Sunday, August 14, 2022

Oconee County Schools Will Receive More Property Tax Revenue Than Budgeted Even After Approved Cut In Millage Rate

***Rollback Millage Rate Also Produced Budgeted Revenue***

Administrators of Oconee County Schools underestimated the size of the county’s Tax Digest in the budget the Board of Education approved on June 6 by $195 million, or 7.4 percent. (See Note below.)

As a result, that budget underestimated the amount of tax revenue Oconee County Schools would have expected to have received had the Board set the tax rate at 16.25 mills as recommended by Superintendent Jason Branch by just less than $4.5 million.

Board Member Wayne Bagley cited that underestimation of the Tax Digest when, following citizen protests, he proposed at the end of the meeting on Aug. 1 that the millage rate be dropped to 15.5 from the 16.5 of last year, rather than only to 16.25.

The cut in the millage rate, which was approved by the Board, will have no negative impact on the budget adopted, because the expected revenue, even with the cutback to 15.5 mills, will be much greater than the amount of revenue from property taxes in the approved budget.

In fact, had the Board cut the rate to 14.8, as was requested by many citizens who spoke in the three tax hearings leading up to the Board’s vote on the millage rate, the tax expected to be generated would have exceeded the amount in the budget approved by the Board.

In short, the Board could have chosen no tax increase this year, rather than the 4.7 percent increase it approved, and still have generated the property tax revenue it said it needs in order to cover expenses for the Fiscal Year that began on July 1.

The amount of money that the Tax Digest actually will produce is an estimation, because it does not take into consideration delinquencies and other uncertainties of tax collection.

In the Fiscal Year that ended on June 30, however, the amount of tax that Oconee County Schools received was actually more than $150,000 over the amount projected based on last year’s Tax Digest.

Source Of Figures

The calculations of projected revenue from the three different millage rates is based on the advertisement placed by the Oconee County Schools on page A5 of the July 21, 2022, edition of The Oconee Enterprise.

Click To Enlarge

The Enterprise serves as the Legal Organ of the county, and governments place their legal advertisements regarding the tax rates in that paper.

The advertisement shows that the Net Tax Digest for Oconee County is $2,818,122,370. The same figure appears at the bottom of the advertisements on page A3 of the paper placed by Oconee County Board of Commissioners.

The advertisement for the Board of Education on Page A5 reports that the Total Taxes Levied for Oconee County Schools will be $45,794,489, based on the Millage Rate of 16.25.

That figure is the result of multiplying $2,818,122,370 by the millage rate of .01625.

Multiplying $2,818,122,370 by the adopted millage rate of .0155 produces $43,680,897 in Taxes Levied. The millage rate adopted by the Board on Aug. 1, following the public protest in the three tax hearings, was .0155.

Multiplying $2,818,122,370 by .0148, the zero tax increase millage rate, produces $41,708,211.

Excess Revenue

The budget passed by the Board of Education on June 6, 2022, lists $41,334,069 in property tax revenue.

So the originally proposed millage rate of 16.25, which Superintendent Branch recommend the Board approve even after the three public hearings, would have produced $4,460,420 more than was budgeted.

The millage rate of 15.5, which the Board adopted, is expected to produce $2,346,828 more than budgeted.

The millage rate of 14.8, which was the rollback rate required to avoid a tax increase, would have produced an estimated $374,142 more than budgeted.


The Budget approved by the Board on June 6 is based on a Tax Digest of $2,623,000,000, rather than $2,818,122,370. 

In the original version of this post, I used an estimated figure of the tax digest used by Oconee County Schools, $2,543,635,015, rather than $2,623,000,000.  The Budget reports the projected revenue of $41,334,069 and the millage rate, and, as I reported, I solved for the unknown in the multiplication.

I subsequently found the rounded figure of $2.623 billion in the Budget itself and used that in this update. It changes the amount of underestimation of the Tax Digest from $274.5 million to $195.1 million.

Although a multiplication of the $2.623 million Tax Digest by the .01625 millage rate equals $42,623,750, Oconee County Schools used $41,334,069 in the budget, or 97.0 percent of the larger figure. This appears to represent an expected shortfall in collection.

The calculations above and in the graphic are based on the actual Net Tax Digest of $2,818,122,370 are are not affected by my use of this estimate.

Budget Revenue

Board Member Tim Burgess at the Aug. 1 meeting of the Board, estimated that the Board usually spends “six, sometimes eight weeks going through” the budget with Branch before adopting it.

Liz Harlow, Chief Financial Officer, for Oconee County School, told the Board before it adopted the budget that the millage rate was tentative and the final Tax Digest figures were not yet available.

