Budget woes: Bad to worse

Fayette braces for property tax crash

Fayette County officials are preparing for the bleak economy to catch up to home values this year.

County financial staff said last week they are preparing for a “worst case” scenario of a 7 percent decline in the tax digest thanks to home foreclosures and a new Georgia law.

Such a decline would reduce the county’s portion of property tax revenue by $2.5 million. The final fallout won’t be known until March when the tax digest data is finalized, officials said.

The law requires county tax assessors to factor in foreclosure sales when calculating a given property’s value. Previously foreclosures were not factored in to the calculations.

While reduced “fair market” valuations will impact individual homeowners, the snowball from the reduced home prices falls squarely in the county’s lap. Property taxes are a significant source of income for the county, and with the legislature last year also freezing home assessments, Fayette and its cities can expect to see property tax revenues go south.

The building boom has ground to a halt: just 19 homes were built in the county last year, the lowest amount of building permits issued in Fayette since the first such records were kept in the late 1960s at a time when the county’s population was under 15,000, said County Manager Jack Krakeel.

While other local governments have reeled from the drop in sales tax revenues, Fayette has weathered the economic storm. That is due in large part to a hiring freeze enacted three years ago — with the exception of public safety personnel — that has caused other employees to work even harder than they have before without reducing service levels, Krakeel said.

Krakeel credited the county employees for controlling costs and particularly the finance staff for staying on top of the matter; he also said the county’s constitutional officers have done their part.

Finance Director Mary Holland said sales tax revenues so far this year are about 3 percent short of projections but property tax collections are only 1 percent behind the same point last year. Property taxes are due Dec. 31.

“The good news is we’re only 1.7 percent behind where we anticipated to be at this point,” Holland said of all county revenues.

Midyear budget adjustments will leave the county in the black this year by $400,000 even in the worst-case scenario of a 7 percent decline in the tax digest, Holland said.

The county has a reserve fund of $5.25 million on hand that can be used if necessary, officials said. Should such an emergency arise, employee furloughs would save the county $142,592 a day, staff has calculated.

If each employee were furloughed one day a month it would save the county $1.7 million a year, Holland said.

“That is not our recommendation, just some calculations we have done as part of our overall analysis,” Krakeel said.

Krakeel said while the county had its highest number of home foreclosures last year, this year he is worried about “significant issues” with commercial property.

The mid-year budget adjustments and next year’s budget will not have any employee furlough proposals, Krakeel said.

“We are in good shape and continue to be very diligent and frugal in our expenditures,” Krakeel said.

The 2010-2011 budget will eliminate eight vacant staff positions including a tax appraiser, a building/grounds custodian, an animal control supervisor, a road maintenance worker, a water meter reader supervisor, a risk manager in human resources and a part-time 4-H program assistant.

Krakeel said the county is comfortable those positions can be axed “without impacting severely our ability to deliver those services.”

The county has eliminated about 32 vacant positions over the past three years, Krakeel said.

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