Danielsville approves tax increase

That changed recently when the city council unanimously bumped the rate to 4.0 mills, which will generate an additional 38 percent ($19,951) in property taxes from city residents, up from $52,113 last year to $72,064 this year.

“I am doing this because I know it’s the responsible thing to do and that it is a necessary thing for the survival of the city,” said council member Junne Temple. “At the same time I do it with great sadness and a much heavy heart that we have to take this action at this particular time when the economy is in such bad shape.”

Council member Ron Faust echoed Temple’s sentiments.

“It’s not something I want to do,” said Faust. “I don’t think it’s something any of us want to do.”

Former Danielsville clerk Michelle Dills is now in prison for stealing over $200,000 from the town between 2003-2008. Dills was a bonded employee, so the city did receive insurance money for all the funds that were verified as stolen.

But Dills was largely in control of the city’s financial records for years and the town is still trying to get a clear picture of its finances. The council has hired a financial firm from Gainesville to help get things straight.

What they see doesn’t look good.

“The financial concerns of the city are of grave concern for all the council,” said Temple.

City officials expect to end the year in the red, but they don’t have any predictions yet on how far in the hole the city will go.

Temple, the council’s most outspoken member, said the city’s dire financial situation has been caused by a number of things. She notes the past thefts, the decline in city revenues due to the down economy, and the fact that city taxes and fees remained unchanged for years. She said the tax increase might not have been needed if the city had addressed revenue issues incrementally. Then again, past council members, who looked to Dills for financial information, weren’t getting a clear revenue picture.

While the county government and school system rely heavily on property taxes to fund their services, the city of Danielsville is much more reliant on its fee structure, particularly for water and sewer services, and on local sales taxes than on property taxes. For instance, the 2010 city budget is over $1 million — $635,187 for water and sewer funds and $431,276 for the general fund. Meanwhile, the city has generated roughly $50,000 in property taxes for the past five years. That will now increase to $72,064 for 2010, but that’s still in the five to seven percent range of the city funding picture.

That property tax increase is expected to partially offset a decline in city sales tax revenues. City clerk Connie Riley notes that the city’s local option sales tax (LOST) revenues are off roughly $2,000 a month from what they were in 2009.

Council members are also increasing fees to cover city costs. Earlier this year, the council increased water rates by three percent, but that brought revenues to a “break even” point, Riley said. The council has discussed raising rates again, so that the city actually brings in some revenue off the service. Meanwhile, the city’s current garbage collection rates don’t cover what the town must pay to have a company perform the service. So, those rates may be increased, too.

While revenues are short, the city also doesn’t have much money in the bank either. Right now, the city has roughly $70,000 in reserves, which totals roughly seven percent of its operating budget. The state recommends that governing bodies have at least 15 percent of their operating budget in reserves to handle financial emergencies. But 25 percent is recommended.

Danielsville council members met for two hours with Riley Monday evening, going over preliminary budget figures for 2011. The group plans to hold more meetings in coming weeks to iron out next year’s figures.

“We are doing what we can to get the city finances back on a sound basis,” said Temple.