Valdosta Daily Times

Local News

June 15, 2014

Breaking down the city budget

City explains reasons for possible tax increase

VALDOSTA — The City of Valdosta hosted its annual budget hearings Tuesday and Wednesday nights. On Thursday morning, The Times sat down with Mayor John Gayle, City Manager Larry Hanson, and Deputy City Manager for Administration Mark Barber to discuss the city's 2015 fiscal year budget.

During their meetings, city officials proposed increasing the millage rate from 4.102 to 6.102.

“We have to have a balanced budget submitted to the state by June 30th,” said Gayle. Barber added, “Balanced for the State of Georgia means, you take your appropriated revenues that you're estimating, add in your existing fund balance, minus your budgeted expenses, and if that is greater than zero, then it's balanced.”

The city does not follow these guidelines because it tries not factoring in the reserves.  

“For us here we don't go by that formula. Each year we say that the revenues and the expenditures have to break even. We try not to factor in those reserves if we don't have to,” Barber said.

For FY15, the total revenues expected are $85,473,067 and the total expenditures are $82,444,214. Within that total, the city's general fund revenue is expected to be $33,383,795 and its expected expenditures are $32,854,304.

The general fund numbers are

significant because citizens' property taxes go into the general fund.

Thirty-four percent of the city's general fund revenue comes from franchise fees, occupational, alcohol, and title ad valorem taxes, 27 percent comes from property taxes, and 26 percent comes from sales and use taxes. Departments funded by the general fund include: Police, Fire, Engineering, Finance, Administration, Public Works, and Municipal Court, among other departments.

The City of Valdosta has not raised the millage rate since 1992, but it has lowered it 12 out of the past 18 years. The millage rate was increased to 6.25 in 1992, and it's now 4.1. So even if it is raised two mills, it would still be less than it was 22 years ago, Hanson said.

“Since we last raised our millage rate, the price of gas has tripled, the price of many other things has doubled, and we're consumers of those things. We need gas to run police cars and fire trucks, and those are things that we can't control, and we're affected by them,” Hanson said. “In recent years we've eliminated or defunded 33 positions, and that's 5 percent of our total work force. I think that shows that we've made a substantial effort to keep the taxes low.”

Gayle added, “LOST (Local Option Sales Tax) and SPLOST (Special Purpose Local Option Sales Tax) has kept Valdosta's millage rate low, and because of LOST and SPLOST, 52 percent of that is paid from people from outside of Lowndes County.”

When asked about the LOST shortfalls, and if it was factored into the FY15 budget, Hanson said, “This year (FY14) we anticipated about $8.9 million. We reduced the estimate next year assuming we are going to collect about $8.1 million. The main impact on this budget is that sales tax collection has been down. We're collecting less now than in 2005.”

Barber added, “And we track those revenues every month, so we can calculate and make adjustment when needed.”

Valdosta residents not only pay the City of Valdosta millage rate, they are also required to pay the Lowndes County millage rate.

“A resident living in the City of Valdosta has to pay the Lowndes County millage rate, too,” Barber said. “We're all Lowndes County residents, no matter what city you live in, you live in Lowndes County. So you have to pay that tax, and a lot of folks don't realize that.”

Gayle bolstered Barber's statement and said, “The people that live out in the county, and who do not live in an incorporated area, they only pay county taxes. We pay city and county taxes … If we decide to raise taxes, we're raising them on ourselves, too.”

Although this is hypothetical, a two mill increase would add $2.9 million of revenue to the city's general fund. It is hypothetical because the Valdosta City Council can still adjust the budget, and the city's tax digest has not come in yet.

“We hope that there is growth in the digest, and some minimal cuts and reductions are made (by the council). So hopefully it won't be 2 mills. We're hoping for less whether that be 1.6 or 1.7, but we really won't know until the digest is finalized, and until they (the council) will decide what, if anything, that they'll want to remove,” Hanson said. “There is nothing new in the budget. There are no new positions. There's not salary increases, for any employees. It's primarily a continuation budget, meeting the existing needs.”

Gayle said he does not want to see the city go backwards, and that the city will suffer if it neglects its infrastructure.

“I am a very big believer in this. Once you start cutting, cutting, and cutting, especially in the services that we offer, then the next thing is you have people that are avoiding you as far as new businesses coming in, and new industry because you're not taking care of your facilities, your roads, and everything just starts to go to pot,” Gayle said. “I think the vast majority of people are willing to pay for that. They don't want to see dilapidated and vacated buildings, and roads with pot holes in them, and a sewer that's not properly maintained, and flowing in the right direction, so we've got to look at it from that standpoint.”

With a proposed millage increase, city officials said they are looking to the future.

“Even though I am probably going to get a lot of criticism for raising taxes, I feel like Larry, Mark, and our staff has done an excellent job making cuts and getting things down in line where they should be,” Gayle said. “There comes a time, when we've cut so much to make things worthwhile for everyone, but there comes a time when you have to raise your prices a little bit because everybody else is raising their prices a little bit.”

Hopeful for Valdosta's future, Gayle said, “I think we're really on the verge of breaking out. I feel like Valdosta is going to continue to grow, and continue to prosper, and people are going to continue to be drawn to Valdosta because of the way the city is ran, and because of the things that go on here. I really think that our digest is going to grow. With everything that we have to offer here, Valdosta State University, Wiregrass. The hospital being a regional hospital, everything that we have, Valdosta is just on the verge of moving on up to the next step, and being a real regional city, which we are now, but I think it's going to be recognized a lot more by the people in North Georgia. We are forgotten down here because we are 250 miles away from Atlanta, and we're hoping to change that.”

What follows are a few of the city's general fund departments, and what they received in FY13, what they spent in FY13, what they estimate they will receive in FY14, what they expect to spend in FY14, what they hope to receive in FY15, and their proposed expenditures for FY15.

Public safety departments typically operate at a deficit, Hanson said, but it's a service that is necessary and it must be provided to the community.

“They're typically the highest cost, and lowest revenue generators. The difference is subsidized through the millage rate because it is in the general fund,” Barber said.

The Valdosta Police Department received $2,684,082.44 in FY13, spent $12,210,766.38 in FY13, it estimates it will receive $2,342,680.00 in FY14, spend $12,566,412.00 in FY14, the department expects to receive $2,626,688.00 in FY15, and spend $13,085,698.00 in FY15.

Fire Department received $531,042.04 in FY13, spent $6,334,493.83 in FY13, received $298,921.00 in FY14, spent $6,296,860.00 in FY14, receive $280,500.00 in FY 15, and spend $6,786,540.00.

Engineering: received $2,748.02  in FY13, spent $2,780,076.97 in FY13, received $5,300 in FY14, spent $3,129,156.00 in FY14, receive $4,200.00 in FY 15, and spend $3,028,951.74 in FY15.

The City of Valdosta will meet 5:30 p.m. Thursday, June 19, to make adjustments and adopt the FY15 budget.

More information about the City of Valdosta's 2015 Fiscal Year budget, contact the City of Valdosta, (229) 259-3548.

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