Recently, several articles about conflicts of interest, have been hitting the political pundit’s websites;
is a very interesting article about conflicts, the appearance of conflicts, and the problems that they cause at the state level. I have no idea if any of the legislators mentioned in this article truly have some ethical conflicts with their businesses doing business with the state or not, but they should each either QUIT doing business with the state or QUIT their legislative positions or post their own article describing why THEIR situation is not a conflict. While we all should be innocent until proven guilty, politicians have a bad enough rap without doing ANYTHING to damage their (or the entire group’s) reputation.
Any politician needs to be extremely careful about even the appearance of a conflict of interest. I was maintaining the city’s website and charging them around $1,000/year. They were my client, before I got into politics. But once I became a city councilman, I stopped charging the city for maintaining their site. I probably COULD have kept charging – as long as we bid out the contract and as long as I recused myself from any discussions or votes, but I thought it best to just not charge the city. So for almost a dozen years, I did the city website for free – saving the city and citizens thousands of dollars.
Later on, as a conflict arose between a local business owner and the city of Hawkinsville (on a very unrelated matter), a particular businesses owner ACCUSED me of having a conflict of interest. She thought I was getting paid to do the city’s website. She had not bothered to ask anyone. That particular business owner posted on Facebook (July 25, 2014) (with a picture of me), “How in the h*** you is the one doing the website for hawkinsville and you on the commission broad the one of the to decide which person get the job if you are on the broad are have friends are family on the broad you should not get the job it wood not be fair to the people the one how broad on it and did not get it because they do not have friends on the broad or family” (all grammar and spellings were as posted, not mine)
This particular business owner even posted this to 11Alive Newsroom’s Facebook page! She had not bothered to CHECK to see if there was a conflict of interest, she just assumed. But as politicians, we need to go the extra mile removing even the appearance of a conflict. (After I sold my website company, the city and county are now getting the Regional Commission out of Macon to maintain their websites.)
I challenge all of my colleagues to go the extra mile and remove any and all appearances of conflicts. Let’s put our constituents first and our private businesses second.
What are your thoughts?
Throughout Georgia, City Finances Continue to Improve, but New Report Shows Recovery from Great Recession is Incremental
A new report from the National League of Cities (NLC) reveals that municipal finances have stabilized in the wake of the Great Recession, but the recession’s effects are still evident in city budgets across the nation. The 30th annual City Fiscal Conditions report found that fiscal impacts of the 2007 recession are much more substantial when compared to similar downturns in 1990 and 2001. However, modest improvements in city fiscal conditions, including an expansion in general fund revenues, led 82 percent of city finance officers to report their cities are better able to meet their financial needs.
With 30 years of historical data, the report surveys city finance officers on their cities’ abilities to meet fiscal needs, factors impacting budgets, tax receipts, and revenue and spending trends and provides a context for how current fiscal conditions compare with previous recession and recovery periods.
Highlights from the Report
General Fund Revenues and Expenditures
Trends in general fund revenues tend to reflect the changing economic and fiscal environment of their cities. General fund expenditures increased 1.5 percent in 2014, with continued growth anticipated into 2015. This was driven largely by investments in employee wages, public safety, and capital projects and infrastructure.
Trends in tax receipts provide an understanding of the impacts of the broader economy on city revenues.
- Property tax revenues: Severely impacted by the recession, property taxes registered their first post-recession gains in 2013, and experienced moderate growth in 2014 (2.4 percent) with 1.2 percent growth expected to continue into 2015.
- Sales tax revenues: Sales taxes respond more quickly to economic conditions than property taxes, and showed their first signs of post-recession growth in 2011. Sales tax receipts have grown every year since, but the pace of growth has slowed, with 2.3 percent growth expected in 2015.
- Income tax revenues: Income taxes have been the most volatile tax source during the recovery period, but only about 10 percent of cities have access to income tax. Income tax revenue growth reached a post-recession high in 2012, and is expected to grow by 3.6 percent in 2015. *Hawkinsville has no income tax revenues…..
Budget Impact Factors
A number of factors combine to impact the ability of cities to meet their financial needs. The most impactful factors on city budgets were the value of the local tax base (70 percent), health of the local economy (63 percent) and gas and oil prices (24 percent). Infrastructure needs (48 percent), pension costs (38 percent) and health benefit costs (36 percent) were the most negative impacts on city budgets.
