City franchise fee revenues down

City officials say they’ll continue to monitor steep declines in electrical franchise fees and sales taxes.


Presenting a first-quarter financial report Tuesday, Finance Director Donna Williams said the franchise fees – a percentage of gross revenues paid during the first quarter by local electrical providers Georgia Power and Jefferson Electric – are down by $1.1 million over last year.

City leaders last year forecast a decline of $600,000 from a paper machine shutdown at Resolute Forest Products, for years one of Georgia Power’s largest customers. Around the same time another large customer, Fibrant, announced plans to shutter most of its Augusta operations.

Electric franchise fees represent the largest single source of tax revenue for the city’s general fund and were budgeted at $14.6 million for 2017, down from $15.2 million in 2016.

City Administrator Janice Allen Jackson said through a spokesman the decrease was “larger than we anticipated” but decreases in franchise fees and sales taxes were expected. “We still have 10 months of sales tax collections remaining in the year,” she said.

Sales tax collections – the four, one-percent taxes collected for schools, transportation, local government and the Local Option Sales Tax – also continue to decline.

“In 2015 and 2016 we have experienced absolute declines in your sales tax revenue for your local option sales tax,” Williams said.

As of February, because March payment information was not available, 2017 sales tax receipts for the LOST were down $88,218 over last year, about 11 percent below budgeted amounts.

Low sales tax collection rates have varied impacts on the government, Williams said. While the Transportation Investment Act expires after 10 years, low collection rates for the other taxes used for capital projects merely slow or delay the projects until enough funds are collected.

The LOST, however, is used like ad valorem taxes to support government operations and cuts into funds available to the general fund, law enforcement and the Urban Services fund, she said.

The city last year budgeted some 38 percent of law enforcement funding from the LOST, and 51 percent of funds for the Urban Services District, located in the pre-consolidation city limits, according to Williams’ report.

“Law enforcement has fewer other sources of revenue to depend on,” she said.

The sales tax decreases continue a several-year trend that officials have struggled to explain, due largely to limited information provided by the state about collections. Last year was the fourth and final year of staggered implementation of a new sales tax exemption for energy used in manufacturing, Williams said.

When manufacturers won the state tax break and lobbied to stop the local government from substituting an excise tax, city officials estimated the break will cost the government between $3.5 million and $4 million.

Williams said the city could make up the difference by year’s end, in part from limited growth in the tax digest, but said the city continues to monitor collections.

“It is not a catastrophe right now; it is a concern,” she said.

Reach Susan McCord at (706) 823-3215 or

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