DeKalb County Georgia. Source: Google Maps.

A report published on Monday raised questions about whether the proposed city of LaVista Hills could run the surplus its supporters claimed.

The report suggested the city might run a deficit, and calling into question whether it can take in enough in tax money to provide services to its more than its more than 65,000 anticipated residents.

Mary Kay Woodworth with the LaVista Hills Alliance pushed back against an analysis conducted by Russell Carleton, a resident who lives in the proposed area of LaVista Hills. That analysis was reconstructed by the Atlanta Journal Constitution, which published its findings on Sept. 14. She questioned Carleton’s qualifications to conduct such a study.

The question arises from the millage rate the city would charge. The financial feasibility study, conducted by the Carl Vinson institute, assumes a millage rate of 7.64 mills for LaVista Hills. But the LaVista Hills enabling legislation caps the millage at 5 mills.

LaVista Hills supporters have published contradictory information about the potential surplus. Until the evening of Sept. 14, the LaVista Hills Alliance had a version of the CVI study concluding the surplus would be $2.4 million while LaVista Hills Yes, another advocacy group, had the study using the off-cited figure of $1.7 million. Both are drastically lower than the $6.8 million surplus LaVista Hills supporters suggested in January of this year.

Woodworth said the city will still be able to run efficiently and run a surplus. Carleton provided additional details about how he came to his conclusions.

Here are Woodworth’s and Carleton’s unedited statements on the subject …

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CVI has a long and proven history of being conservative in its methodology and, more importantly, being right.  The “researcher” has a long and proven history of making ill-informed pronouncements about cityhood.  Unfortunately, the writer at the AJC chose to present an errant viewpoint as fact.

The bottom line is this.  Dunwoody’s CVI study (like those of the other new cities) was completed with the same basic methodology, which is that the then-current millage rate was assumed.  In the case of Dunwoody, DeKalb was charging 3.04 mills in study year.  Dunwoody has been operating on a gross 2.74 millage rate since incorporation in 2008, and generating millions in annual surpluses.  The actual surplus enjoyed by every city that has undergone a CVI study has been greater than what the CVI had predicted; the statutory cap for LaVista Hills is nearly double that amount.

Two additional comments:

1) The CVI does not actually design a new city’s budget, but merely tests its feasibility at the margins of what is likely, intentionally choosing the lowest estimates for revenue and the highest estimates for expenses.  City residents will ultimately decide whether the surplus will be used for tax relief, improved services, a rainy day fund, or some combination of those items;

2) The CVI compared LVH’s first-year expenditures with those of cities that provide levels of service substantially greater than those that our residents currently experience in DeKalb County.

Mr. Carleton is a technical writer in the psychology profession and baseball statistician who apparently believes that his background makes him more of an expert than the actual experts at the Carl Vinson Institute of Government at the University of Georgia.

The anti-city crowd (much of the base of which lies outside of the LaVista Hills boundary) has been grasping at straws to try to thwart a strong, grassroots movement in our area.  Their false claims have been well-documented on our Facebook page should you care to take a look.

It is unfortunate that this small group is doing whatever it can to make the vote go its way, facts be darned.

As far as the LVH Alliance website, the revised study was on a subpage that was set as draft, rather than published.  An unintentional mistake that review of website missed.

– Mary Kay Woodworth

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In May, I saw that the CVI had explicitly stated that they were basing all of their revenue estimates on the idea that the city could (and would) simply duplicate the county’s rates, including the then-current millage rate of 7.64 for the affected services. I started with the (incorrect) assumption that because the millage rate would have to be moved from 7.64 to 5.00 that this would mean that the projected property tax income listed in the CVI study needed to be adjusted downward with a simple ratio calculation (i.e., 5.00 is roughly 2/3rds of 7.64, so I could simply assume 2/3rds of the revenue.)

CVI pointed out that because of the differences in HOST and the homestead exemptions, you can’t directly compare the millages like that. And that’s true for residential properties which claim the homestead exemption. In those cases, it’s possible to charge a lower “sticker price” millage rate, but have it produce more revenue for the city (and a larger tax bill at the house level). In the spreadsheet, we see that despite the fact in a scenario where LaVista Hills charges a rate of 5.00, the amount collected from residential properties exceeds that which was collected by the county at a rate of 7.64.

The problem is that only residential properties which qualify for a homestead exemption are affected. Commercial and industrial properties pay whatever the “sticker price” millage is and those rates do compare directly. Same goes for tax categories such as personal property, motor vehicles, and intangible taxes, which are all linked to the property tax rate. In addition, any residential properties that don’t have a homestead exemption (e.g., houses that are being rented out to someone else) pay the sticker price as well.

In 2014, the county could charge those categories a millage of 7.64, but the city would be capped at 5.00, and so a lot of revenue estimates need to be reduced proportionally. You have to break apart the residential/homestead eligible properties from everything else. My new calculations specifically account for that.

The rest is simply plugging in the numbers already in the feasibility study and accounting for the lack of HOST credits on city taxes as well as the different homestead exemption offered by the city (the county’s homestead exemption is $10,000 flat, while the city proposes a $10,000 exemption plus the value of one mill). When you use the city’s, rather than the county’s, tax system — and the CVI study explicitly stated that they were using the assumption that the city would collect at the same rates as the county (i.e., 7.64) — the numbers aren’t as favorable to the city’s position.

Indeed, the CVI specifically said, as you quoted in your write-up: ““A county millage rate is not equivalent to a city millage rate in this context,” Baggett said. “A city millage rate does not come with the HOST county property tax rollback or the applicable county homestead exemptions. Thus a lower city millage rate will generate more revenue than DeKalb County’s millage rate. It compares apples to oranges.”

It seems strange then to say that, but then base assumptions about the amount of revenue that a city could bring in using the county’s tax structure. It seems more fair to apply the city’s proposed tax structure as written in its charter.

– Russell Carleton