Chamblee, GA, February 8, 2016 – Commentary, by Russell A. Carleton – Money doesn’t just appear out of thin air, but the proposed annexation of areas that had been LaVista Hills into Chamblee would require that to happen. For those unfamiliar with the proposal, a group calling itself “Citizens for Cityhood” has released a map which draws from the former LaVista Hills area and suggested that it be added to the city of Chamblee. It’s not a small area either. According to the map, the area under consideration has a population of 34,755, a number which more than double the current population of Chamblee (29,231).
While I appreciate that advocates for LaVista Hills may still favor that the area become incorporated in some fashion, this seems like a very bad match. For one, in the LaVista Hills referendum, advocates consistently promised that property taxes would not go up in a new city. In 2015, the owner of a house appraised at $300,000 would have paid $378 to DeKalb County for the police, road maintenance, and parks services provided by the county. Chamblee’s government, which provides these services as well, charges a millage rate of 6.4, with a flat homestead exemption of $30,000 per household. The same $300,000 house would have paid $576 to Chamblee for its city services. Chamblee also provides sanitation services on its own, although both the city and the county charge the same flat $265 annual fee for that service. Annexing into Chamblee would represent a rather large tax increase on residents in the annexation area (along with an increase in franchise fees).
Now, higher taxes are not necessarily a bad thing. It could certainly be argued that Chamblee residents get more from their government than they would if they had been in unincorporated DeKalb County. The citizen-to-police officer ratio is lower in Chamblee and Chamblee provides a good deal more in its parks system than does DeKalb. They pay more, but get more. The citizens of Chamblee have decided that this is the proper balance of taxes and services for their needs. Perhaps the people in the annexation area would willingly make that trade as well.
At least the citizens of the annexation area would get to vote on whether they wanted to make that choice. In the United States, we practice government by the consent of the governed. But there’s another side to this plan that has been little mentioned by annexation proponents. The way that annexation works in Georgia is that the only people who get to vote on the matter are in the annexation area itself. This means that if annexation goes to a vote, the current residents of Chamblee would have no say in the matter.
And here’s where a good look at the numbers is important. Recall the balance of taxes and services that I mentioned earlier. Every community decides for itself what that balance should be. According to Chamblee’s budget, in 2016, the city is slated to spend $32,240,286. In 2015, they spent a more modest $25,011,945, though this was prior to the city taking on responsibility for road maintenance, which they did on January 1, 2016. We will use the lower number from 2015 to be conservative in our estimates. This suggests that Chamblee spends $855.66 per resident on providing services.
The annexation area, according to the map released by supporters, has an estimated population of 34,755. Per capita ratios are not a perfect proxy for estimating costs, but organizations such as the Carl Vinson Institute at UGA and the Andrew Young School at Georgia State, which conduct studies on municipal feasibility, commonly use per capita projections in their cost estimates. To provide services at that same $855.66 per resident rate for the 34,755 people in the annexation area, it would cost Chamblee $29.7 million.
It’s worth pointing out here that even though the population of Chamblee would (more than) double, that not all expenses would need to be doubled. For example, the city wouldn’t have to pay a second mayor nor a second police chief. But, to maintain the police officer to citizen ratio, they would need to hire twice as many police officers who would have to spend more time driving to patrol a bigger area. Plus, they’d need to find physical space for all of those officers to do their work. A lot of other departments would have similar issues. That all comes with a cost.
But perhaps more importantly, building that much government capacity in that short of a timeframe will require a large amount of capital outlay. In the police department, adding a few dozen new officers to the force means a bunch of new police cars, along with computers, radios, service weapons, and several other pieces of equipment. Normally, cities budget to replace these items on a rotating basis a few at a time as they wear out. Such a large upfront expense could be financed, but servicing the interest on that sort of debt is a new expense that the city currently doesn’t have to deal with. There are potential cost savings, but also new expenses to think about. The final answer to how much it would take to on-board the new residents might be a bit more or less than $29.7 million, but that’s the correct order of magnitude.
