DeKalb hires help with financial forecasts

Say “tax digest,” even in a room full of government wonks, and half the eyes glaze over.

But the digest, the tally of a county’s taxable property, is the first step in the government budget process that ends with property taxes going up or services like police protection being cut if governments can’t make ends meet.

Now DeKalb County, notoriously off on its digest forecasting even before the economic downturn, has inked a $35,000 deal with Georgia Tech to help it become more accurate in its projections.

If it works, it could mean an end to last-minute tax hikes and scrambling for spending cuts that have marked the county’s last four springs, including a record 26 percent hike to the tax rate in 2011.

“It’d be nice for them to get it right for a change,” Charles Peagler, a 35-year resident of DeKalb, said of the forecasting. “They need a more comprehensive approach, so if it takes hiring someone else to get that to happen, I am all for it.”

The ongoing slide in home values have created new struggles for many metro Atlanta counties to figure out how much properties will be worth.

It doesn’t help that Cobb, DeKalb, Fulton and Gwinnett counties all must make revenue projections nearly a year before their main source of cash, property tax, is due each fall. As values fall throughout the year, the accuracy of the projections becomes especially critical when most counties set their tax rates in early summer.

DeKalb’s model has been the same for decades: look at property values for the region, then make tweaks based on history for various areas of the county.

That system works well when values inch up. But when the real estate boom hit, DeKalb repeatedly underestimated its digest and collections.

When the market fell, DeKalb’s forecast didn’t reflect just how deeply the county would need to cut spending to match falling cash flow. Cobb’s forecast also fell short in 2011, requiring it to raise taxes so it could start 2012 with money on hand.

“It’s clear we need to do something different,” said DeKalb Commissioner Lee May, the head of the board’s budget committee who has pushed for outside review.

That difference will be a more detailed look at values. The Georgia Tech Research Corporation will examine individual properties’ histories and is likely to also add in data such as population.

Overseeing the work: Alfie Meek, an economist who joined Tech last year after overseeing forecasting and research for Gwinnett.

Meek was unavailable for comment, and others in his new office declined to comment.

But Gwinnett Finance Director Maria Woods credited Meek with developing the forecasting system that has helped the county end their budget years with surpluses since 2009. That year, too rosy projections prompted service cuts that were restored after a tax increase.

Gwinnett continued to refine that model this year and is on pace to generate a $10 million surplus for its general fund, Woods said.

“We really don’t want to find ourselves in a situation at the end of the year where we have to cut again,” she said. “We are getting better every year. It’s an ongoing process.”