A tax increase to wipe out debt faster? The BOC wants the IDA to think about it, saying it will lead to big county savings in the long haul.
Madison County commissioners asked industrial authority members last week to consider boosting their tax rate from one to two mills so the authority’s debts could be paid off quicker, saving the county interest payments in the long run.
Commissioner Dennis Adams brought up the matter, noting that one mill generates about $830,000, which could be used to tackle debts.
“If we were to examine the possibilities of increasing the tax levy by one mill, there’s an opportunity for this debt to be paid off in six-to-seven years,” he said at a joint meeting of the county commissioners and industrial authority Jan. 6. “And there would be some substantial savings there.”
Commissioner Terry Chandler said the sound of a tax increase is never good, but he said the payoff in the long run could be worth it. He said eliminating debts for the county in an accelerated manner would save the county approximately $1.2 million in debt payments.
“This is probably the most courageous public conversation I’ve ever been a part of, to think about doing something like this in a public manner,” said Chandler. “I think everyone in this room can share the same sentiment, that the thought of a tax increase rubs you wrong…There will be a lot of misunderstanding, but the goal for all of us should be to create the best long-term situation for everybody in the county. And saving $1.2 million ranks fairly high to me.”
The IDA has over $11 million in infrastructure debts. The group refinanced eight loans a couple of years ago to lessen its monthly debt burden, which helped the IDA run a 12-mile water line down Hwy. 72 from the Elbert County line to Georgia Renewable Power (GRP) in Colbert. That project led to $4.7 million in IDA debts. The plant generates about $2 million annually in tax revenues for the county, which are primarily split between the school system and county government, with the IDA getting about $85,000, but carrying the whole debt burden of the project.
Adams said he would like to see revenues from such projects go toward debt services for infrastructure before other uses.
“With GRP, it would have been great if the money generated was set aside to go to the IDA to relieve that debt burden, and then we’d look down the road at what’s the next project,” he said.
IDA debts also remain from water projects in the early 2000s before any current members were at the table. Those past projects didn’t lead to significant customer increases to offset the expenses. And local leaders have said they don’t want to approve any more lines without a clear customer base and return on investment. Still, the old debts remain. And the IDA is largely hamstrung in providing infrastructure for new industries or businesses that could provide more tax revenue for the county.
“For us to be in debt is not the end of the world, but it’s everybody’s debt,” said IDA executive director Frank Ginn. “So when I look at should we go pay off that debt, well the only reason you want to pay off that debt is so you’re able to attract the next industry? Do you have the availability of credit if there’s another industry that comes to look at the county and they need water or sewer that you’re in a position to do that?”
The county commissioners have indicated that they’re ready to allocate $1.4 million in county reserve funds to help relieve the IDA’s old debt burden.
IDA chairman Josh Chandler expressed gratitude for the funding. The BOC also recently agreed to allocate $2.5 million in federal funds to the IDA as part of a matching grant obligation in its application for $7.5 million more in federal grant funding.
“I want to applaud the board,” he said. “Aside from the commitment for the grant match, this will be the first time the BOC has invested back into infrastructure. I think that’s a huge step for our county.”
But Adams said the IDA needs to take action, too. He noted that the industrial authority can levy up to two mills in taxes. It currently levies one.
“Are you going to levy the additional mill you’re entitled to?” he asked IDA members. “I’d personally like for you to.”
Josh Chandler asked if the BOC would consider rolling back its mill rate to offset an increase with the IDA’s rate.
“Do y’all anticipate a rollback on y’all’s side that would offset some of that (a one mill increase)?” he asked Adams.
Adams said the IDA is already planning to give the money that could be rolled back to the IDA in the form of $1.4 from reserves to help with debts.
“You done come got the eggs,” he said. “Now it’s time to feed the hen.”
Chandler said he had mixed feelings about the request.
“It sounds great when I think about ‘Hey, let’s get out of debt,’” he said. “But put my taxpayer hat on, and that’s a mill of tax. Think of the narrative of what we’re charged to do. We tell people if we just get commercial and industrial growth, you’re taxes are going to go down, and we’ve bragged on GRP and what that’s done to bring revenue into the county. People are going to see now we’re going to raise your taxes by a mill and that’s real hard to sell and hard to digest as a taxpayer… I’d love to get us out of debt, but I don’t know what the appetite from our citizens is going to be for another mill of taxes.”
Commission chairman Todd Higdon said city residents need to be considered.
“Take Comer and Danielsville, both with their sewer plants, both with their standalone water systems,” he said. “People inside the city pay that same mill rate, because they’re county residents. And so they’re already paying a mill rate they receive no services for from the IDA.”
Commissioner Derek Doster asked the authority to keep the issue in mind during 2022 and possibilities could be discussed later.
Toward the end of that discussion, Higdon brought up the possibility of moving the county’s water oversight under the BOC, not the industrial authority.
“I’m hearing people saying Madison County may be taking over the water department,” he said. “That’s not true. There’s been discussion, but there’s no truth to it. But if something like that was to develop… there would be a road department and a water department. The IDA would be concentrating on industrial development. Just throwing it out there while we’re all at the table.”
The meeting ended shortly later, with Doster saying, “There are a lot of what if’s in that, but at the end of the day, none of us know what tomorrow brings. But I appreciate the conversation…Whether it’s an official county department or not, it’s a collaborative effort.”
Doster also said the commissioners will present potential replacements for a vacant IDA position to authority members sometime in the next week for input, before approving the new member.