Commissioners debate similar budget proposals in final negotiations

UPDATE (5/25/23): Houle said at a meeting of the Athens-Clarke County Democrats today that their current budget proposal cuts property tax rates by 0.4 mil, and that the current version of Hamby’s proposal cuts rates by 0.75 mil.

Commissioner Jesse Houle has released a budget proposal to compete with Commissioner Mike Hamby’s plan to cut property taxes by a full mil*. Houle’s plan cuts tax rates by 0.1 to 0.2 mils while still funding critical infrastructure needs and keeping the county’s “rainy day” fund balance full.

Hamby’s plan has changed quite a bit from his original proposal. It now provides some funding for infrastructure and maintenance while keeping the full mil tax cut, making it very similar to Houle’s proposal. Despite this, no compromise appears possible on the details that remain.

Table of Contents

Houle’s plan
Hamby’s plan
In defense of fund balance
The easy compromise that should happen but won’t
Next steps

Houle’s plan

More for ACC employees

Houle’s plan provides an additional 1% raise for ACC employees to help them cope with the effects of high inflation. It absorbs health insurance cost increases and even helps to reduce these expenses and make ACC health insurance plans more competitive going forward. It raises the ACC government’s pay floor to $16.07 per hour.

Houle’s plan also funds wage increases at the ACC Library, at the public defender’s office and for the Neighborhood Leaders program.

Fund infrastructure needs

Similar to Mayor Kelly Girtz’s recommended budget, Houle’s plan provides funding to maintain local government facilities and to help replace aging vehicles. It allocates $800,000 to help repair crumbling culverts before their failure causes roads to collapse, and it provides an extra $120,000 for traffic calming in Athens neighborhoods.

Other notable items

The Center for Racial Justice and Black Futures, a $500,000 expense, is present in the plan as requested by the Athens Justice and Memory Project. The plan also funds a nonprofit capacity-building program and grants an extra $50,000 to help put on community events like the Wild Rumpus. It raises the landfill tipping fee to $60 a ton from $45 (Girtz had recommended $55) as a way of preserving the landfill’s lifespan. Finally, it withholds $43,000 from the ACCPD to prevent the purchase of assault rifles.

Houle leaves about $700,000 unspent, money which could be used to cut taxes by an additional 0.1 mil, or 0.2 mil in total.

Hamby’s plan

In many ways, Hamby’s updated plan is very similar to Houle’s. Both plans fund raises for ACC employees, the library, the Neighborhood Leaders program and the public defender’s office. Both plans absorb this year’s increase in health insurance costs. Both plans fund the Center for Racial Justice and Black Futures and both support community events like the Wild Rumpus.

These two plans are so similar that at times they’re difficult to tell apart. 

The main difference is the millage rate – Hamby proposes cutting taxes by a full mil – which causes him to deplete Athens’ American Rescue Plan funding more quickly ($800,000) and to burn through a significant chunk of “rainy day” fund balance ($2.8 million). 

Hamby’s plan also cuts a bit of money that Houle allocates to fleet and stormwater maintenance, but the difference here is much less significant than it was in Hamby’s original proposal.

In defense of fund balance

Fund balance, sometimes called the “rainy day” fund, is the amount that all local governments strive to keep unspent every year. Best practice is to keep about two months of expenses (or 16.7% of the budget) unspent and available at all times in case of a recession or some kind of disaster.

With a recession looming on the horizon, Girtz had decided to keep this fund full, even over the 16.7% minimum. That would pre-fund Athens’ recession recovery now when money is plentiful. But after the explosion of anti-tax anger felt by commissioners at a recent taxpayer bill of rights hearing, Hamby has apparently decided to cut tax rates no matter what.

Hamby’s plan drains fund balance almost to the 16.7% limit, meaning that any money spent during the next recession would need to be replaced in future budgets, and quickly.

Another reason why it’s best practice to maintain a robust fund balance is Athens’ credit rating. Financial agencies continually monitor individuals, businesses and governments alike, looking for any sign of financial weakness. If Athens’ credit rating declines, the government will have to pay more in borrowing costs going forward, making everything more difficult.

ACC financial staff don’t want to risk it, so they’ve done their best to keep the local government’s fund balance full in recent years.

The easy compromise that should happen but won’t

As stated above, Hamby and Houle’s budget proposals are very similar with the exception of the tax rate (and level of fund balance). There’s an obvious compromise here – cut tax rates down the middle while preserving as much fund balance as possible. 

A 0.5 mil cut would cost Houle’s proposal an extra $2 million. If commissioners chose to fund infrastructure and maintenance as in Houle’s budget, then they’d be looking at a drop in fund balance levels similar to Hamby’s budget. While there are a few smaller items commissioners might have a vigorous debate over, the foundation of a compromise is plain to see.

But it’s also impossible.

Commissioners Carol Myers and Tiffany Taylor asked their colleagues to come together and work on such a compromise at a work session on Tuesday.

“These budgets are not too far apart,” Myers said. “I wish we could come to some compromise on this with a millage rate in-between. I’m not sure anyone is willing to do that, that’s in my dream-world.”

“I was thinking the same thing,” Taylor replied. “We’re one community. I feel like this open discussion gave both of you an overview of what we all would like to see.”

Hamby resisted this idea, saying that Houle would need to agree to a full mill cut before he’d be willing to talk.

Next steps

Both budget variations head towards a June 6 vote with a good chance of being adopted, although Hamby’s plan has a bit more support the way things stand now. Hamby’s version will pass if Taylor votes in favor of it, whereas Houle’s version needs Taylor’s vote plus the mayor’s tie-breaking endorsement.

Either way, this budget seems likely to pass with fewer commission votes than any budget in recent memory. Typically, ACC government budgets pass unanimously, or perhaps with one or two objectors only.

The Athens-Clarke County Unified Government’s fiscal year 2024 budget will take effect on July 1, 2023.

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