Cities may cut, school districts may borrow, to cope with Fulton taxes

The story so far

Earlier: Fulton County was to have set its tax rate in June, but an error in calculating tax exemptions has delayed the process.

The latest: Some cities and school districts may have to borrow money because bills are running late.

What's next: Fulton tax bills are set to be mailed in September and due in November.

Fulton County tax bills, delayed because of a tax digest calculation error, are back on track.

But the problem has caused frustration for cities that depend on the county to ensure their own tax digests are correct, and could force school districts to borrow money to cover a cash flow gap.

On Monday, the Atlanta school board voted to authorize borrowing up to $175 million to cover payroll and other costs while it waits for the county to start collecting taxes. The loan will come before the board for final approval next month.

Even borrowing less than that amount would cost the school district. A short-term loan of $75 million could cost about $269,000 in interest and administrative costs.

The tax dollars that would be spent on the short-term loan could otherwise be spent on teachers, counselors or other school services, Atlanta school board chairman Courtney English said.

“It is baffling to me that by no fault of our own we have a $269,000 burden that we have to account for,” he said. “That’s money that could and should be going to kids.”

A spokeswoman for the Fulton County schools said they are monitoring their cash flow, and may have to borrow “if the delay continues for an extended time.” The property tax bills are about a month behind schedule, meaning collection dates will also be pushed back. They are now scheduled to go out in mid-September, and money would be due mid-November.

Fulton County cities were supposed to receive their updated tax digests Wednesday, but as of late morning Stacey Inglis, Milton's assistant city manager, was still waiting for it.

Because Milton’s fiscal year ends Sept. 30, the delay means the city will have to move money around in its accounts to cover its obligations, she said. Money that should go to capital improvements will stay in the general fund for now, she said.

“It’s hard to know what we’re going to get, and we’ve already spent everything,” Inglis said. “It’s rearranging resources, it’s added frustration.”

This is not the first time the county has had problems that delayed tax bills. In 2009, disagreements about the tax digest delayed the tax bills until October. Then, Inglis said, Milton had to go into the red.

Representatives for Mountain Park, Sandy Springs, Roswell, Palmetto and Atlanta all said they are monitoring the situation, but expect that they have the money available to cover expenses. In Alpharetta, assistant city administrator James Drinkard said the delay has been problematic.

Alpharetta starts its fiscal year in July, so it has already advertised its millage rate and adopted its budget. If something needs to change, the city might need to make spending cuts.

“You certainly never want to be in a position to have to go to the residents and say, ‘We made up the projection, and we were wrong,’” Drinkard said. “‘What else were you wrong about?’ …At this point, it makes us nervous, quite honestly.”

Hapeville city manager William Whitson said that city has appeals hearings set for next week, and has to have the digest before it can proceed.

Fulton County still has to set its own millage rate, and has scheduled a public hearing for Wednesday morning. While the proposed rate is up — to 10.55 mills, from 10.5 mills — a county spokeswoman said that was because reassessments led to a decrease in values.

The millage rate was scheduled to be set in June. But an error in calculating tax exemptions dragged out the process.

Whitson, in Hapeville, said he did not think Fulton County was paying enough attention to tax issues.

“It’s a vital function; it’s not a luxury,” he said. “I don’t get it. It’s your cash register. Why don’t you pay more attention to it?”