alleviate this.
One resident disagreed with the “philosophy” that rising home values should be seen as a problem that needs to be alleviated. She has advocated in both meetings for the city to focus on improving its infrastructure.
Council Member Mike King said the city had neglected street maintenance for too long and needed to take decisive action to address that deficit.
“For six years as a government we have neglected street maintenances. It’s time we roll our sleeves up and say we’ve got to fix this,” King said. “I’m here to tell you we need to take the politician’s hat off and fix this city.”
King said funding road maintenance at $2.5 million would at least get the city “started in the right direction.”
Council Member Terry Ernst agreed that maintaining a certain level of quality comes at a cost.
“We didn’t budget for road repairs like we should have, and shame on us for that. I will say that the price of gas goes up everyday, the price of milk, the price of bread. The citizens suck it up. They have to pay for that. If we want this city to continue to be the city we know and love, at some point we’re going to have to pay for that. I for one, as a councilman for this city, am willing to do what we have to do to fix this city,” Ernst said.
King, Ernst, and Mayor Vanessa Fleisch indicated they would not be interested in a millage rate decrease.
A major push from Imker has been for the city to present a united front in pushing to get a SPLOST on the ballot. Fayettte County is one of only a handful of the 159 Georgia counties that does not have a SPLOST.
“If we added a SPLOST next year, we can implement 25 miles a year instead of the six miles a year. We would catch up really fast,” Imker said.
He has criticized the county commission, without naming individual commissioners, for declining to support a SPLOST initiative for political reasons. King agreed, saying the county would not support a SPLOST initiative with the current commissioners in place.
“I understand the virtues of a SPLOST, but you know as well as I do there’s no impetus for a SPLOST,” King said.
A separate but also important discussion Monday was the user fee for golf cart registrations in the city, which is currently pegged at $12 every five years. The council seemed to agree to a new policy that would set the registration fee at $45 every three years. The change in policy would bring in around $180,000 a year as compared to around $30,000 under the old fee system.
Council did not reach a consensus on what direction to take the budget heading forward, particularly in the area of use of reserves for road maintenance. Staff will likely return with options at the next budget discussion that includes options for funding road maintenance at $2 million or $2.5 million while keeping the millage rate flat.
Notably, even if the city keeps the millage rate flat, it will have to advertise that as a tax increase. The estimated growth in the tax digest of around 9.5-percent equates to the equivalent of a roughly 0.58-mill increase, which would cost about $58 on the average property tax bill assuming an average home value of around $259,000.
Roughly one-third of that increase in the digest is due to new growth, which is not factored into a rollback rate. A full rollback rate for the city will likely come in around 0.4 mills, so if the city holds the millage rate steady, it will have to advertise that as a tax increase that will have add about $40 to the average property tax bill.