She warned the Board that the proposed millage rate of 16.25 could represent a tax increase.

The Board placed its advertisement in the Enterprise notifying citizens of a “Property Tax Increase” of 9.8 percent on July 14 and placed the advertisement listing the final Tax Digest on July 21.

The first public hearing on the tax increase wasn’t until July 25.

So the Board had plenty of time to adjust the millage rate, based on the final Net Tax Digest, before the public hearings.

Sudden Change

Harlow began each of the public hearings by reviewing the information on those two advertisements and reporting that Branch was recommending the millage rate of 16.25 be adopted.

She said that was a drop from the 2021 rate of 16.5.

Board Member Burgess spoke at length at the final public hearing and just before the vote on the proposed 16.25 millage rate about the soundness of the budget, the importance of maintaining a large Fund Balance, and how most of the money goes to personnel.

Bagley also defended the original budget with the 16.25 proposed millage rate, saying it was “a very responsible budget” and “a very efficient budget.”

Then he said that most of the work done on the budget “was done before we got the tax digest” and now that he had that final digest he proposed dropping the millage rate to 15.5.

“We based the budget on the tax digest that we thought was going to happen,” Bagley said.

The Board then voted unanimously to approve the reduction in the millage rate from 16.5 to 15.5.

No New Budget

I anticipated that Harlow would present the Board with a revised budget when she gave her financial report at the Aug. 8 Board of Education meeting.

She did not, and, instead, she gave the first Year-To-Date Budget Report listing the same Ad Valorem Taxes figure as in the adopted budget.

That figure was $40,300,718, which is the budgeted $41,334,069 minus the 2.5 percent collection fee ($1,033,352) the county charges the Board of Education to cover some of the costs of the Tax Commissioner Office and the Property Appraisal Office.

About 70 percent of the property taxes people in the county pay are for Oconee County Schools.

On Aug. 11, I sent Anisa Sullivan Jimenez, Director of Communications for Oconee County Schools, an email.

“I noticed that Liz did not provide a revised budget with new revenue projections on Monday when she gave the budget report,” I wrote. “When do you expect that will be produced?”

“The final budget as approved remains,” she wrote back a few hours later.

Follow To Jimenez’ Email

Following receipt of that email from Jimenez, I did the calculations I reported above.

I also looked at the FY 2022 General Fund Budget Amendment approved by the Board of Education at its July 18, 2022, meeting.

That budget amendment shows that the adopted budget for Fiscal Year 2022 had listed $39,230,483 in Ad Valorem Taxes, or property taxes.

The figure in the approved budget for Fiscal Year was $40,236,393, but Harlow had removed the 2.5 percent collection fee paid the county of $1,005,910.

The Board amended the final Fiscal Year 2022 Budget on July 18 to increase the Ad Valorem Taxes in the budget by $204,000, bringing the revenue minus the fee to $39,434,483 or, with the fee included, to $40,445,623.

It also increased the revenue from the Intangible and Transfer Taxes by $770,000, and from the Vehicle Title Tax by $1,450,000.

The total Amended Budget approved by the Board on July 18, 2022, listed $7,137,617 in additional revenue, increasing the Revenue figure from $86,434,779 to $93,572,396.

Federal relief funds are not included in the amended budget.

Amended Budget Higher Than Projected

Last year, the projected revenue for Oconee County Schools based on the simple multiplication of the 16.5 millage rate times the Net Tax digest was $40,287,710.

Oconee County Schools used the slightly lower figure of $40,236,393 in it approved budget.

The amended budget, however, increases that figure to $40,445,623. (This is a computed figure, produced by dividing Harlow’s $39,434,483 by .975.)

So the evidence from last year is that the actual Ad Valor Tax collection is likely to be higher, not lower, than the rough figure shown on the Property Tax Digest And 5 Year History Of Levy published by the Board of Education’s legal advertisement in the Enterprise.

Five Year History Of Levy

That legal advertisement also makes it clear how unusual 2022 was and why a reduction of the millage rate from 16.5 to 16.25 could only offer partial compensation.

Advertisement In Oconee Enterprise July 21, 2022

The Net Tax Digest grew by 15.4 percent from 2021 to 2022, compared with 5.6 percent the year earlier, and 6.3 percent the year before that.

Had the Board adopted the 16.25 millage rate requested by Superintendent Branch and originally approved the Board, the tax revenue increase would have been a growth of 13.7 percent.

With the millage rate of 15.5 percent adopted by the Board, the tax revenue increase will be 8.4 percent, still considerably higher than the 5.6 percent last year.

In fact, it is the highest rate increase going back at least to 2018.

