Originally created 11/18/96

Augusta getting in better financial shape



This time last year, the old city of Augusta teetered on the edge of bankruptcy following a year of bounced checks and employee layoffs. Today, the consolidated government is flush, according to its top financial officer.

The difference is:

  • Budget cuts - painful to city employees and residents alike.
  • More money from property and sales taxes than expected.
  • An upcoming $75 million water and sewer revenue bond issue that will spread bond debt payments out over the next 30 years and decrease this year's payment by $2 million.
  • Comptroller Butch McKie has even revised his earlier warning of a 50 percent tax increase next year to pay for manning and operating the new 556-bed Phinizy Road jail scheduled to open April 1998.

    The city expects to receive $7 million more in franchise fees from utilities next year and that could pay for running the new jail, he said.

    This year's financial turnaround started when the new government cut $3 million from the old city's budget, mainly by not rehiring laid-off employees. But there was a a price to pay when trash piled up on city streets and cemeteries went untended.

    Summerville resident Lois Pietrowski still hasn't gotten over it and neither have a lot of her neighbors, she said, although trash pickup has improved in recent months.

    "They are doing some better because they are at least picking up the trash," she said.

    Meanwhile, property and sales tax collections are up over last year, reflecting a 4.2 percent growth in Augusta's economy, compared with a usual 2.5 to 3 percent growth, Mr. McKie said.

    The city will receive $2.8 million more in property taxes this year than the old city and county received last year due to reassessments and properties being added to the tax rolls. Also, property tax billings were $739,104 higher than budgeted.

    Local option sales tax collections, meanwhile, will be $2 million by year's end above budget projections.

    Sales taxes are budgeted very conservatively because officials can't predict the economy, said Assistant Comptroller Glenn Greenway.

    "The bottom line is we expect these two governments combined to show a $3 million profit this year, revenue above expenditures," said Mr. McKie. "We expect to add $3 million to our surplus."

    Last year, the old city of Augusta had to transfer a record $11.47 million from its waterworks operations to wipe out longstanding negative fund balances and close out its books.

    And a year ago Saturday, it scrapped a $28 million bond issue in the wake of Mr. McKie's warning of "certain financial ruin for the new consolidated government within 18 months."

    The bond ordinance was drafted in such a way that after this year no money could be transferred from the city's waterworks operations into the general fund.

    "And that was 25 percent of the (old) city's general fund's budget," Mr. McKie said. "Actually, last year it was more than a third."

    Since 1987, the former city transferred between $8 million and $10 million a year from waterworks to keep the city afloat, a practice that continued this year with a $6.7 million transfer.

    Besides, Richmond County officials wanted to do the bond issue themselves after the governments consolidated, they said.

    Tuesday, Mr. McKie, four city officials and several bond counselors flew to New York to meet with bond rating officials about the upcoming $75 million revenue bond.

    This bond resolution will allow the city to continue tapping water revenues but cut the transfers to the general fund off to a $1 million a year trickle in 2000 until the bonds are paid off in the year 2027.

    The bond sale will pay for $42.7 million of new water and sewer projects and refinancing existing bond debt.

    When the old city's bond issue was halted, Richmond County, now known as the suburban district, lent the city $13 million to pay for seriously overdue sewer projects and $2 million for short-term expenses such as meeting the payroll.

    "The suburban government had to use its money to get through," Mr. McKie said.

    It picked up about $2 million of the old city's bills and obligations. And the suburban district is paying the expenses of some consolidated departments, except for payroll, he said.

    "When we consolidated, we moved some departments out of the city budget," Mr. McKie said. "For example, the police department, municipal court and the stockade all went over to the county side, and are being funded from the county side. The payroll stayed with the city, but all the other expenses - about $1.5 million - stayed with the county.

    "With some other departments, for example license and inspections, the city employees went out to Marvin Griffin Road, and we told them they had to operate on the county budget."

    A boon and bane to the new government has been its refusal to rehire many of the employees the old city laid off last year.

    "When we did the city budget this year, those department heads thought they were going to be able to put those people back on the payroll," Mr. McKie said.

    "The layoffs were seen as just something temporary. Well, we didn't do it. We kept them off because we had to. That was another $3 million."

    While holding the line on hiring kept costs down, city residents were up in arms. The city has since hired more sanitation workers and is picking up trash more regularly now, but some residents say consolidation is a flop.

    Central Avenue resident Roy Davis said trash pickup and median upkeep have improved on his street in recent months, but Mrs. Pietrowski thinks services overall have declined.

    "We don't have the police protection we did have," she said. "And for awhile the garbage pickup got terrible."

    If the city has any excess money, officials should think about the taxpayers, she said.

    "Our taxes did not go down, and this was one of the things they pushed on us with consolidation," she said. "This was one of the reasons I voted for it, but we didn't get it."

    And they probably won't either. While this year's finances are good, that could change with some emergency expense or economic downturn.

    Still, Mr. McKie is feeling optimistic about this year.

    "We've done a pretty good turnaround," he said last week. "Almost every department is under budget. We've put our budgetary controls in. They're not working perfectly because some people still try to go around the process and get things approved by committees other than finance, but we're trying to get away from crisis management."