A public hearing on Villa Rica’s proposed $20 million budget is scheduled for this afternoon.
The hearing will precede the regular City Council monthly work session, which will take place at 3 p.m. at the Municipal Courtroom of the Holt-Bishop Justice Center, 101 Main St.
City Council members will hear residents’ comments on the proposed budget, in which city officials are attempting to set a course for “financial health by 2020” with an aggressive set of actions that include higher fees for water and sewer customers, and new restrictions on which senior citizens qualify for discounts.
The budget proposes raising the average water customer’s rate by 7 percent, while boosting revenue for sewer service by 35 percent. The average water customer who now pays $62.51 per month for combined water and sewer service will see their bill increase by $9.41 per month, or $71.68 total.
This will be the final council meeting concerning the budget before the panel votes to adopt the plan at its Dec. 5 regular monthly meeting.
The budget for 2018 is for only nine months, running from Jan. 1 until Sept. 30, which is when a new fiscal year will begin. The City Council voted in September to change the 12-month fiscal year to Oct. 1-Sept. 30, instead of current term, which tracks the calendar year.
The fiscal year was changed primarily so city staff can better forecast the city’s revenues and expenses. Most of the city’s revenues are property taxes, which will now be received in the first two quarters of the fiscal year.
The nine-month 2018 budget anticipates no property taxes, since it will expire before Carroll County officials send out property tax bills. Therefore, the city will have a deficit of just under $1 million. However, city staff believe this one-time shortfall can be corrected within one budget cycle.
The biggest drag on city finances is its water, sewer and sanitation funds. These are so-called “enterprise funds,” meaning that they are supposed to be self-sustaining, and generate enough income to offset their expenses.
But revenues from those funds have consistently underperformed, particularly on the water-sewer side. The main reason is that, along with all the system’s operating expenses, the fund must also meet the annual payment on the $34 million revenue bond that built the city’s new wastewater treatment plant.
The city now shells out $1.7 million a year to make that payment, but in 2020 – the year the city has set its sights for “financial health” – that bond payment soars to $2 million.
Because the water/sewer system cannot now pay for itself, it requires regular transfers of cash from the city’s general fund. This, city officials say, risks the city’s overall financial health, even as the town surges in growth.
Overall, the preliminary budget anticipates $19.7 million in revenues to cover $20.5 million in expenses. The revenue side includes $999,000 drawn from the general fund balance to make up for the one-time deficit caused by the lack of property tax revenues this budget cycle.
In a presentation made to the public during the Nov. 7 council meeting, the city’s chief financial officer, Sarah Hefty, explained how the city plans to find its way to financial health in time for the 2020 increase in the city’s bond payment.
The city’s policy is to maintain fund balances that represent 40 percent of its budgeted expenses. That’s equivalent to a family maintaining a bank balance that’s higher than their monthly expenses.
But a city’s finances are more complicated than a family bank account, and include many sources of incomes that flow into separate funds. The general fund pays for basic government services -- administration of departments, police, city employee paychecks, etc. There are other funds that are supposed to be self-sustaining, generating fees that offset the expenses for running them.
While the general fund is healthy, the water-sewer funds are leaking, thus city officials have, in the past, diverted cash from the general fund and SPLOST revenues to keep them afloat. All that means that there is less money in the general fund to provide vital government services to a growing city.
The new budget aims to end this subsidy, and to maintain the same tax rate of 6.36 mills, which is the lowest in 10 years.
One of the main ways of doing this involves adjusting the rates for water, sewer and sanitation services for all citizens, and restricting the discount all senior citizens had received on those rates to those with low incomes.
An average customer uses 4,500 gallons of water per month. Based on that usage, someone who pays for both water and sewer service pays $62.51 each month. The proposed increase in fees for both those services increases that monthly bill to $71.68, which is comparable to what residents pay in other Georgia cities of similar size, and considerably less than what Atlanta residents pay ($107.37.)
Currently, seniors aged 65 or older are entitled to a discount on those services. But the city proposes now to limit those discounts to households with $24,000 income or less. Senior customers use less water than other customers, or 3,500 gallons per month. Therefore, the average non-discounted senior will see their bills go up by $20 per month, while average discounted seniors will see a $6 per month increase.
Sanitation and solid waste are additional “enterprise funds” that are losing money, but at a less serious rate than the water-sewer fund. The new budget also calls for increased fees for both those services; to $12.50 from the current $12 fee for sanitation, and to $7.50 from the current $5 fee for solid waste pickup. As with the water-sewer fund, senior discounts for sanitation will be limited to low-income households.