Disparity exists in Augusta's property tax system

It’s the proverbial elephant in the room, and it has been sitting there more than 16 years.

Ignoring the problematic pachyderm, however, might no longer be an option as some consider ways to address the city’s “unfair” property tax system – possibly through the courts.

It was a problem City Admin­istrator Fred Russell became aware of when he was hired 10 years ago. He said the government’s tax structure seemed more than a little odd.

“That was the question when I first came here,” he said.

“What are we, Augusta or Richmond County?”

That disparity is built into the consolidated government’s charter – two overlapping tax districts in which property owners pay for government services in two distinct and, at times, unequal ways.

“You are providing the same services and charging people different rates,” said Commissioner Jerry Brigham, acknowledging that Augusta’s property tax system needs to be fixed.

Brigham, whose involvement with local government predates consolidation in 1996, said he is one of the few commissioners to have studied the problem in depth. A solution, however, is not something he or anyone else in city government is prepared to offer.

“You’ve got to do something about it, but how do you do it?” said Brigham, noting that any solution is sure to anger a lot of taxpayers. “It is going to turn off everybody.”

The problems with Augusta’s property tax system are a legacy of the deal hammered out in 1995 to merge the Augusta city government with that of Richmond County. The legislation that created Augusta-Richmond County took the existing tax districts from the two entities and pasted them together.

City dwellers, who paid for services such as trash pickup, streetlights and better fire protection than the county, would continue paying city taxes – essentially an additional millage rate applied to an area that covered the old city limits. This was called the Urban Services District.

County dwellers would continue paying their current property tax rate and pay a separate rate for fire protection. Those who had street lights would pay a user fee based on how much of their property fronted the street. This made up the Suburban Services District.

Property owners in the cities of Hephzibah and Blythe had separate districts as well.

The immediate effect was that taxpayers would not notice any significant changes on their bills. That was fine for 1996, but the patched-together tax system did not take into account how the city would grow and change over the years, said Donna Williams, Augusta’s finance director.

“It was passed in Novem­ber and was effective 60 days later,” Williams said of the consolidation bill. “The proper way to handle those issues would have been for each question to be answered before it was passed, to say this is what is going to happen, but that isn’t the way it was done.”

How it began

According to the consolidated government’s charter, the Urban Services District was created to pay for government services “not furnished” in the suburban areas. The taxes levied were to be used only for those services, not for other things. The charter also provides for the expansion of the urban district as these services are extended to other property owners outside the old city limits. The charter also allows commissioners to create new tax districts to pay for services as they are created or extended.

That is not what happened, however, when in 2001 commissioners decided to extend trash service to suburban areas.

Instead of making the urban district larger, or creating a new tax district, commissioners chose to charge a solid waste user fee for property owners in the suburban areas. The fee meant that property owners in the suburban areas would pay a flat fee for trash pickup while their counterparts in the city would pay a millage rate for the service, which was connected to the value of their homes. The effect was that some property owners in the city continued to pay less than suburban property owners, while others paid much more.

“There is a big disparity in the way people in the county and the way people in the city are paying not much at all or way too much for garbage (service),” said Com­missioner Joe Bowles.

Some property owners pay as little as $107 a year – the partial fee applied to Urban Services District properties for trash service – because their property value is very low. In fact, urban homeowners with standard exemptions whose properties are valued at less than about $317,000 pay less in trash taxes and fees than those in the suburbs.

Those with more valuable property pay more. In 2011, a homeowner with a house valued at $500,000 paid about $120 more per year for trash service than a homeowner with a similarly priced house in the suburbs.

Bowles said that in his opinion the problem leaves Augusta open for a lawsuit, which he thinks might be the only thing to fix it. He has already consulted lawyers about filing a suit himself.

“I’ve talked to several,” he said. “I was told, as an elected official, that I will not be able to sue myself.”

Bowles said if the issue isn’t resolved before he leaves office in January, he intends to file a lawsuit against the city government right away to force the commission to deal with it.

“We are a consolidated government, and we need to treat everybody accordingly,” he said.

More problems

Garbage fees, however, are not the only problem with the Urban Services District. On each property tax bill, taxpayers see a “sales tax credit” applied to their millage rate. Since 1976, money from the local option sales tax has been used to roll back the millage rate, effectively reducing tax bills. Because those who own property in the Urban Services District pay for fire protection, trash and street lights through the millage rate, they receive a sales tax credit for those services, Brigham said.

“County property owners don’t get that,” he said.

Because trash service and street lights are user fees, and the fire tax is a separate millage rate, the sales tax credit applied to suburban tax bills doesn’t affect those charges, he said.

But that’s not all.

By law, tax revenues from the Urban Services District are supposed to be applied to services not offered in the suburban areas. That’s not exactly happening.

Although funds are being used for trash service, fire protection and street lights, at least $4 million each year is being spent in other places.

Urban Services money funds Housing and Neigh­borhood Development, the Downtown Development Authority and public transit – all services associated with the old city area, but none that are reserved “only” for urban taxpayers.

Then there is the $3 mil­lion that goes to the Rich­mond County Sheriff’s Office. Law enforcement is provided countywide, so that part of the budget appears to be contrary to the city charter.

Sheriff Ronnie Strength said his officers might answer more calls in the downtown area but that his officers provide no services in the city that they do not offer in the suburbs.

“Everybody should get equal police protection, and that is what we strive to do,” he said.

