Budgeting is the most important function of the DeKalb BOC, and the annual process culminating tomorrow drives the taxes you pay, the quality of service you experience, and sets the stage for future spending. This year’s proposal from Interim CEO Lee May represents a missed opportunity to strengthen the County’s financial position, builds pressure for increased personnel costs, and sets the County on the course to unsustainable facility expansion. The budget is built on new debt achieved by manipulation of millage rates, and commits to long lasting obligations with only temporary taxing capacity to meet the expense. As a consequence, I will seek to amend the budget, and if unsuccessful, I will oppose its passage.
In the past, DeKalb and many other Metro Counties had the advantage of a steadily growing tax base, which delivered the added income. Some jurisdictions actually lowered millage rates as property values increased, but DeKalb mostly rode the wave to higher expenditures growing both the scope of service delivery and paying rising wages and benefits. Between 2000 and 2008, DeKalb’s population only grew about 20%, but our budget doubled. All that changed in 2010, when plummeting property values forced a tax increase and budget cuts. Gradually, valuations stabilized in some areas, but overall, the County has a weaker tax base than before the recession.
A $1.3 billion budget is by necessity complex, and politicians can hide a lot as they seek to simplify the message. For many years, that message has been dumbed down to the aggregate tax rate for homesteaded properties in the unincorporated County, where most residents still live. When that figure, 20.81 mills (which is $20.81 in taxes for every $1000 in your assessed value), is offset by the credit homeowners receive from the Homestead Option Sales Tax (HOST), the homeowner pays relatively little, but that number is comprised of eight levies that tell a lot about DeKalb’s deteriorating financial condition. First, consider that businesses don’t enjoy the HOST rebate, so our efforts at economic development bear the full brunt of a high millage rate. Also, the tax base is much weaker in unincorporated DeKalb, so police, roads, and parks there are starved for funding, even as pressure mounts to raise taxes. The upshot is that we need to be frugal, but this administration is converting deferred or retired debt service payments into operating expense or new capital projects.
The means to this regrettable end is the millage rate for bond debt service. In 2014, DeKalb refinanced County Wide debt for a lower interest rate. In 2015, DeKalb cut the millage rate that funded the 2001 General Obligation Bond that funded greenspace acquisition. And at the end of 2015, the County refinanced the 2006 GO bond at a lower interest rate. Each of these actions should have reduced your millage rate, in aggregate by close to two mills. But instead of returning those savings to the public as a tax decrease, much of that money was re-directed from debt service to operating expense, either by increasing other millage rates offsetting the decreases, or by refinancing to create “up front savings” now used for pet projects or commitment to permanent hikes in operating costs. The Administration is thus inflating the short term outlook, while taking on new obligations that will persist indefinitely.
To make matters worse, the Administration’s budget adds new debt that tax-payers will bear for many years. First, the Commission voted on February 9th to fund the new $9 million Animal Shelter with “Certificates of Participation” or COPS. While the facility is a necessity, this financing approach is a relatively high-cost means of issuing new debt that avoids the public referendum the Georgia Constitution otherwise requires. And in doing so, the Commission also made the Shelter ineligible for $2.75 million in bond funding already set aside for Shelter, allowing ruling Commissioners to pick additional new debt funded projects as yet un-named.
The Administration proposes to add $7 million in new debt for a senior center and library that are the personal priorities of Commissioner Davis-Johnson and Barnes-Sutton, respectively. Regrettably, the Administration proposes to immediately dedicate funding for these projects even though design will take a year or more, thereby forcing use of the COPS mechanism for the overdue Animal Shelter. The Administration’s Budget also allocates $600,000 in the new debt to material for the library, which was squeezed out of the final allocation of 2006 bond proceeds is a bargain that gave every Commissioner $1million to spend as they saw fit. In recognition of the loss to the Library System, I dedicated $200,000 of my allocation to library materials. Finally, the Administration purports to “save” $2.8 million of this years’ new debt for “reserves”, but does it make sense to borrow money simply to inflate your bank balance? Overall, avoidable new debt for 2016 totals over $13 million.
This recourse to debt doesn’t mean that the proposed budget meets our operating needs. Public Safety personnel are pressing for pay hikes, citing heavy attrition in their ranks. County Libraries are still operating under an austerity schedule, and lack the materials that make the facilities worth visiting. A pending pay and classification study will likely put further pressure on the payroll. As is their habit, the administration is pushing these priorities off until June, when it will likely propose new budget increases, fully absorbing any new revenues that may accrue.
DeKalb’s operating strategy seems solely focused on short term political benefit, new debt for facilities that we can’t afford to operate, and political posturing in an election year. I can’t support that agenda. I will therefore offer amendments to correct the defects outlined above, but if they are not accepted, I’ll be forced to vote against the overall budget. The Interim CEO is counting and buying his votes, so he may prevail, but will do so at the expense of the County and Taxpayers.