Cities to Perdue: Don’t yank tax grants

Georgia’s slumping economy already has local governments cutting staff, reducing programs and raising taxes.

Just the suggestion that Gov. Sonny Perdue would yank $428 million in state tax relief grants has local officials howling in protest.

“I don’t think any local government can just suck it up,” said East Point Mayor Joe Macon, whose city got $356,478 under the program last year.

East Point has laid off more than 80 workers, closed two fire stations and cut spending by $5 million this year.

“We are low-hanging fruit [for the governor]. A lot of local governments have had to make very hard decisions about services and taxes,” said Macon.

The program was conceived in the late 1990s as lawmakers grappled with rising tax bills due to ever-increasing assessments. The General Assembly under then-Gov. Roy Barnes proposed a rebate program to help support local governments and offset property taxes.

Under the program, the state sends the grant money to local governments, which pass it along to homeowners in the form of credits on their property tax bills.

Perdue said Tuesday it’s not working.

“The growth of local government has been overwhelming,” Perdue said.

Local officials have built their budgets to include the state grants since they were first awarded in 1999. Many have already mailed 2008 bills including the grants. If they were eliminated, new bills would have to be figured out and mailed.

Clint Mueller, legislative director for the Association County Commissioners of Georgia, estimated that the grants now make up from 2 to 5 percent of revenues for the average county. Local spending, he said, is not out of control because local voters won’t allow it.

“Our folks are very accountable,” Mueller said. “They see their constituents every day. They hear the complaints about taxes.”

The state credit provides income to every local government, from the DeKalb school board ($21.6 million) to Gwinnett County government ($13.3 million) to Smyrna ($758,377). Georgia’s capital city — which has already spent the summer locked in a financial crisis — would lose about $4 million.

That would be bitter for a city that’s already seen 519 layoffs and a nasty fight about the closure of Atlanta’s oldest fire station.

“It would be devastating,” said Councilman Howard Shook, who chairs the city’s finance committee. “Right now, we are fighting over pennies. There is no more money. Four million dollars would be a huge hit. It would immediately mean layoffs and stuff being closed.”

Perdue and lawmakers have been at odds over whether to stall the homeowner grants as they look for ways to cut the budget. With tax collections down in the slow economy, state officials are looking to cut at least $1.6 billion in spending from the budget for the fiscal year that began July 1.

Shook, a Republican, said he “was amazed at the assertion that local governments are out-of-control spenders. We went from $647 million to $580 million [in Atlanta’s general fund]. How you translate that to out-of-control spending, I’d like to see.”

That message was echoed across metro Atlanta.

Gwinnett Schools, which is expecting 160,000 students this year, uses the grant for day-to-day operations, said school spokeswoman Sloan Roach.

“If we don’ get the $24 million from the state, it does put us in a pinch,” Roach said. “That tax relief grant was figured in as part of our revenue budget.”

Cobb Commission Chairman Sam Olens said rescinding the grants, which would take legislative action, “would set a terrible precedent, as our property owners were promised those savings.” Cobb government received about $11.5 million last year.

DeKalb County government is expecting $16.3 million, said Kathie Gannon, the county commission’s presiding officer.

DeKalb would have to cut services or raise taxes, or both. She said it would be a logistical “nightmare” to send new bills asking people to give back the state’s credit.

Gannon, who chairs the county commission’s budget committee, said DeKalb’s spending has risen in recent years because the population has grown and so have costs. She said Perdue was merely dumping his budget woes onto taxpayers and short-changing local governments “like a thief in the night.”

“He’s not cutting his budget … he’s just going to the taxpayers and saying, ‘You pay for it,’ ” Gannon said. “It’s just totally irresponsible. I can’t believe that he’s doing it.”

Staff writers Ty Tagami, Tom Opdyke, Kristina Torres and Aileen Dodd contributed to this article.