Amid an uncertain economic climate, Gainesville proposes rolling back its property tax rate in the budget that takes effect July 1.
At an annual retreat March 13, city staff met to work on the fiscal year 2021 budget as the COVID-19 pandemic was just taking hold.
Department directors “were aware that the budget they had developed for that day would no longer be valid as our world and the economic environment around us was quickly changing,” City Manager Bryan Lackey notes in the proposed budget.
Directors were then asked to reevaluate their proposals by looking at their FY2020 budgets and determining what could be cut.
City officials had been planning for an economic downturn after several years of economic expansion, Lackey said, but the COVID-19 pandemic forced some last-minute reevaluations of the budget.
“We knew something was coming. We were hopeful it wouldn’t be the great recession,” Lackey said at a Gainesville City Council work session Thursday. “... We didn’t see a pandemic, worldwide crisis coming on.”
The Council will vote June 16 on a budget that includes projected revenue decreases due to the COVID-19 pandemic.
The millage rate would roll back from 3.322 mills to 3.250 mills. One mill equals $1 for every $1,000 in assessed value. A rollback is revenue neutral for the city, though some property owners could receive a higher or lower tax bill, depending on their property assessments.
The public can comment on the budget at a hearing 5:30 p.m. Tuesday, June 2, at the city’s Public Safety Complex at 701 Queen City Parkway. The meeting will be streamed live on the city government’s Facebook page.
The proposed $28.8 million general fund budget is 9.8% lower than the current fiscal year’s budget.
Overall, the budget accounts for a 12% decline in operating revenues. It includes a 2.7% increase in property tax revenue due to growth, mainly from new construction. Property taxes account for 14% of the city’s revenue, with 38.7% of property tax revenue coming from residential properties.
Other revenue sources are expected to decrease due to the economic effects of COVID-19. The city is budgeting for a 53.8% decrease in title ad valorem tax revenues.
With courts being closed and less traffic on the roads, the city is projecting about a 44.9% decrease in revenue from fines, fees and forfeitures, Lackey said.
Permitting and zoning fees are projected to decrease by 46.4%.
The departmental spending for the city would go up by 1.9%. Lackey said most departments are keeping spending steady or decreasing it, and spending increases are concentrated in public safety and information technology. Costs will include network upgrades to improve security and upgrades for 911 equipment.
The budget does not include any pay adjustments for city employees, and no positions will be added to the general fund budget.
It is the city’s current policy to keep three months of reserve funds on hand, although the state recommendation is two months of funds. Lackey said the budget includes a proposal to instead keep 2.7 months of reserve funds.
“Just like anybody has a personal savings account, you save up for a reason,” he said. “You hit a personal rainy day, a tough time, you dip into that a little bit to be able to soften the blow.”
A surplus in revenue and savings from the current fiscal year could be used to fund some capital projects in the coming fiscal year. Some $3.3 million is budgeted for capital projects, and $1.3 million will be directed to the city’s capital improvement program, a decline from almost $4 million for the current fiscal year. The additional $2 million is what officials estimate will be used of the surplus funds to offset revenue shortfalls next year.
Capital projects in the budget include roadway improvements, replacement police cars, police and fire radio upgrades and a parking deck near the Gainesville branch of the Hall County Library System. Improvements are also planned at the intersection of Memorial Park Drive and Old Flowery Branch Road.