A 2-mill property tax increase for government operations and a new tax on manufacturers to fund law enforcement, transit and reduce blight might be on the horizon after Augusta Commission members approved the two “action items” at the end of a daylong Friday retreat.
The new tax, an excise tax on energy used in manufacturing, puts them at odds with Mayor-elect Hardie Davis, who co-authored the legislation that exempted manufacturers from paying sales tax on energy but allowed counties to replace the lost revenue with an excise tax.
Davis, who attended the retreat, questioned the wisdom of imposing the tax, up to 2 percent of the 6 percent exempted by the state, a move already taken by Columbia County.
“Does it make us as competitive as a city?” he asked. “Are we being revenue-neutral by doing it?”
Finance Director Donna Williams presented information on the tax as part of an extensive budget proposal at the retreat, held at Augusta’s Kroc Center. The city, already facing a $5.4 million budget shortfall this year, will lose $4 million a year in revenue by 2016 when the new exemption, taken by about half of the city’s 25 largest property taxpayers, is fully phased in.
Williams’ recommendation, to charge the tax and dedicate 75 percent of the revenue to law enforcement and a quarter to transit, was met with Commissioner Donnie Smith’s suggestion to use a third of the law enforcement portion to tear down some of the thousands of abandoned buildings that litter Augusta-Richmond County.
Williams came to the retreat armed with the other breaks only Augusta provides its businesses, including a five-year exemption from property taxes for business and commercial capital improvements valued at more than $100,000, and a five-year exemption for manufacturers for capital improvements valued at more than $1 million. Both exemptions go back decades.
Williams’ and Deputy Administrator Tameka Allen’s other recommendations included two budget proposals, both of which included a 2-mill increase that would raise the countywide millage to approximately 10 mills. The tax increase would amount to a $70 increase in the county services portion of tax bills on a $100,000 home with a standard homestead deduction and generate $9 million in revenue.
Augusta hasn’t raised taxes since 2007, when commissioners increased the mill rate by .25 mills, and property owners actually pay a slightly lower mill rate now than then because the county tax digest has grown slightly.
Commissioner Bill Lockett advocated for both increasing the millage, which he said taxpayers will accept “if we let the people know how the money is going to be used,” and implementing the excise tax.
Commissioner Wayne Guilfoyle said doing both will “double wham” for Augusta industries, several of which are in his district, and made other suggestions, including closing unused recreation facilities and charging nonprofits a fee for services.
“Have you talked to your pastor about this?” Davis, a pastor, asked Guilfoyle.
Guilfoyle’s suggestion to send consultant Malik Watkins of the University of Georgia Carl Vinson Institute of Government to evaluate Recreation, Parks and Facilities instead of Procurement, where the commission had intended, did become another “action item” approved by the group Friday.
Allen and Williams said the years of not raising taxes were catching up with the city. “We cut the fat out of the departments a long time ago,” Williams said.
“They have not had these decisions made in the past, but they’re catching up with us,” Allen said.
“Something needs to happen,” said Mayor Pro Tem Corey Johnson, in a heated runoff for the Senate District 22 seat. Any increase needs to “do enough, so they don’t have to keep coming back.”
The $145 million general fund budget proposal supported Friday included reversing 2.4 percent budget reductions approved as part of the 2014 budget in December and replacing them with 1 percent departmental cuts. It includes a $1,000 pay increase for all employees, effective Aug. 1, a vacation day buy-back program, narrowly closes the $5.4 million deficit with which the commission started the year, restores $1.1 million to the city’s rainy-day fund depleted by winter storm cleanup and court settlements and ends the year with a $459,393 surplus.
Commissioners will formally adopt the tax rates in August, after a series of public hearings if they choose to raise them. The numbers could change based on a financial audit Williams said will be presented to the commission July 7.
Commissioners Joe Jackson and Alvin Mason missed the retreat, but the rest of the commission, Davis and Mayor Deke Copenhaver praised the presentations made entirely by city staff.