New subcommittee Chairman Wayne Guilfoyle, along with fellow Commissioners Donnie Smith, William Fennoy and Alvin Mason, spent most of a meeting Thursday listening and asking questions as Finance Director Donna Williams brought them up to speed on the complex issues involved.
Those include how to read language in the city charter governing tax districts, how tax digest calculations affect millage, the impact of reduced sales tax revenue, the collection of trash service fees and what to do about a county property tax cap that can be changed only with a statewide referendum.
It was a lot to take in. As Tax Commissioner Steven Kendrick put it, “I do this all the time, and I only half-understand it.”
Augusta’s multitiered property tax system divides most of the county into two main districts – one urban and one suburban – that roughly coincide with the pre-consolidation political lines between the old city and Richmond County. Each district has a combination of millage and fees that when combined, pay for the services provided by the Augusta government, such as trash service, fire protection, street lights and law enforcement.
The problem is that property owners in each district end up paying different amounts for the same services.
Commission members are examining how to untangle the mess and level out taxes, fees and services for everyone.
Guilfoyle said that whatever the solution, the goal is to make it “revenue neutral,” meaning the amount of tax collected should remain unchanged.
Kendrick reminded those in attendance that “revenue neutral” could be interpreted in several ways, explaining that collecting the same amount of revenue countywide doesn’t mean that individual taxpayers will pay the same as they are paying now.
“We are going to have to do some cost-shifting. That is what is going to make this project tough,” he said.
City Administrator Fred Russell cautioned the commissioners that resolving the problems will likely result in making “90 percent of the people unhappy with us.”
Still, it has to be done, he said. Although the problem has lingered for years without much being done, state legislation is now forcing their hands.
Last year, legislators passed a tax reform bill that included a four-year phase-out of sales tax on energy used by manufacturers. Some of that sales tax money has been used to offset or roll back the amount that property owners pay each year. That loss in county revenue is expected to hit property owners this year, but how much is unknown at this point, Williams said.
Another bill, which forces governments to remove fees from tax bills, is expected to pass this year. That would mean Augusta’s trash service fees – which are collected on tax bills through fees in the suburban district and a combination of tax and fees in the urban district – would have to be billed separately.
“There is no chance in my mind that this isn’t going to happen,” Mark Johnson, the solid-waste director, said of the impending legislation.
A separate bill would mean higher trash fees, because the collection rate would likely drop, reducing overall revenue.
Johnson said the current “bad debt” rate is about 3 percent. He would expect that to rise to at least 7 percent if the trash fee went to a separate bill. Russell said he would expect at least 10 percent
Smith asked whether they could just do away with city trash service and let the “free market take care of it.”
Johnson explained that many people would just forgo trash collection altogether if they had the option. The city could expect to incur costs for picking it up “out of the ditches.”
Mason said he could see there are a lot of problems to address but was hoping to hear solutions. He asked whether staffers could present some options at the next subcommittee meeting in February. Guilfoyle and the others agreed.
Afterward, Guilfoyle said his eyes were opened to the complexities of the problem.
“On the outside looking in it seems like a very easy task, but if you are on the inside, such as at this meeting we just came out of, it is very complicated,” he said.