Mayor: Avondale millage increase is a “placeholder”
Avondale Estates Mayor Ed Rieker emailed residents today about an advertised millage rate increase, but said that the increase isn’t something the city intends to adopt.
Rieker explained that the city has a series of hearings on the millage rate each year, “Due to the constraints placed on the City by law, DeKalb County municipalities are required to adopt a millage rate by July 1, 2014. It is possible that our Tax Digest could experience a change (up or down) just shortly before this July 1st reporting deadline.”
“As part of the prescribed process for adopting the millage rate the City is required to advertise a millage rate ahead of actually receiving a finalized Tax Digest and adopting a millage rate,” Rieker’s letter says. “As the City has done in the past, and in order to protect the City, the City has advertised a PLACEHOLDER for the millage rate of 11.2 mills. The GOAL is to maintain the current millage rate of 10.957 mills. This is the same millage rate and placeholder process that we have successfully used since 2011.”
The city of Decatur also is about to hold public hearings regarding its millage rate.
Here is Rieker’s full letter to residents. All emphasis in the text is Mayor Rieker’s.
2014 TAX DIGEST
Every year at this time, the City announces and sets the millage rate for property taxes. Annual revenues from property taxes represent 60% of the total revenue for the city’s budget.
The City has received the preliminary 2014 New Value and Revaluation Statistics from DeKalb County regarding the 2014 Tax Digest. DeKalb County controls and determines the assessments of all properties in the City that comprise the Tax Digest. Currently the City’s total digest shows a modest increase of 4.2% from last year. This is a preliminary estimate from the County and is subject to change.
Due to the constraints placed on the City by law, DeKalb County municipalities are required to adopt a millage rate by July 1, 2014. It is possible that our Tax Digest could experience a change (up or down) just shortly before this July 1st reporting deadline. For that reason, every year since 2011, the City uses a process that schedules a series of public meetings regarding the millage rate. The last Special Called Meeting is as close to the Tax Digest reporting deadline as possible so we set a rate based on the finalized Tax Digest.
As part of the prescribed process for adopting the millage rate the City is required to advertise a millage rate ahead of actually receiving a finalized Tax Digest and adopting a millage rate. As the City has done in the past, and in order to protect the City, the City has advertised a PLACEHOLDER for the millage rate of 11.2 mills. The GOAL is to maintain the current millage rate of 10.957 mills. This is the same millage rate and placeholder process that we have successfully used since 2011.
If the Tax Digest did drop and the advertised millage rate was lower than the revised digest, the City would have to start the advertising process over, taking a minimum of three weeks, which would most likely cause the City to miss the July 1st deadline. This is why we use a higher placeholder rate until the finalized Tax Digest. As we have done in the past three years it is the expectation that the City will adopt the current 10.957 rate.
The table below illustrates the current projected 2014 Tax Digest along with the last five years of history taxes in Avondale Estates.
Using the current millage rate of 10.957 a property valued at $200,000 would pay about $60 a year in additional 2014 City property taxes. The total 2014 City taxes generated by keeping the 10.957 rate would be $1,712,872 amounting to an increase of $75,242 over 2013.
Two other items will impact Avondale Estates property tax bills this year:
1. The elimination of the DeKalb County Basic Police Services Special Tax for properties located in the City. This is a special tax that is only levied by the County within cities for the County to provide basic police services to city residents.
During the past six years the City has proactively improved the operations, enhanced training and added to the personnel of the Avondale Estates police force so that last year during City budgeting it was determined that we no longer needed to participate in purchasing this service from the County. Eliminating this special tax will reduce the amount of taxes paid to the County by City property owners by $359,986 if the County uses last year’s 2.47 millage rate for 2014 tax billing. However, recent discussions by County leadership indicate that the County will increase this special tax rate in 2014 and lower the general fund rate as an offset so the 2014 tax savings could be even greater to residents of Avondale Estates. Using the current millage rate for the Special Tax District of 2.47 a property valued at $200,000 would save about $198 a year in additional 2014 County property taxes. Additional savings will be realized to City property owners if the County lowers the general tax millage rate in tandem with increasing the Basic Police Services rate.
2. As required by Generally Accepted Accounting Principles (GAAP) the City funds and operates the activities of the Sanitation Department via a separate Sanitation Enterprise Fund. Annual City sanitation fees are collected to provide revenues for this fund. When the Sanitation Fund was created several years ago sanitation fees collected did not fully cover the expenses of delivering sanitation services. As a result in the past this fund was balanced by transferring funds from the General Fund at the end of the fiscal year. To be in compliance with GAAP for enterprise funds-business type activities, the City will fully fund the Sanitation Fund by adjusting the annual sanitation fee to match the expected expenses for delivering the sanitation services. Last fall during the annual City budget process the Board of Mayor and Commissioners adopted a 2014 budget that corrected the imbalance and adjusted the fee. For 2014 the sanitation fee will be increased by $190 per household or about $16 per month.
The short answer: The probable result from the adoption of the 2014 millage rate, elimination of the redundant County Police Services tax, reduction in the County millage rate and increase in the annual sanitation fee is that in most cases, if the assessed value of your home stayed the same, your 2014 City property taxes will remain the same as last year.
Mayor, City of Avondale Estates