There’s an old saying that nothing in life is certain except death and taxes.
But two small Hall County cities — Clermont and Lula — with a combined population of less than 4,000, are helping their residents enjoy life more by doing away with some of the most dreaded taxes local governments are prone to levy.
However, Gainesville Mayor Danny Dunagan said the two small cities may get by without paying property taxes to their respective cities, but their residents also miss out on many services.
“The don’t offer police, they don’t offer fire, they don’t offer parks and rec, they don’t offer garbage pick-up, they don’t offer any of the services,” Dunagan said.
Clermont and Lula residents still have to pay Hall County property taxes.
Dunagan said 50 percent of Gainesville’s $34.1 million general fund budget goes toward public safety — fire and police.
“I guess if we didn’t have fire and police, we might not have any (property taxes),” Dunagan said.
With expenditures of $434,600 in its recently approved fiscal 2017-18 budget, Clermont balanced its budget through sales and use taxes or fees — without a property tax.
Clermont Mayor James Nix said the town levied a property tax soon after it was established in 1913, but has done without it for many years.
“They had a property tax at one time in the early days, I know that,” Nix said. “They haven’t had one in the past 30-40 years. I haven’t looked at the records to see when it was they had one.”
Instead of property taxes, Nix said Clermont — with a population of less than 1,000 residents — gets it revenues from a local option sales tax ($137,500), franchise fees, insurance premium taxes and “odds ’n ends.”
“We just don’t spend a lot of money,” the mayor added. “We tighten out our belts.”
Nix said the only way Clermont residents would ever see a property tax is if the town found itself unable to cover its costs.
Lula Mayor Milton Turner is proud that during his 16-year tenure in office the city has kept its tradition of doing without property taxes to balance the budget.
“That’s the great thing about being here (in Lula) where we’re able to do this and roll back our taxes to zero,” Turner said recently, after the city approved a budget that slightly went over $1 million.
Lula Mayor Pro Tem Marvin Moore said property taxes may be inevitable in the future as the city continues to offer more services.
“We’re going to hold to (no taxes) as long as we can,” Moore told The Times. “We’re hoping our growth will sustain us.”
Revenues from Lula’s local option sales tax (more than $400,000) anchor its general fund budget, which also pulls in from an assortment of selective sales, use taxes or fees.
Lula also operates a wastewater treatment plant on a separate 2017-18 budget of $788,200 that is considered to be an enterprise fund.
Gainesville City Manager Bryan Lackey said the city in fiscal 2016 collected almost $5.2 million in revenue from its local option sales tax and is on track to collect as much if not more in the current fiscal year that ends this month. However, he said that covers only a portion of the city’s expenditures.
“Being a full-service city, our budget takes more than just sales tax and franchise fees to cover our services we provide,” Lackey said.
A study titled “Rethinking Local Government Reliance on the Property Tax,” undertaken by Georgia State University and Tulane University, looked at the impact that the collapse of housing prices during the economic crisis 10 years ago had on local government budgets.
The study concluded that “local government reliance on the property tax has in fact been an advantage for many local governments.” The study points out that population growth and an expanding tax base, along with the ability to adjust property tax rates, has allowed local jurisdictions to bring revenues in line with expenditures.
“Indeed, local government reliance on the property tax rather than more elastic revenue sources like income, sales and excise taxes — so far, in any event — helped local governments” during the downturn in the economy, the study concluded.
Dunagan said Gainesville does not overly rely on property taxes, but rather has a diversified mix of revenues. He said property taxes make up only 19 percent of all of the city’s general fund revenues.
“We’ve got huge amount of business in Gainesville ...,” Dunagan said. “We generate up to 56 percent of the sales tax in all of Hall County. ... We’re diversified.”