Competing ideas on what to do with the city’s ad valorem tax rate next year emerged from a council work session Thursday at City Hall.
Either would result in the tax rate decreasing, but one would mean tax bills would still go up.
Toward the end of the nearly two-hour work session, Chief Financial Officer Jim Brigham recommended for next fiscal year a proposal that would generate an additional $623,780 in ad valorem tax revenue, essentially raising property taxes.
The city’s tax rate for this fiscal year is 54.11. Brigam’s proposal would drop that rate to 53 mills. That reduction, which includes a change in millage for a fire and police retirement fund, would still mean taxpayers pay more, primarily due to rising property values in Lowndes County.
A mill is used to measure real and personal property value, from which ad valorem tax is collected. Brigham’s recommended increase would reduce a homeowner’s taxes by $10.11 per every $100,000 of property value.
In Columbus, higher property values bumped the mill value — the amount of taxes 1 mill is expected to generate — to $218,000, up $16,000 from this fiscal year.
“What has happened is the city has become more valuable,” Brigham said, before acknowledging his mill rate recommendation would result in higher tax bills.
“What we are doing will make it just not as much (of an increase),” Mayor Keith Gaskin said.
The city doesn’t have to approve its mill rate and budget until mid-September, but with budget planning well underway, Brigham said that rate is a big piece of the puzzle. The new fiscal year begins Oct. 1.
“To get the equation put together on the budget, we need to kind of discuss what we’re going to do from a millage perspective,” Brigham told the council.
State retirement program
Complicating matters more is a decrease in the amount of mills the state is requiring Columbus to pay into the Police And Fire Retirement Fund, which is part of the Public Employees Retirement System.
Brigham said the state required Columbus to allocate 5.38 mills toward that fund this fiscal year. Next fiscal year, it is only requiring 3.7 mills.
“That means we can move some of that (millage) back to the general revenue line,” Brigham said.
That difference alone would add $280,160 to the general fund and create a net increase of 0.18 mills for those collections — more than eliminating Brigham’s proposed rate decrease.
A revenue neutral alternative
Brigham explained leaving the tax rate the same — 54.11 mills — would generate more than $865,000 in additional revenue this year.
However, a reduction of 3.98 mills next year would generate the same amount in ad valorem revenue — $10.93 million — as this year.
Ward 5 Councilman Stephen Jones pressed Brigham on why he wasn’t recommending that.
“Why don’t we take it down to the same thing so (taxpayers) don’t have an increase at all?” he asked.
“Then you’ll have to figure out where in the budget you want to cut,” Brigham replied, implying additional expenses are expected next year.
Brigham offered no specifics during the meeting on why the city needed new revenue to balance next year’s budget, nor did Gaskin when The Dispatch contacted him afterward.
Speaking to The Dispatch in early July, though, Gaskin said the city could use the additional revenue to help pay down the city’s nearly $30 million of debt faster, accommodate employee salary raises and address technology and equipment needs.
In a text to The Dispatch on Thursday, Gaskin said he agreed with Brigham’s recommendation.
“We are trying to give some relief to the citizens, while also making sure our city is financially healthy going forward,” he wrote.
Jones told The Dispatch after the meeting he wants to give all, not just some, of the city’s increased property value back to the citizens.
“I think we should have a revenue neutral approach, so we don’t have to raise any citizen’s taxes,” he said.
The city is planning public hearings for its budget at 6 p.m. Aug. 15 and 22 at City Hall.
Zack Plair is the managing editor for The Dispatch.
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