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Officials keep fingers crossed over tax relief grant

POSTED: September 3, 2008 5:01 a.m.

Facing a budget deficit estimated at about $1.6 billion due to shortfalls in revenue, Georgia is looking at ways to make cuts, many of which trickle down to county and city governments and school systems.

One of the proposals made by Gov. Sonny Perdue is holding the Homeowners Tax Relief Grant, which is a state reimbursement to local governments of money they lose on the homestead exemption on property taxes, which averages about $200 to $300 per household. The Homeowners Tax Relief Grant is basically a way to keep property taxes lower without reducing local government revenues.

The loss to area governments ranges from about $7,000 for the city of Oakwood to some $3 million for the Hall County school system. Many local officials remain optimistic that the state legislature won’t vote to do away with the grant when it meets in January.

For both the Hall and Gainesville school systems, the loss of property tax revenue could come on top of an additional 2 percent cut in state funding for all local districts.

The Hall County school system began this fiscal year on July 1 with a total budget of about $218 million, said Will Schofield, superintendent of the Hall County school system. He said the 2 percent state cuts have already cost the county school system about $2.5 million.

Schofield said the Hall County school system stands to lose approximately another $3 million if the tax relief grant is frozen as well.

"I don’t see the local board of education saying, ‘OK, we’ll eat that $3 million,’" he said.

Merrianne Dyer, interim superintendent of Gainesville schools, said in an e-mail the Gainesville school system stands to lose about $130,000 with the possible cut of the Homeowners Tax Relief Grant.

In the 2007 fiscal year, the Gainesville school system received $138,173 from the Homeowner’s Tax Relief Grant.

She said the property tax base for Gainesville is primarily commercial, industrial and multifamily, therefore the city system would not be affected as severely as the Hall County school system.

"However, any reduction is critical to us right now," Dyer said. The Gainesville school system is trying to dig itself out of an estimated $5.6 million deficit.

Like the county school system, Hall County government gets a large chunk of revenue from property taxes and would stand to lose some $2 million if the tax relief grant is frozen.

Assistant Hall County Administrator Phil Sutton said the county is left with few options if they do not receive that money. In a year when the budget is already balanced on a razor’s edge, there isn’t much room for additional cuts; the revenue loss would be a blow to the county coffers.

"It’s brutal," Sutton said. "We have no way to make that up. We already have a hiring freeze."

Unlike the Hall County government, the cities of Gainesville, Flowery Branch and Oakwood are looking at a much smaller impact if the tax relief funds don’t come through.

For fiscal year 2007, Gainesville city government received $72,288 from the grant, a small number compared to the city’s $28 million budget. Oakwood is looking at about a $7,000 revenue loss and Flowery Branch, about $20,000.

Patti Doss-Luna, assistant city manager for Oakwood, said "we’ll certainly have to (factor that in)" as the city prepares its 2009 budget. "We’ve just begun (the process)," she said.

City Manager Bryan Shuler said Gainesville can manage without its share of the relief grant, but he’s still counting on it, though.

"We are confident, based on what our legislators have represented, that the money will be found and provided to the city," Shuler said.

If even legislators cannot find the money to give to the local governments, which usually comes to Gainesville in January or February, Shuler said the city will adjust its budget accordingly.

Like Shuler, Melissa McCain, city clerk for Flowery Branch, said she believes "there is still a chance that the state will reverse that and we can apply for it."

"If we don’t give that exemption — if we charge (residents) for that — and then it comes back that the state decides they are going to grant that, we will not be able to apply to get those funds back through the state."

Though they have met with state Rep. Carl Rogers to discuss the cuts, Sutton said the Hall County government is not making any moves until the legislature meets in January to decide the fate of the Homeowners Tax Relief Grant.

"How do you pre-empt that decision?" Sutton asked.

Hall County is sending tax bills out as usual, without raising taxes, in anticipation that the grant money will not come.

"We’ll implement it as required by law," Sutton said. "We don’t have the right really to change the tax bill at this point."

Sutton said in the next month or so there will likely be statewide discussions that will move the county closer to a solution.

"It’s a tough year to suddenly lose $2 million in revenue," he said.

Though they remain hopeful it won’t go away, many local officials say they just may have to take their cuts.

"We’re going to live with it whatever happens," he said. "We’ll be fine either way. ... It would be a lot less painful if we didn’t have to deal with those cuts. The truth of the matter is though, we’re all hurting and we’ll do what we need to," Schofield said.

Staff writers Ashley Fielding, Jeff Gill, Jessica Jordan and Melissa Weinman contributed to this story.



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