Strength said he wasn’t aware that city residents paid more for law enforcement, and even if he was, it would not be a factor in how his officers do their jobs.

“We place our personnel based on criminal activity,” he said. “There are areas in west Augusta that we would like to have more folks working.”

No easy fix

Unraveling these issues and repairing Augusta’s property-tax system will be no easy job, Russell said.

This city has asked consultants to look at the issue in the past, including one from the University of Georgia’s Carl Vinson Institute, without much luck. Recently, Williams said she asked financial consultant Dianne McNabb to take on the issue, but no work had been done yet.

“How do we get out of this?” Russell asked. “It might take a judge telling us what to do.”

Solutions are sure to rouse the ire of some taxpayers in the suburban and urban areas. Resolving the trash service fee is intertwined with all the other problems, but everyone agrees it is where things need to start.

Brigham said he expects state legislation to force the government to act eventually. A 2011 House bill that would prohibit governments from putting “non-tax” fees on property tax bills is still lingering, he said.

“Eventually that is going to pass, maybe this year,” he said.

Such a law would force Augusta to fix the trash fees, but in the process it could make commissioners revise the entire tax structure.

If officials decide to take trash service off the tax bills, then the problem becomes how to bill for it and who will be in charge of it. Making everyone pay a fee for trash service will create sticker shock in some of the poorest neighborhoods, where those who own property pay only part of what it costs to provide the service.

If officials decide to extend the urban district and create a new tax district to pay for trash, some county residents and business owners will end up paying higher taxes, officials said. Whatever the solution, it needs to be “revenue-neutral,” said Williams.

“You’ve got a revenue level that you need to have to continue to operate,” she said. “The methodology that I have now, although patched, produces that amount of revenue.”

Russell said the issue has lingered too long. This elephant needs to be shown the door.

“I think we are at a point where that conversation must happen,” he said. “Leadership has to look at the entire city and realize that there will be some winners and some losers.”

Augusta to raise taxes in urban, suburban districts
Consolidation bill up for debate
Tax increase won't affect all Augusta property owners
AUGUSTA’S TAX SYSTEM

Augusta has one consolidated government, but it has two systems for funding its services, depending on where you own property. The Richmond County Tax Commissioner’s Office sent out brochures last week breaking down the various millage rates in Augusta’s tax districts.

There are six tax districts in Richmond County. Two are for the cities of Hephzibah and Blythe. Two are special Business Improvement Districts in Augusta’s downtown area. The two remaining tax districts are for Augusta residents.

The Urban Services District refers to the area within the former Augusta city limits. The Suburban Services District refers to the area outside the old city limits.

Each district has a different set of millage rates and fees that determine the total tax bill for an individual property.

 

WHAT PEOPLE ARE PAYING

ALL PROPERTY OWNERS

• State tax. A small portion of property tax which goes to the state.

• School tax, which supports the county school system (property owners 65 and older are eligible for an exemption).

• County tax, which supports the city’s general fund.

• Capital outlay tax, which is used to purchase equipment and other non-reoccurring expenses

 

URBAN DISTRICT PROPERTY OWNERS

• Urban tax, which is intended for better fire protection, street lights, trash service and other things in the old city area

• Solid waste fee. The flat $107 fee pays for a portion of city trash service.

 

SUBURBAN DISTRICT PROPERTY OWNERS

• Fire protection tax, which funds the Augusta Fire Department

• Solid waste fee. A flat $302 fee is charged to property owners with city trash service.

• Street lights fee, which is based on the amount of street frontage for a given property.

Sample tax bills

SUBURBAN TAX DISTRICT: SAMPLE BILL ON $150,000 PROPERTY

 

EntityAdjusted fair-market valueNet assessmentExemptionsTaxable ValueMillage rateGross taxCreditNet Tax
School maint. & operation$150,000$60,000$5,000$55,00019.11$1,051.050$1,051.05
Street light charge$150,0000000$450$45
Solid waste collection$150,0000000$3020$302
Fire protection-county$150,000$60,000$5,000$55,0001.602$88.110$88.11
County sales tax credit$150,000$60,000$5,000$55,000-6.0110-$330.6050
County maint & operation$150,000$60,000$5,000$55,00014.086$774.730$444.125
County capital outlay$150,000$60,000$5,000$55,0000.784$43.120$43.12
State tax$150,000$60,000$2,000$580000.25$14.50$14.5
Totals----29.821$2,318.51$-330.605$1,987.91

 

URBAN TAX DISTRICT: SAMPLE BILL ON $150,000 PROPERTY

EntityAdjusted fair-market valueNet assessmentExemptionsTaxable ValueMillage rateGross taxCreditNet Tax
Urban sales tax credit$150,000$60,000$5,000$55,000-9.7690-$537.2950
Urban maint. & operation$150,000$60,000$5,000$55,00017.771$977.4050$440.11
School maint. & operation$150,000$60,000$5,000$5500019.11$1,051.050$1,051.05
Solid waste collection00000$1070107
County sales tax credit$150,000$60,000$5,000$55,000-6.0110-$330.6050
County maint & operation$150,000$60,000$5,000$55,00014.086$774.730$444.125
County capital outlay$150,000$60,000$5,000$55,0000.784$43.120$43.12
State tax$150,000$60,000$2,000$58,0000.25$14.50$14.5
Totals -----36.221$2,967.805-$867.9$2,099.91

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