Four years of falling home values have taken a toll on metro Atlanta homeowners, who could face another round of property tax increases.
While recent news suggests an economic recovery, property values continue to slide -- by more than one-third in one city. That means local government revenue continues to be either flat or falling, leaving them in the lurch for money needed to pay police, pave roads and provide other services residents have come to expect.
Some residents are bracing for another round of tax increases, as local governments this spring prepare to set tax rates for the next budget year and metro Atlanta voters prepare to vote in July on a 1-cent regional transportation tax.
"I understand the need for revenue to operate the government," Lawrenceville businessman Don Shaw said. "But I also understand that government's got to improve the way they're operating."
Metro Atlanta's cities and counties have been cutting services and personnel, adding user fees, delaying projects and raising taxes. But the most challenged municipalities may be forced to remake themselves around the new realities of having significantly less money available to operate.
It's a no-win situation for property owners and local governments -- especially homeowners.
Residents in Cobb and DeKalb counties, for example, felt the sting last year when property tax rates climbed by double digits. And while Gwinnett homeowners enjoyed a fractional decline in their tax rate, it hardly made up for the 21 percent hike passed two years ago, the first tax increase in 13 years.
"All of these potential tax increases are hitting taxpayers at a time when they can least afford it," said Lance Lamberton, president of Cobb Taxpayers Association.
TAKING A HIT
Metro Atlanta is still being pinched by the housing crisis. No one, it seems, has been spared.
While the number of foreclosure filings has declined in Georgia, the state remains among the worst in the nation for foreclosure activity, according to data released this week from real estate tracking firm RealtyTrac.
Battered by five years of recession, many local governments were looking for property values to level off or fall a modest 3 to 5 percent. Now, some are bracing for worse.
Sandy Springs, which saw property values fall 3.5 percent last year, learned last week it could face an 8 percent decline this year.
That surprised Mayor Eva Galambos.
"We didn't know what to expect," she said. "We haven't seen that many foreclosures, but I imagine the value of our homes have just kept declining."
Sandy Springs cannot raise taxes without a referendum, so Galambos said she expects city leaders will look at cutting capital improvements, such as adding turn lanes at intersections and land purchases for parks.
The city's Town Center project, still in the planning and design stages, will remain on track, she said, because the city has already set aside funding.
But rather than spend the shrinking capital budget on building projects, retired resident Lee Baker wants the city to address its neighborhoods, insuring a high quality storm water system.
"What really upsets me is I feel we voted for the city to protect our neighborhoods," she said. "Some of us are really upset that all the money keeps going to sidewalks, all these ornamental streetlights. All these things are nice, but meanwhile some of the neighborhoods are being thrown under the bus."
A far worse case is in East Point, whose tax digest has plummeted 36 percent since 2008. It is fearing for the worst, said Mayor Earnestine Pittman.
"We're looking at reductions in staff and salaries," she said. "We're also looking at restructuring departments and public-private partnerships."
The city is also considering a tax increase, she said.
"You have to look at that because when you lose 36 percent of your valuation, you're not bringing in nearly what you brought in before," she said. "Even if you do increase (taxes), you're still not where you were."
LIVING ON LESS
The city of Atlanta has been hit as hard as anyone and expects to feel more pain in the coming year.
The city expects declining property values will cost it $13 million in revenue for the coming year, Chief Operating Officer Duriya Farooqui said.
No tax increase is expected. The city now operates with a budget that is $100 million lower than the 2008 budget, she said, and will absorb more revenue cuts.
It has become the norm in local government to aggressively seek cost savings while holding down spending.
"We are pursuing a strategy to control spending, find efficiencies, and our objective is to protect the service improvements made over the last two years," she said.
Cobb expects to reach into its savings to absorb its expected revenue hit.
Early estimates for Cobb County's 2012 tax digest, which accounts for the value of taxable properties in the county, show a 3.9 percent decline from last year, according to the county's tax assessor. That equates to $8.3 million, which the county expects to absorb with a surplus and set-aside funds for fuel costs, finance director Jim Pherson said.
Lilburn, a city in Gwinnett county, has kept the lid on property tax increases by adding a fee and expanding its borders. A $10 monthly sanitation fee has helped its budget and the annexation of properties along Pleasant Hill Road will help mitigate this year's decline in property values, City Manager Bill Johnsa said.
Roswell, where property values declines haven't been as steep, is looking to give its employees pay raises this year.
Mayor Jere Wood predicts overall revenues will be up this year because rising sales tax collections will offset a decline in property values. He said he wants to salvage a 2 percent merit increase for city employees at a cost of about $500,000.
"It's been three or four years," he said, "and I think they're due one."
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