Hoschton has recently made what Mayor Erma Denney said were several tough decisions to reduce expenses. But instituting property taxes hasn’t been one of those choices.
To help offset a major budget shortfall this year and a likely shortfall in 2011, the Hoschton City Council voted to cut all funding to its police department.
City officials have said the department will be reinstated once some “economic recovery” occurs. The Jackson County Sheriff’s Office will now serve as Hoschton’s primary law enforcement provider.
Tax debate
When the council announced its decision regarding the police department at a Jan. 13 meeting, a few residents and business owners said they would support paying a property tax if it meant the city could keep its police department.
Denney said the current council remains opposed to instating a tax, however.
The city’s former council previously proposed implementing a tax when drafting the 2009 budget. The tax would have been the city’s first in 30 years, but council members later nixed the idea when they balanced the budget.
Last year, several residents also circulated a petition, which garnered 417 signatures, that was aimed at requiring Hoschton to change its charter and hold a public vote any time a change in the property tax was proposed. The former council later denied the validity of the petition.
Amy Henderson, public information manager with the Georgia Municipal Association, said in the past five years, five Georgia cities have instituted a tax. She said a recent survey conducted by Kennesaw State University showed that more than 100 of Georgia’s 535 cities currently do not have a property tax. In Hall County, Lula and Clermont do not have property taxes.
The surveys were sent to 505 of Georgia’s 535 cities — all GMA members — and responses were received from 229 municipalities. Of these, 106 had populations of less than 2,500. Hoschton’s population is estimated to be 1,612, according to the U.S. Census Bureau.
Dissolving a city
The question of what would happen if Hoschton dissolved itself has also been posed by residents throughout the city’s ongoing financial saga.
Despite the cuts, Hoschton still offers residents enough services to meet what the Georgia Municipal Association requires of municipalities, Denney said.
Henderson said a city must provide three services out of a list of 11 possible choices to be in compliance.
Hoschton no longer offers residents public safety, but it does offer water and sewer, waste collection, planning and zoning and recreation, all of which are provided either by the city or through a contracted service.
During the Jan. 13 meeting, resident Pam Butler asked council members how long the city could last if it kept its police department and what would happen to the sizeable debt Hoschton still owes the Georgia Environmental Facilities Authority if the city were dissolved.
A considerable amount of the city’s financial problems stem from the more than $6 million Hoschton owes GEFA for aid it received in expanding its wastewater treatment plant.
The city must make $480,000 in loan payments this year. It recently settled a lawsuit with its former wastewater treatment plant engineer for $746,000, which will help make this year’s payments. Hoschton officials have admitted they are worried the city may have trouble making next year’s payments, however.
Henderson said a legislative act is needed to create and dissolve a city. Just as the Georgia General Assembly must vote to grant a city its charter, it must also vote to revoke that charter, she said.
When doing this, the assembly considers several factors, among these a city’s assets and debts.
Thomas Mitchell, Hoschton’s attorney, recently said the only way Hoschton could be dissolved was either through an act instituted by Jackson County or the Georgia General Assembly.
“The only way the city could cease to exist is if the county agreed to unincorporate the city and reincorporate it into the county or the General Assembly took action,” he said.
If this occurred, Mitchell said Jackson County could create a special tax district in Hoschton’s former boundaries to help repay the city’s debt to GEFA. He also said GEFA could prevent Hoschton from dissolving itself because of the city’s debt.
Other cities struggle
But Hoschton isn’t the only Georgia municipality grappling for ways to survive financially this year.
Many other cities throughout the state have found themselves in a similar position, according to Henderson.
“I think Hoschton is an example of where cities are now that have had a hard time with this economy,” Henderson said. “They’ve cut expenses, they’ve cut the nonessential services, things they were maybe planning on doing, they’ve postponed or nixed ... and they may have raised some user fees.
“They’re now at that tipping point, where if things don’t look better then it comes down to what Hoschton has done, which is to cut some services.”
Disestablishing a city, however, rarely happens in Georgia, according to Henderson. She said she knew of only three cities in the past six years that have been dissolved.
One example she noted was Bibb City, an old mill town near Columbus that was dissolved in 2000. The small city — the U.S. Census Bureau noted its population was 510 in 2000 — could not afford to fix several venerable water and sewer pipes. Columbus agreed to fix the infrastructure and incorporated Bibb City into its boundaries.
“It doesn’t happen all that often,” Henderson said. “I think part of that is people really do identify with their city. It’s not just a practical thing, it is, in a way, a very emotional thing because that’s where you say you’re from and you don’t want to give that up.”