It then becomes a question of whether the annexation area would provide enough in revenue to match the $29.7 million needed to service the new residents. This is normally where a feasibility study, such as the one that Avondale Estates did for its recent annexation map, would be done. If the area could support itself, then the residents of the current city of Chamblee wouldn’t have much to worry about. They would be able to continue supporting the same balance of taxes and services that already exists.
However, Ben Shackleford of the group Citizens for Cityhood has stated that a feasibility study isn’t necessary “because the City of Chamblee has been around a long time and knows what they are doing.” I hope they do, because the evidence that we do have shows a big and rather obvious hole in the math, one that would be a disaster for Chamblee.
Prior to the LaVista Hills referendum, cityhood proponents released a feasibility study conducted by the Carl Vinson Institute, one which contained some documentable flaws, but even leaving those aside, it estimated that the entire LaVista Hills area could have expected to generate about $36.6 million in revenue. The estimate was based on the then-current county government property tax millage rate of 7.64 for the services that would have been provided by the city as well as several other sources of revenue that cities have access to. Chamblee’s millage rate then (as now) was 6.4, although because city residents cannot claim HOST credits on their city taxes (but can on county taxes), the city rate produces a higher tax bill for homeowners (as I mentioned a few paragraphs above) and a lower tax bill for commercial and industrial properties.
The number $36.6 million sounds great until you realize that the map released by proponents of the annexation only contains about half of the original LaVista Hills footprint. Indeed, the annexation area contains just over half of the population of what would have been LaVista Hills (34,755 vs. 67,446), as well as less than half of the total property tax digest ($1.24 billion in the annexation area vs. $2.61 billion in LaVista Hills), and less than 40 percent of the non-residential (commercial and industrial) digest that LaVista Hills had. The revenue number would be helped slightly by the fact that Chamblee would also collect the $265 sanitation fee from property tax payers (LaVista Hills did not propose to provide its own sanitation services), although if each of the 9,389 parcels on the annexation map paid this amount, it would add up to just shy of $2.5 million.
If the entire LaVista Hills area, with more than twice the taxable assets, would only have been able to raise $36.6 million, how much would the annexation area really be able to raise? Even allowing that they could recoup half of that figure ($18.3 million) and allowing for the additional $2.5 million in revenue from sanitation fees, that’s $20.8 million in new revenue compared to $29.7 million in new expenses, a shortfall of nearly $9 million. It’s not clear where this money would come from. It certainly isn’t appearing out of thin air.
In that case, if Chamblee residents wished to keep their current service levels, they would be forced to raise taxes on themselves (and the newly annexed residents, even more than just accepting Chamblee’s current rate would). Or they could keep the same rate and cut those service levels, meaning that the idea that residents in the annexation area would inherit Chamblee’s higher services levels becomes questionable. But what’s clear is that the balance between taxes and services, which Chamblee residents have decided for themselves, would be thrown off. Shamefully, Chamblee residents would not be allowed to vote on whether this balance should be altered.
This is not government by the consent of the governed. This is one group of people attempting to over-rule the democratic process of another group. That’s not an annexation. That’s an invasion.
I can imagine that there are cityhood/annexation supporters or perhaps people who are undecided who have read to this point and who doubt my calculations. I’ve tried to make some reasonable assumptions, perhaps some that are even favorable to the annexation position, based on the data which are publicly available. I am always happy to see more data and to adjust according to it. But I would submit that, based on what we know now, the numbers don’t add up, and that I would have to be very wrong for them to come close to adding up. But if you have your doubts, I understand. My own opposition to LaVista Hills was well-known, so I can appreciate that some might not see me as an impartial source.
So, I say this. Let’s see a feasibility study. Certainly, proponents, opponents, and don’t-know-yets alike would also welcome an outside source taking a look at the matter and running the numbers. The idea that a vote would be taken on an issue of this magnitude without due diligence is frankly astonishing. If it turns out that the plan is feasible, then so be it. Secondly, because this plan has the possibility to fundamentally alter Chamblee – indeed the new residents would outnumber the old ones! — I propose that the current residents of Chamblee deserve a vote on whether they want the annexation. They might say yes or they might say no, but it seems wrong to disenfranchise them. I realize that through a quirk of the rules, Chamblee wouldn’t need to approve, but it seems the most democratic thing to do to ensure government by the continuing consent of the governed.