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Weak economy blamed for tax hike

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POSTED: November 27, 2012 11:14 a.m.

Hinesville residents are invited to take part in three public hearings on the city’s proposed increase in property taxes. The hearings are scheduled at city hall for 11 a.m. and 6 p.m. Nov. 29, and 3 p.m. Dec. 6, during the city council meeting.
The Coastal Courier recently published a brief about the city’s intention to increase property taxes by 9.94 percent over the rollback millage rate. The nearly 1-mill increase will bring the millage rate to 10.50 mills, City Manager Billy Edwards said.
Edwards said a decline in other sources of revenue caused by the weak economy led to a budget shortfall. The city needed to increase the millage rate in order to balance the budget, he explained.
“When we adopted the budget, we assumed a level millage rate,” he said, noting the city has had a three-year moratorium on property-tax hikes. “We agreed to increase the millage rate (up to but no more than) 1 mill. The $558,000 needed to balance the budget was based on what 1 mill would produce at 100 percent collection (based on last year’s tax digest).”
Edwards explained they never really assumed the city would get 100 percent collection of property taxes, noting there are a number of reasons why cities don’t collect all the taxes owed. He said most cities usually base their budgets on a 95 percent collection rate.
“We didn’t know what the (tax) digest would be,” Edwards said, explaining that the county had not yet released the tax digest for fiscal year 2013 when the city council approved the budget. “The tax digest did not change that much, so a 1-mill increase at 95 percent collection turns out to be a little less than what we needed to balance the budget. However, it’s such a small amount; we’ll be able to make some minor adjustments (to balance the budget).”
Edwards said Georgia law requires that a rollback millage rate has to be computed to produce the same total revenues on the current year’s tax digest that last year’s rate produced if no reassessment of property has occurred.
He then explained there are two kinds of growth in the tax digest: inflationary growth and new construction.
“In plain English, what that means is, if last year the millage rate was 1 mill and your property was valued at $100, the property tax would be $10,” he said. “If this year your property has been valued at $110 (due to inflation), the city has to adjust the millage rate so the property tax is no higher than last year — $10.”
Edwards said for every $100,000 fair market value on a nonhomestead home, the city’s proposed 1-mill tax increase would be about $38. A non-homestead homeowner with a home valued at $150,000 would see an increase in his or her property tax of about $57, he said.
Because the budget adopted by the city requires a millage rate higher than the rollback millage rate, Edwards said Georgia law requires the city to hold three public hearings before it can finalize the rate increase.

 

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