Explanation Of Digest Growth

Allen Skinner, Chief Appraiser for Oconee County, told me in an email message on Aug. 11 that “Our base cost per square foot on residential houses went up 15 percent and that was applied to all residential structures.”

“I would say that 99 percent of property owners received some type of increase this year, improved and vacant,” he said.

Skinner said that for each of the last three years, “99 percent” of property owners have had some increase in their property taxes, but rates were not as high those years as this year.

Skinner said the base cost per square foot on residential houses was $85.00 in 2020, $92.50 in 2021 (an increase of $7.50), and $106.50 in 2022 (an increase of $14.00, or 15.1 percent).

Criticism From Board

Three of the Board members on Aug. 1 were quite critical of any change in the millage rate other than the drop to 16.25, which the Board and school system had promoted as the “Lowest millage rate this century.”

Board Member Amy Parrish said those who asked for a larger cut in the millage rate had “energy and passion” but they did not represent the majority of citizens in the county, who, she said, approve of the millage rate proposed.

Burgess said “If an investment in our school system is not what we’re willing to spend, then we have a different set of values than what I come to this meeting with.”

“Somewhere along the way it seems like the civic duty lost its way,” Bagley said.

Both Burgess and Bagley blamed some of the problem on “miscommunication.”

“Over the last 10 days we heard a lot of things from bloggers and political activists that represent a lot of things that I personally believe are inaccurate and misleading reports,” he said, though he did not identify what he felt was inaccurate or misleading.

“The action that the Board is considering taking tonight to lower our millage rate do not in a sense, do not by themselves, increase the tax burden on any individuals,” he said.

“I dare say there is a lot of miscommunication out there,” Bagley said. “Math is math. The only way we can raise your taxes is to increase the millage rate. That’s a fact.”

Contrary To Department Of Revenue Guidance

The Georgia Department of Revenue has a different interpretation of a tax increase than does Bagley, based on the Taxpayer’s Bill Of Rights passed by the General Assembly in 1999.

Advertisement In Oconee Enterprise July 14, 2022

“Each year there are two types of value increases made to a county tax digest; increases due to inflation, and increases due to new or improved properties,” the web site of the Department of Revenue explains, citing state law.

“There are no additional requirements if the levying authority rolls back the millage rate each year to offset any inflationary increases in the digest,” the Department of Revenue writes.

“If it does not, a local levying authority must notify the public that taxes are being increased,” the statement continues.

If taxes are being increased, the taxing authority has to hold three public hearings, places notices of the tax increase in the newspaper, and issue a press release, the web site states.

When the total digest of taxable property is prepared, Georgia Law requires that a rollback millage rate be computed that would produce the same total revenue with the new digest that last year's millage rate would have produced had no reassessments occurred, according to the Department of Revenue.

For Oconee County Schools, that rollback rate in 2022 was 14.8.

Oconee County Form PT-32.1 For 2022

Each assessed property in the county has to be classified each year as to whether any change in value is due to inflation or improvements to the property. Changes in a property sold without improvements would be considered inflationary change.

Each year, Jennifer Riddle, Oconee County Tax Commissioner, must produce a report that calculates the rollback rate based on the classification of properties in the county.

Upon my request, Riddle sent me copies of the reports for 2022 and 2021 on Aug. 11 and Aug. 12

The form shows the Net Digest Value growing from $2,441,679,386 in 2021 to $2,818,122,370 in 2022, as is shown on the 2022 Property Tax Digest And 5 Year History of Levy.

Of that growth, 77.1 percent ($290,360,806) was inflationary, and 22.9 percent ($86,082,178) was due to changes in the property.

To compute a Millage Rate Equivalent of Reassessed Value Added, the form divides the $290,360,806 by $2,818,122,370 and multiplies that by the 2021 Millage Rate of 16.5.

The product is 1.7, and that is subtracted from the 16.5 to produce the Rollback Millage Rate for 2022 of 14.8.

The form was updated to reflect the adoption of the millage rate of 15.5, and it labels that a Percentage Tax Increase of 4.73.

Oconee County Form PT-32.1 For 2021

The 2021 form showed the much smaller growth in the Net Tax Digest from $2,312,365,028 to $2,441,679,386.

All of the growth was inflationary. In fact, the change in assessment that was real was negative.

The 2020 millage rate was 16.5, and the rollback rate was 15.618.

The Board adopted the rate of 16.5 last year without any citizen protest.

The percentage Tax Increase was 5.65, higher than the 4.73 for the final adopted rate in 2022, but considerably lower than the 9.8 percent increase requested by Superintendent Branch and initially approved by the Board of Education.

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