Tax equity payments to the cities in Hall County shrank significantly in fiscal year 2012, and they want to know why.
A tax inequity occurs when city residents pay property taxes to the county for services that are provided only in the county’s unincorporated areas. A 2004 study looked at whether taxes were being distributed fairly between the cities and the county and found three services cities provide separately from Hall.
Officials from Oakwood, Flowery Branch and Gainesville and county officials are planning to meet to discuss the reduced payments and understand how the county came up with those numbers.
“If the property taxpayers within the cities, if they’re paying the county for services that they’re not receiving, the concept is that the county would reimburse those funds back to the cities,” Oakwood City Manager Stan Brown said.
The three services at issue are engineering, road maintenance and planning and zoning.
The city of Oakwood got a check for about $5,500 in August. Gainesville received nearly $32,000. Flowery Branch got about $5,600.
“We are concerned with the unexpected drop in tax equity payment we received from the county,” said Gainesville City Manager Kip Padgett in an emailed response.
No meeting has been set up yet.
Vickie Neikirk, Hall County finance director, said the drop is because the county is spending less on those services. The county paid $4.7 million in engineering, road maintenance and planning and zoning costs in 2011, compared with $3 million in 2012.
“That’s due to the budget cuts that the (Hall County Board of Commissioners) moved forward with during the downturn in the economy,” Neikirk said. “That’s the big reason for that change.”
County Administrator Randy Knighton said the county is open to meeting with the cities and examining whether the formula should be changed or updated.
Neikirk said she thought the formula was looked at every 10 years. Before the 2004 study, a tax equity study had been completed in 1998.
The 2004 study by the Carl Vinson Institute at the University of Georgia shows the tax equity amount then was $389,209. It was about $396,000 in 2011 and $50,918 in 2012, Neikirk said.
To come up with the amount to reimburse cities, the county takes the amount spent just in the county, service charges and taxes charged only to county residents who don’t live in the cities. Those amounts are subtracted and then multiplied by 52.9 percent to get the amount spent on the services that came from property taxes.
The county figures about 34 percent of the tax digest, which is the value of all taxable property in Hall County, is from city residents.
The tax digest is also used to come up with the millage rate, which is the percentage of the property’s value that is taxed. A mill is $1 of every $1,000 in assessed property value. The county uses 40 percent of the assessed value.
The final amount from the formula is the cities’ contributions, which were nearly $51,000 for 2012, and that’s paid back to the cities based on percentages for each. Gainesville gets 62.6 percent; Oakwood gets 10.8 percent; and Flowery Branch receives 11 percent.
Bill Andrew, city manager of Flowery Branch, didn’t return a call for comment.