“City budgets have been put to the test, and are proving resilient even with limited fiscal tools and revenue raising capacity,” said National League of Cities Research Director Christiana McFarland, the report’s author. “Looking to the future, cities will continue to face of major budget stressors like infrastructure, pensions and healthcare, and will need to make tradeoffs to maintain a fiscal balance.”
Another question I get asked often about is the city’s budget. While we are almost a $9,000,000 annual budget, most of that is related to the incomes and expenses associated with our different “profit centers” or “Enterprise Funds” as they are called within the government functions. Basically, we attempt to make each enterprise fund pay for itself. In other words, we want the water fees to be enough to cover the costs in the water department.
But some expenses do not have income associated with them. For example, we pay the sheriff’s department almost $600,000 per year. But the fines collected go to the county, so we have no associated revenue’s with that expense. So what pays for items such as that? Well, those are paid out of the general fund. The general fund gets its revenues from any profits from the enterprise funds (over and above the costs), as well as property taxes and Local option sales taxes (and some other smaller taxes), and Franchise fees, and insurance premiums, and some other things.
SO…. Here is a breakdown…
The city of Hawkinsville generates revenues multiple ways:
The Net profit from the services that we offer (ex, Water, Gas, Trash Pickup, etc) is slightly over $500,000 (most of this is generated from our ability to sell Natural gas. We receive almost another half million from Property taxes. Those two income sources combined amounts to almost half of the net revenue of the City. As the chart above indicates, we also get significant monies from LOST (Local Option Sales Taxes) 17%, Insurance Premium Taxes 13%, Franchise Fees 12%, and Vehicle Title Taxes 5%. We also get another $120,000 from fees such as Business licenses, Fines, Hotel/Motel Taxes and our animal control expenses, among others).
You can see elsewhere in this booklet the expenses associated with the enterprise funds, but there are lots of other expenses as well. Expenses associated with overall goals of the city such as public safety and streets and roads.
|Road and Streets||$ 456,930.00|
|Animal Control||$ 70,300.00|
In order to control escalating costs as well as a better service delivery strategy for our citizens, we have consolidated many services with the County. While we no longer have a city police department, we still pay the county Sheriff’s office almost $600,000 a year to provide a level of service to our citizens. The city/county fire departments combined but we still pay almost $200K per year for fire/EMA (Emergency Management Agency) protection. We pay almost half a million a year on improving our city roads and of course, these roads produce no income. (The county does reimburse half of Animal Control Expense) . Of course there is overhead such as administration salaries, utilities, etc. that also have to be paid.
The city has several accounts known as Enterprise funds. These are the incomes and expenses associated with the services that we offer. For example we have a water & sewage department, we have a sanitation department, a natural gas department, etc. The items (water, trash pickup, gas, etc) are services/products that we sell. As previously mentioned, the net profit from these services amounts to 23% ($532,195) of our net revenue that we use to pay for the non-revenue generating expenses such as police and fire protection. Here is the breakdown on our Enterprise Funds:
|ENTERPRISE FUNDS||INCOME||EXPENSES||NET PROFIT|
|Water/Sewage||$ 1,348,530||$1,198,965||$ 149,565|
|Gas||$ 3,360,450||$2,685,700||$ 674,750|
|Harness Track||$ 140,050||$ 248,840||$ (108,790)|
|Solid Waste||$ 365,375||$ 397,710||$ (32,335)|
|Inert Landfill||$ 137,400||$ 123,485||$ 13,915|
|Econ Dev.||$ 56,100||$ 248,950||$ (192,850)|
|CBDG Grant||$ 465,000||$ 475,000||$ (10,000)|
|WorkforceCen.||$ 10||$ 27,230||$ (27,220)|
|Cemetery||$ 30||$ 30||$ –|
|‘13 Chip Grant||$ 37,900||$ 38,040||$ (140)|
|‘14 Chip Grant||$ 306,000||$ 306,300||$ (300)|
|Hotel/MotelTax||$ 41,600||$ 26,000||$ 15,600|
|$ 6,258,445||$5,776,250||$ 482,195|
There are many hard expenses that don’t bring in Revenue. And Even when we get some State Grants like the CBDG (Community Block Development Grant), there are often some expenses associated with it that go above what the grant gives us. Basically our goal each year is to set the fees associated with each service such that it pays all the expenses within that fund. Gas is the one profit center does help us offset property taxes.
