COVER STORY: STATE VS. LOCAL CONTROL: Pols feud over who’s in charge of what

It’s a tough time to be a local elected official.

Cities, school systems and counties are cutting jobs and services to cope with a deepening recession.

Meanwhile, state legislators —- facing billions in cuts themselves —- keep proposing new laws that stand to make running local governments not only more complicated but more expensive.

From the proposed cap on property assessments to penalties for failing to settle legal cases, mayors, school board leaders and commissioners in counties small and large worry their ability to manage their own affairs is being strangled by politicians under a shiny Atlanta dome.

It’s enough to leave Bill Floyd peeved.

“It’s a frustrating thing,” said Floyd, the mayor of Decatur. “They can’t fix their own problems down there, so they are meddling in ours. I don’t have a problem when they deal with things that affect their revenues, but when it affects ours, I have a problem with that.”

But lawmakers at the Capitol say they have broader missions and larger constituencies than most local officials. That means they have to consider wider impacts.

“Nobody likes the position we’re in,” said Rep. Jerry Keen (R-St. Simons Island), the GOP leader in the House. “I don’t know anybody who isn’t upset about what we’re doing here. But difficult times require difficult decisions and these are the most difficult.”

State leaders also complain that local governments have dramatically increased revenues. Department of Revenue figures from January show cities and counties saw their per capita take of sales and property taxes rise to $1,519 last year from $1,094 in 2000. The state’s share from those sources increased to $625 per capita from $601.

Keen points to a spreadsheet that shows the amount of money in each county’s general reserve fund. Many counties still have plentiful rainy day accounts, while the state’s is down to 9 percent when compared with state expenditures.

Before Gov. Sonny Perdue reversed course last week and signed into law HB 143, which ensures the state will meet its obligation to fund the homeowners tax relief grants, counties were faced with either eating the $200 to $300 those grants save each homeowner, or to send residents a new property tax bill. That decision cost the state $428 million.

There are several bills still pending that concern local officials. One, Senate Bill 83, would raise the homestead exemption from $2,000 to $4,000 —- a boon to homeowners, but another headache for Floyd and local governments. That could cost DeKalb County an estimated $10 million according to an analysis by the Association County Commissioners of Georgia.

If it were to pass, county leaders would have to decide: Do they eat the lost revenue in an economic downturn, or raise taxes? If it’s the latter, that could cost each homeowner in the county an average of $80.

In flush times, these kinds of arguments are more abstract —- they’re about governance and general philosophy. These are not those times. For local governments —- including Atlanta, Canton, Smyrna, Gwinnett County and others —- the plunging economy has led to layoffs and service cuts, meaning these decisions have real, concrete impacts.

And all of this is playing out amid tensions and anxiety surrounding the $787 billion federal economic stimulus package recently signed by President Barack Obama. Georgia expects about $6 billion out of the fund, and much of that could flow to local governments. But some mayors and local leaders have a sinking suspicion that Republicans in the General Assembly might monkey with the money.

The economic mess has everyone on edge.

“It appears to be an attitude that the economy is only impacting the state,” said Jerry Griffin, executive director of the county commissioners association. “Everybody is being affected.”

That’s unfair, Keen said.

“What’s going on in our nation and what’s going on in the state, it’s certainly going on in our counties,” he said. “Just like we at the state level cannot operate in a bubble, like the economy is good and it’s business as usual, neither can local governments.”

But for local leaders, SB 83, the homestead exemption bill, is just one of many that would make their jobs harder:

> HR 1 and HR 2 would cap property assessments and force local officials annually to raise taxes if they wanted more money. But local officials say that could also lead to disparate tax levels for owners of similar homes, and some county leaders believe it punishes counties who have managed their finances and taxes responsibly.

> HB 233 freezes assessments for two years, limiting local government income.

> HB 125 would force cities to pay a 25 percent penalty when they refuse to settle a dispute and lose a judgement in court.

> HB 239 increases the cost for water treatment.

> HB 316 exempts the state from local storm-water utility fees.

Cobb Commission Chairman Sam Olens supports an assessment freeze. On that, he and Keen agree. Olens’ county already has a homestead exemption that adjusts yearly for inflation to keep assessments and taxes from creeping up. But he’s been trying to raise a series of technical issues with HR 1 and feeling like he’s not getting anywhere. He contends the bill as written is unfairly harsh on Cobb.

“You shouldn’t be hammering the conservative governments that have already done the right things,” Olens said. “The idea appears to be if [lawmakers] pass some tax reform [voters] won’t notice what’s going on.”

Many lawmakers served in local government before rising to the General Assembly. They, perhaps more than others, understand the impacts their actions have on their former colleagues.

“You have to strike a balance between the issues, and having municipal or county experience is a big advantage,” said Rep. Sean Jerguson (R-Holly Springs), who served on the Holly Springs City Council and as acting mayor. “I deliberate quite a bit on bills that affect local government. Certainly, that’s not to say I’ll support those bills every time or don’t support those every time, but I do try and be diligent and strike a balance about what’s good for the citizens of Georgia and also preserve local control.”

Sen. John Douglas (R-Social Circle) served on the Newton County Board of Education before joining the General Assembly. Douglas said he understands what is happening back home and how those local leaders are affected by what they do. But he also said lawmakers are often stuck between unpleasant choices.

“I also understand we … only have a finite amount of dollars to spend,” Douglas said. “I believe the cuts have to go across the board and everybody has to share the pain to be equitable.”

As for some of the specific legislation, such as the caps on property assessments, Keen tolerates little complaint from locals.

“We’re trying to bring real relief to people across the state on property taxes,” he said, particularly in an economy where home market values are dropping yet many cities and counties are increasing assessments.

“There’s no rationality for it,” he said. “If local governments feel like they need to raise revenues during these times, they have the same remedy we have. They can go to their voters and say we’re going to raise your taxes. We’re not limiting their ability, nor are we attempting to.”

Not all lawmakers share that view, however. Rep. Rob Teilhet (D-Smyrna) sees the problem as being the state’s, not local governments’.

“The state has mismanaged its finances,” Teilhet said. “The state is close to $3 billion in the hole when you add it all up, and they’re [Republican leaders in the House and Senate] trying to shift the blame for that onto counties and cities and school boards.”

Teilhet —- a rising star in the Democratic Party —- and Olens, a top Republican, agree that Cobb County is not the problem.

“The state of Georgia is $3 billion in the hole and it’s telling Cobb County, which is running a small surplus, telling them how to handle their budget?” Teilhet said. “That’s laughable.”