Augusta uses urban taxes contrary to city charter

Filling the gaps
Augusta Commission member Joe Bowles has said he will sue the government if some action hasn't been taken to equalize the property tax system before he leaves office in January.

Joe Bowles lives in a nice house on Milledge Road, so he pays a lot in property taxes – more than $8,500 a year.

Most of that goes to Richmond County schools, but he pays about $1,900 because his address lies within the city’s Urban Services tax district, which means he pays more for fire protection, streetlights and trash pickup than his counterparts in the suburbs.

But it also means Bowles pays more for other services in the city budget, such as bus service and law enforcement, and that appears to run counter to Augusta’s city charter.

Bowles, who represents the third district on the Au­gusta Commission, said it is a situation the city can’t justify.

“The whole thing is just crazy,” he said. “The more you look into it the more problems you will find.”

According to an analysis by The Augusta Chronicle, millions of dollars are being diverted each year from the city’s Urban Services tax district to fund government departments and services, and those transfers appear to be contrary to Augusta’s consolidated government charter.

The Chronicle found that since 1996 more than $60 million was transferred from the Urban District to supplement services in the county’s general fund. City officials say it’s because they are using an imperfect system with built-in problems that date back to consolidation.

When the city of Augusta and Richmond County merged in 1996, the consolidated government created a two-tiered property tax system – one for suburban dwellers and another for those who lived within the old city limits. The bill that consolidated the governments stated that an Urban Services District would be formed and additional property taxes would be “imposed on account of governmental services available therein that are not furnished in the Suburban Services District.”

The bill stipulates that these services were to include “fire protection of a higher class, garbage pickup, and governmental water and sewer services, and such other services as may be provided only in an Urban Services District.”

Those rules, however, have never been strictly followed by the Augusta Com­mission.

Filling the gaps

Since the first year of consolidation, the Augusta government has used Urban District revenue to fill holes in the budget when the general fund came up short.

More than $2.9 million has been diverted to the general fund, another $2.9 million to the Port Authority, $5.5 million to Housing and Neighborhood Development and another $780,000 to Riverwalk Augusta, according to The Chronicle’s analysis.

The biggest recipients of Urban Services money have been the municipal bus service, which received more than $23 million, and the sheriff’s office, which was given more than $21 million.

None of these services appears to be only for the Urban Services District, as the charter stipulates.

Augusta Finance Director Donna Williams said that all these transfers have been approved by the commission and that none has been questioned by external auditors. She said that these departments, and others, are associated with Augusta’s more urban areas and have some history of being funded by the old city.

Some services and departments have been funded with Urban Services money from the beginning of consolidation. Those include the fire department, streetlights, trash pickup and bus service. About $10.9 million also has been used to fund the Downtown Development Authority since 1996.

Other transfers from the Urban District have come and gone over the years, depending on necessity.

Funding for the Port Authority ceased in 2010. Housing and Neighborhood Development funding began in 2002. In some years, money was transferred to Augusta Municipal Golf Course and to Newman Tennis Center. In other years, money went to Riverwalk Augusta and to the Emergency Telephone Response system.

The peak year for these transfers was 2006, with more than $6 million going to services not exclusively reserved for the Urban Dis­trict. This year, the budgeted amount was more than $4 mil­lion, with most of that dedicated to law enforcement – a service provided to all residents of Augusta-Rich­mond County.

In 2004, the Urban Ser­vices District was tapped for about $2.3 million to supplement the Richmond County sheriff’s budget. That has continued every year, increasing to $3 million budgeted for the 2012 fiscal year.

Downtown focus

City Administrator Fred Russell said the rationale behind that has to do with the concentration of resources downtown.

“There are going to be a lot more calls for service in the urban area,” he said.

According to the city’s own crime statistics, however, some of the areas with the most crime reports, such as Richmond Hill and Barton Chapel roads, lie outside the Urban District.

Proportion of service isn’t necessarily the standard applied to all transfers, either.

For example, the proportion of the Augusta Fire Department’s budget that was funded by Urban District money increased from about 17 percent in 2011 to roughly 21 percent in 2012. Fire Chief Chris James said the effort in recent years has been to spread out fire stations to improve service in the suburban area, not downtown.

“We are working to make that system as a whole better,” he said.

Williams said she has made a conscious effort in recent years to eliminate some of these transfers and pare them down to what is essential to get the job done. Augusta’s property tax system might be deeply flawed, but it is the only tool she has to work with.

“We are playing with the hand that we have been dealt,” she said.

Williams also noted that most of the revenue in the Urban Services District comes from local option sales tax, not property tax. In fact, property taxes – on real estate and automobiles – make up between 40 percent and 45 percent of revenue each year and don’t even cover the main reasons for the tax – fire protection, trash pickup and streetlights. Most of the rest is sales tax revenue.

That sales tax money, however, would not be there if it were not for the additional millage charged in the Urban District. By state law, sales tax money is used to “roll back” both urban and countywide mill rates. If the Urban District did not exist, the sales tax revenue would be spread across the main county tax rate, Williams said.

On the positive side, that would be an additional $8.7 million credit applied against the taxes of all property owners. On the negative side, it would mean about $6.9 million in missing ad valorem taxes from the Urban District. To make up the difference, the city would have to raise everyone’s tax rate, Russell said.

But even that solution is problematic, given that Richmond County is operating under a tax cap law that restricts increases in the millage beyond a certain point, and that changes each year, depending on fluctuations in the tax digest.

“We operate on a fairly lean tax bill,” Russell said.

Bowles said corrections in Augusta’s convoluted and unbalanced property tax system are long overdue.

He has put the issue on the commission’s Fi­nance Com­mittee agenda to be discussed Monday.

“We will see where the discussion takes us,” said Bowles, who has said he will sue the government if some action hasn’t been taken before he leaves office in January.

Richmond County Tax Com­missioner Steven Ken­drick said he would like to see some kind of action. He would like to be part of a task force from several departments that takes a hard look at the problem and brings some solutions to the table.

Even though he doesn’t set the tax rate, he said, he fields phone calls from puzzled and angry taxpayers who are confused by Augusta’s property tax system.

“The average taxpayer wants to believe that we are providing them all the same benefits for the same amount of money, but at times that is not the case,” Kendrick said.

Sometimes the answers are easy and sometimes not, he said.

“I get those kinds of questions all the time,” he said. “The question often becomes, ‘Why hasn’t this been changed by now?’ That’s where we hit the roadblock.”

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Tax increase won't affect all Augusta property owners
WHERE THAT MONEY GOES

A look at expenditures in the Urban Services District from 1996-2012:

General fund$2,992,131.87
Port Authority$2,940,403.97
Emergency Telephone Response$200,000
Housing & Neighborhood Development$5,507,380
UDAG-LaneyWalker Bethlehem$24,825.85
Capital outlay$333,996
Law enforcement$21,747,283.53
Downtown Development Authority$10,988,418.76
Augusta Public Transit System$23,174,030.97
Augusta Municipal Golf Course$208,659.42
Newman Tennis Center$246,569.53
Old Government House$15,000
Riverwalk Augusta$782,240
Employee Health Benefits Fund$6,733.25
2007: What you pay depends on where you live

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