The city’s budget year runs from July 1 to June 30 each year. We begin planning the next fiscal year budget in January each year. Our total budget (Enterprise funds and general) is $8.9 million. The city budget is where we outline our priorities for the coming year. How much money should we put in street cleaning? How much in road maintenance? How much in grass cutting? How much on improving blight in our community? We would love to fund everything, but we also have an obligation to keep your taxes as low as possible. And actually, we have done a pretty good job at that. The city’s mileage rate of 5.6% has not changed since 1987. Sure, we’ve seen some years of increase revenue as the tax digest has increased, but we have not increased your mileage rate. We have also stressed consolidation of services with the county whenever we feel that the consolidation will bring about lower costs and/or increased services to our citizens. For example, we pay the county $18,000 a year to collect the city taxes on the same tax bills as the county taxes. This means that you only have to write one check each year. Mail it to the County and they cut us a check for our portion. We have combined our Animal Control, Recreation Departments, Police/Sheriff, Fire, EMA, 911, Codes Enforcement, Tax Collection.
The budget is the most important legislation that we pass. And each and every year we pass a BALANCED BUDGET. Something that the Federal government needs to learn to do. Even as we are implementing this year’s budget, we are planning next years and auditing last years.
I completed this simple booklet as a means to increase the transparency of your elected officials. Everything that we do is open and available for you to peruse, but it is easy to get lost in the details. This is just a brief, simple overview that hopefully enlightens you about your tax dollars and the fees that you pay for services. These numbers are sometimes rounded and I make no guarantee that they are 100% accurate, but they are right to the best of my knowledge and ability. Should you have any questions, concerns, or input, please feel free to contact me by any of the methods below:
Well, it is changing again (and this is still in the House Version, we don’t have a clue what the Senate might do). BUT! I must say, the current version in the House is good for Hawkinsville. The School’s ESPLOST will now be unaffected! No losses for the school system in the current version. The only stipulation is that taxes that are received from Motor Fuels, MUST be spent in the area of Transportation, but the definition is pretty broad. The City and County’s SPLOST (and Future SPLOSTS) are unaffected, with only the same stipulation – Motor Fuel taxes must be spent on Transportation. The City and County’s LOST taxes will see an INCREASE in revenue. Although Motor Fuels are being removed, the rest of the sales tax base will be taxed at 1.25% rather than 1%, so it will be a NET gain to the combined CITY/COUNTY of almost $80,000.
Hotel/Motel Taxes are also being slightly adjusted upward in the current version. I don’t really understand why.
And as mentioned in an earlier post, the current version of this bill will also FORCE a larger state allocation of LMIG (road resurfacing money). Although we have to match (30%) of the LMIG allocation, this WILL allow us to resurface additional miles in the years to come.
So…. Although the fat lady has not even gotten up to sing yet, the current version IS good for Hawkinsville.
(I am NOT making any such overall statements about whether this bill is good for GEORGIANS or not. Any way you slice it, it IS a tax increase on gasoline purchases in Georgia).
During the 2012 legislative session, the General Assembly approved sweeping tax reform in H.B. 386. The bill had overwhelming bipartisan support in both Houses, passing with a 54-0 vote in the Senate and 155-9 in the House. Originating from a larger set of recommendations unveiled in January 2011 by the Special Council on Tax Reform and Fairness, the tax reform package included a number of provisions that impact our community. Among the provisions: a new motor vehicle title fee (TAVT) to replace the ad valorem tax on automobiles; elimination of the sales tax on automobile purchases; elimination of the sales tax imposed on energy used in manufacturing; and broadening of exemptions for the agriculture industry including energy, equipment, and business inputs such as seed, fertilizers, feed, etc. The reduction of sales tax revenues is no surprise as the state fiscal analysis of H.B. 386 prepared prior to passage of the bill projected that elimination of sales tax on automobiles and the included sales tax exemptions would cost local communities $199.6 million from 2013 to 2015; however, the fiscal analysis could not have predicted that these losses would be unevenly distributed across the state, a fact which is evident now that the exemptions have been in place for 19 months.
The approval of H.B. 386 followed years of study and recommendations aimed at comprehensive tax reform. In 2012, Georgia, like most other states, was just beginning to emerge from the “Great Recession” and state leaders were eager to find ways to help Georgia compete for jobs and encourage economic development. The intended purpose of the exemptions included in H.B. 386 was to support some of Georgia’s most critical industries, including agriculture and manufacturing. However, since the provisions of H.B. 386 have been in place, it has become evident that there are unintended consequences of the bill that are having a significant impact on local government revenues since the law
went into effect in 2013.
