The region’s four biggest counties hit or exceeded their income projections last year.
But considering that it mostly took tax hikes, spending cuts and some surprise extra cash to end 2011 in the black, public finance experts say it’s time to switch the focus from income to spending. Not surprising, residents agree.
“People get very scared when government says they’re going to cut something like police or fire without more money,” said Brett Bitner, the vice president of the Cobb Taxpayers Association. “Those are false choices. They are asking whether you want cops or taxes when they should be asking what government is doing and what it should be.”
Cobb, DeKalb, Fulton and Gwinnett counties all must make revenue projections nearly a year before their main source of cash, property taxes, are due each fall. The accuracy of those projections matters more in the lean economy because overestimating can cause governments to scramble in crisis mode later in the year to balance spending. That leaves taxpayers with a difficult choice: accept tax increases or see popular services such as law enforcement and libraries cut.
Documents reviewed by The Atlanta Journal-Constitution show all but Fulton needed to make big changes at midyear to keep paying for the same level of service with police patrols, road paving and just answering the phones.
As the counties prepare their 2012 budgets, taxpayers say they are tired of facing the tough choices put on them when it becomes clear the projections have fallen short. Yet threats to cut key services, and making them, have been commonplace since the downturn:
- Gwinnett let 50 police officers go in 2009 after residents protested a proposed 28 percent increase in the tax rate to plug a $43 million hole in the budget.
- Cobb raised its millage rate 15.7 percent in July, three months after the county chairman called for filling its deficit in part by closing most of the county's libraries.
- DeKalb's chief executive and County Commission battled for months over a proposed 14 percent tax hike in early 2011 before realizing last summer that the increase wouldn't be enough to cover a growing deficit. In July, the county raised property taxes by 26 percent.
“The problem is not income,” said Barbara Neuby, a professor of public administration at Kennesaw State University. “The problem is these governments don’t know the cost of their services because people are just unwilling to do the math. If governments would calculate the data, I think the public would be very interested in having a say of having more of A and less of B to balance the budget.”
Fulton alone tackled its spending while it was projecting income. That allowed it to end 2010 with $156 million left over, a surplus that helped it end 2011 with $132 million.
Massive cuts in spending for services in the unincorporated south helped create the positive balances, but with property values continuing to decline, officials are seeking a 17 percent tax hike for Southside property owners in 2012.
Fulton Finance Director Patrick O’Connor said he began telling local politicians in 2008 that the news about the economy would hit the county hard. O’Connor said he just kept urging more cuts at every turn.
The county’s overall budget has been fairly steady, at $602 million in 2009 and a recently adopted $602.6 million for 2012. The money spent on the unincorporated area has dropped by more than half, to $45 million for next year.
“Since the financial crisis hit, you can throw historical out the window,” O’Connor said. “Nobody wanted to hear it back then, but we knew things were going to get a lot worse. They did, we were ready for it and we’ve come out ahead because of it.”
Gwinnett has shown improvement, successfully forecasting surpluses for 2010 and 2011 after previously coming in under projections.
“We err on the side of being pretty conservative about what’s happening out there,” county Finance Director Maria Woods said.
Cobb and DeKalb prepared for lost income, too. But in both cases, their forecasts didn’t suggest they would need the deeper cuts or tax hikes that ultimately hit residents last year.
Cobb was slightly better off. In fact, the one-time cuts and furloughs it made in its midyear 2011 budget would have let it end the budget year in September with a balanced budget.
But Finance Director Jim Pehrson monitors revenue every month. He realized by summer that the county would have started its 2012 last fall with a financial hole that needed immediate filling if it hadn’t called for more cuts or raised taxes.
“We are nine or 10 months into the year before we get a real handle on the revenue,” Pehrson said. “[The increase] gave us some cushion against future cuts that would have been painful.”
DeKalb miscalculated its income, even after the 26 percent tax hike. It was the only one of the four metro counties to fall short on property tax revenue. What saved overall projections was, in part, sales tax collections that are unique there.
The bulk of the nearly $4.7 million collected from the homestead option sales tax goes toward offsetting property taxes in DeKalb.
“We came in higher on some and lower on others but were up overall,” DeKalb Finance Director Joel Gottlieb said.
Michael Bell, the former chief financial officer for DeKalb and Atlanta, worries that the counties are too pleased at eking out the year in the black. Now a public finance professor at Georgia State University, Bell too criticizes the focus on revenue.
All the counties, even Fulton, need to spend more time on the part of the budget they most control. They can only project revenue, but they can control spending, Bell said.
“You have it everywhere: a spending control problem in a declining economy,” Bell said. “You cannot keep spending like you have, but that message doesn’t seem to get through.”
Some watchdogs, though, think this might be the year that changes. No county leaders have proposed tax hikes for 2012, an election year.
That is a sign to Rhea Johnson, who recently formed a taxpayer rights group in DeKalb, that spending will get its due this year.
“They seem to have the revenue side of the equation down, and that’s an example of what they can do if they really want to," she said. "I just want to see that effort on the spending side now.”
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