Brace for a tax increase, DeKalb County.
A preliminary report released Monday showed property values dropped 10.5 percent in the county, more than double what was projected for the budget. That created a $25 million hole for commissioners -- who have sliced $33.6 million to create a $529 million budget.
A majority of commissioners said that meant another round of cuts, and, for the first time, consideration of a tax hike.
“It’s going to have to be a mix,” said Commissioner Lee May, who heads the budget committee. “The fact remains, we have a real revenue problem.”
DeKalb ended last year with declining revenue and no cash reserves. Chief Executive Burrell Ellis proposed raising taxes by 2.32 mills to cover the loss, but commissioners voted to make the cuts. The county tax rate, including bonded debt, is 16.86 mills.
Only 40 percent of the reductions have been made, commissioners said. Even if they had raised taxes earlier, they wouldn't have been able to cover the latest gap unveiled by the county’s chief appraiser, Calvin C. Hicks Jr.
At full appraisal, the county's value went down $6.76 billion, according to preliminary figures. At the 40-percent assessed value, the rate taxed, that was a $3.22 billion drop.
Values could drop again when an adjusted report with public utility and motor vehicle values is released later this month.
A final digest won’t be calculated until late summer, once appeals are over. A new state law has given all property owners the right to challenge their assessments, which could create a rush of appeals.
“It has not been a banner year,” Hicks said.
The commission must set a preliminary tax rate next month and adopt a final one in July. That gives the county time to send out tax bills later this year. Even if the tax rate is increased as expected, it's unclear if homeowners actually will pay more. Lowered values typically mean lower bills.
Any tax hike, though, will likely go beyond filling in services. The county saw its bond rating drop three times this year. Unless enough money is raised to replenish the reserves, the downgraded ratings will remain. That would increase how much DeKalb pays in interest on major projects such as a $1 billion overhaul of its water and sewer system.
“We have to increase beyond our deficiencies to increase our reserves,” Commissioner Stan Watson said. “We have to be more determined than ever to do the right thing.”
DeKalb is not alone in struggling with the decline brought on by the down economy. Gwinnett County recently agreed to use a property tax levy intended for library and road improvement to balance its budget. Cobb County last year reduced library hours and did not fund 70 open positions.
Yet the willingness to consider a tax hike is a welcome reversal for Ellis. He has cut $107 million from the county’s general fund since 2008. He has argued that more cuts wouldn't be enough.
“I’m not saying we can’t do more cutting, but to continue funding these services our residents say they can’t live without -- library, the rec centers -- we’re going to have to adjust our millage,” Ellis said.
An estimate of millage rates and other proposals should be available at the commission's next meeting on Tuesday. The board is expected to hold its first hearing on any proposed increase on June 14.
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