Sales taxes are a primary source of revenue for Hawkinsville to provide critical services that protect the health and safety of our residents and maintain a vibrant quality of life for all taxpayers. SPLOST and ESPLOST have been approved by voters throughout the state as a means of funding capital projects for local governments and school systems. Since 2001, approximately 95% of SPLOST referenda have been approved by the voters. Every sales tax exemption whittles away at local revenues, even as costs to provide services and demand for services increase. Exemptions that are put in place after
approval of a SPLOST, ESPLOST, or bond referenda erode the revenues available to complete capital projects and to pay off debt.
The Georgia Municipal Association has collected data on sales tax distributions to all of Georgia’s 159 counties and 538 cities during a 19-month period from February 2012 to September 2014. Sales tax distribution data was obtained from the Georgia Department of Revenue website, and includes distributions of LOST, SPLOST, ESPLOST, MOST (City of Atlanta), HOST and MARTA sales taxes.
The picture above illustrates the percent change in sales tax distributions immediately PRIOR to the enactment of the exemptions to the period following implementation of the exemptions. Areas shaded in green have experienced increased distribution during these time frames; areas shaded in red have experienced decreased distributions.
As the maps indicate, a comparison of distributions from 2012 to 2013 (and beyond) shows:
– an immediate and disparate impact from region to region;
– as a direct result of the exemptions included in the 2012 tax reform package, areas of the state with a large agricultural industry base show a greater decline in sales tax revenues than areas with greater diversity of industry; and
– rural areas have seen greater reductions than urban and suburban counties in Georgia.
Pulaski County has seen sales tax reductions from -10% to -15% due to these changes in the law. This effects our LOST (Local Option Sales Tax – which we split 50/50 with the County), and SPLOST (Special Purpose Local Option Sales Tax – used to fund capital projects) and it also effects ESPLOST (Education Special Purpose Local Option Sales Tax – which goes to our school system, not the city). Hawkinsville is working hard to meet service demands, maintain infrastructure, and provide essential services, while cutting departmental budgets.
We need to take a hard look at what exemptions are WORKING to bring industry to our state and what exemptions are due to lobbying efforts by well-funded special interest groups!
In these tough economic times, the City of Hawkinsville is trying to do all that it can to generate revenue and cut expenses. However, we are attempting to generate revenue WITHOUT raising taxes. Our millage rate has not changed (other than rollback rates) since 1987. One would have to travel over 150 miles to find a municipality with a lower millage rate than Hawkinsville (with the exception of Rhine, Ga.). However, costs keep rising. Everyone is aware of the huge increases that everyone has seen in Health Care Insurance Costs. In fact, all types of insurance continue to increase. Other costs are also rising. Plus there are things that really need to be done (Infrastructure, housing issues, etc.). The city’s infrastructure is really getting old. The pipes carrying water to your house are in need of upgrading. We continue to have issues with stormwater pipes not being big enough when there is a big rain.
So what is your city doing? Well, we have cut cut cut cut cut. In fact, we have probably cut our manpower to levels that are not sustainable. I fussed in a previous post about the grass not being maintained at the city owned cemetery, but if we (the city commission) do not give our departments enough manpower to do their jobs, then really, the blame belongs on us. (However, it is up to the city administration to let us know the results of too much cutting so that we can make informed cuts).
We are utilizing prison labor whenever possible. We have details from both the area men’s and women’s prisons that help us cut grass, clean up, etc. While we do pay for (the men’s detail), the costs are ALOT cheaper than we could do alone.
We have over the last few years raised some service fees (on things like trash pickup, water rates, etc.). We expect each department’s service fees to 100% fund that department at a minimum. In other words, the collections from the water bills should cover our annual costs of delivering that water to your house. The garbage fees should cover the costs of weekly pickup. At best, each department services themselves AND provides income into the general fund to offset property taxes. I am proud to say that – on average – each department DOES pay their own way. In fact, our gas department, adds a substantial figure to the general budget every year, while still keeping its rates competitive with other customer alternatives.
We have consolidated services with the county whenever possible. The city and the county get along well and by consolidating services, we can avoid duplication of efforts. We are simply too small a community to do otherwise. In the last several years, we have consolidated tax collections (the county bills and collects our city taxes along with the county taxes). We have consolidated our recreation departments, 911 services, animal control departments, and code enforcement (building inspector) departments. This saves both the city and county on employees and related costs such as providing space/furniture/utilities, etc. And most recently, we have entered into a inter-governmental agreement with the county whereas the Sheriff now has full law enforcement duties in both the city and county. This reduces administration costs and allows the Sheriff to better manage the manpower issues. (In fact, service levels for the city residents have already INCREASED with two officers on patrol within the city at all times, previously there were times that we could only afford to have ONE officer on duty). While we do pay the county for these services, the cost is substaintially less than we were paying to go it alone – and the service has increased – WIN WIN!
