East Point Mayor Earnestine Pittman says that property owners need to be ready for a tax increase to balance the budget: the question is how much.Pittman is leading a rollback in last year's controversial utility rate hikes, which are credited with ousting two council members in the last election. To help pay for that rollback she is asking that the cap on the city tax rate, currently at 15 mils, be removed to help cover the projected $7 million budget deficit in the general fund that resulted from the roll back.
Pittman said last year's council majority behaved irresponsibly when it cut property taxes by one mil -- from 14.75 mils to 13.75 mils -- while at the same time increasing utility rates.
"Yes the taxes are going to go up from 13.75 -- they should never have been dropped," Pittman said. “I’m not prepared to discuss ( how much) at this point because I’m still working on it.”
The mayor said each mil increase would only raise another $775,000 for the south Fulton city because of falling assessments. Councilman Myron Cook said the city may remove exemptions for elderly taxpayers, which drastically lower their tax bills, because more taxpayers are aging into exemptions.
Cook said the the elderly exemption was established for an era when older people didn't have much income but times have changed. "Who do you see driving the Mercedes," he said.
The proposed deficit strategy showcases the debate in East Point about whether utilities should charge enough to cover all their own costs -- including administrative and financial services provided the utilities by other departments.
Pittman contended that increased property taxes would be cheaper for residents than the higher utility bills, which she argued had been used to prop up the general fund, in part by billing for $2.5 million in franchise fees and other charges that the new council has now eliminated.
The council at a meeting Thursday is scheduled to decide what the base rate should be for the water-and-sewer utility. At a meeting last week, in which the staff outlined three options, the mayor indicated she favored the utility rate that would leave a shortfall of at least $4 million in the general fund, which would would mean the lowest water bills for residents.
Acting finance director Derrick Cannon and Roy O. Barnes, head of the water and sewer department, told council they favored the utilities paying more money into the general fund. The mayor and her allies on council, which now have a majority, contend the staff has been overspending and instigating projects without council approval.
"Staff doesn't seem to think that there is anything wrong with rates the way they are now," said Councilman Marcel Reed. "What we want to do is even things out."
East Point has been rocked by a water war since last July, when it boosted the standard base water-and-sewer rate from $19.50 to $47.80 for 3,000 gallons of water after the council voted to stop subsidizing utilities from the general fund. The cost was projected to increase to $66.85 when the next fiscal year begins in July.
After rates increased last summer, some residents complained that monthly bills skyrockted from less than a $100 to several hundred dollars a month. That fueled the political firestorm that Pittman fanned to help elect allies to the council.
Councilman Lance Rhodes, who was a proponent of raising utility rates, said that the mayor and her new council majority are using property taxes to subsidize utility costs, which he said should be covering all its own cost. "The whole idea was to have the utilities be self sustaining," he said. "I’m not prepared to go against these trained professionals because of politics."
Rhodes noted that while the new base rate favored by the mayor was $32 a month, it would jump up to $58 a month in July, which he predicted would create a new political problem because water rates would again be going up on top of higher property tax rates.
“It is going to be interesting," he said. “In four months we’re going to have have a conversation about how high to raise rates again to dig ourselves out of the hole we are creating now.”
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