While we have separate city/county fire departments, we share a chief. So those departments are “practically” consolidated and we may move to formalize that consolidation before long.
So these consolidation efforts are one way that we are working to keep our costs contained.
Utilizing SPLOST (special purpose local option sales tax) is another way that we have been able to maintain our property tax rates. SPLOST allows us to make much needed capital improvements that we quite simply could not afford otherwise. In the upcoming SPLOST (the one just passed), we have 1.5 million dollars allocated for infrastructure upgrades to our water, sewage, and gas lines. Plus roads, recreation dollars, and fire and police equipment.
But the purpose of this post is to tell you about another source of money that we have been very aggresive in obtaining. That is GRANTS. Now on a personal level, I wish the state and federal boys would cut out alot of these grants with a dollar for dollar lowering of our taxes. In theory, I don’t agree with most of these grants. However, if the state/federal agencies are handing out money – I want to be sure that the City of Hawkinsville’s hand is open and reaching for it. We want our share (or more) of these monies. And we have been very successful along these lines – more successful than I think most people realize.
One of our primary sources of grant income has been our successful CBDG grants (Community Block Development Grants). Cities can apply for up to $500,000 every other year. However, because we have taken the massive steps to become an opportunity zone / enterprise zone, we can actually now apply for these grants EVERY YEAR. That’s huge!!! We have recently completed the 6th street project. This project was funded by a $500,000 CBDG grant and replaced water lines and added a sidewalk along sixth street. Then we applied for another $500,000 CBDG grant to replace the water lines in Orchard Hill S/D. We received this grant, and when we bid out the job, the bids came back lower than expected and we subsequently expanded the scope of this project to include Forest Hill S/D. These CBDG can only be used in areas below certain income thresholds. So the SPLOST monies will be allocated to areas that are not CBDG areas.
We received a $500,000 ONE GEORGIA grant that will be used to build the community farmers market on part of the old Pillowtex mill property. We also received a $500,000 CBDG grant for environmental cleanup at the mill site that LandMark Development is developing into a housing complex.
We have also received a $18,500 grant for police department equipment, a $250,000 fire equipment grant, a $10,000 Historic Preservation Grant for replacing/repairing windows at the Opera House, and a $2,500 Home Depot Grant for building wheelchair ramps on houses within our community (of which I think about 8 have been built with donated labor from both the Deacons and Stewards Association and Darryl Brown Construction). And also a grant for landscaping and design work at our city entrances.
We received a 3 year GICH (Georgia Initiative for Community Housing) grant (no money) that allows us to partake of training and resources with other GICH designated communities twice a year. (only3 communities a year get this designation).
And the latest announcement is a HUD grant for $1,000,000. (incorrectly advertised by HUD as a $650,000 grant). We have just received notification that we have won a $1,000,000 grant that will be used to facilitate the development of Phase I of the cotton mill lofts – the housing portion of the development at the old Pillowtex mill.
We were recently named a Preserve America Community, a federal designation that while not having a check attached, will allow us to apply for additional grants due to having that designation.
And if all continues to go our way, we will receive another $500,000 CBDG grant for housing allocated to our McDuffie Street Housing project proposed by our H-GICH (Hawkinsville – Georgia Initiative for Community Housing) committee. AND a $300,000 CHIP (Community Housing Initiative Program) grant for housing issues on the North side of town. We hope (and think that we will) to be awarded BOTH of these grants by the end of August, 2010.
I am sure that I have left some recent grants out. Every department in the city is keenly aware that they need to help us fund their work. Each department actively seeks out grant funding that can be utilized in their department.
Did you have any idea that the City of Hawkinsville had received these grants?
The other way to grow revenue without raising property taxes is through controlled growth. But growth requires JOBS. We hope the pending sale of our spec building to the Korean companies will not only put that property back on the tax digest but will also provide hundreds of jobs. Jobs mean people. People mean houses and businesses to support those people. Houses and businesses mean an increased tax digest – more money – without raising the rates. Again, a WIN WIN for all involved.
Let me know your thoughts! What other areas to we need to be looking at? What are your thoughts on grants? consolidation? cutting expenses? improving infrastructure, etc. etc. Inquiring minds want to know. At best, comment on this post, at worst, shoot me a private email (firstname.lastname@example.org) and let me know your thoughts.