Fulton Republican legislators began the year with a flurry of proposed legislation largely aimed at curbing the spending by the Fulton County Board of Commissioners. Many of these bills did not gain support in the General Assembly, but one that did was House Bill 604. That bill caps the county millage rate at its current rate for two years. After that period, it will require a supermajority of a 5-2 vote to raise taxes in the county. The bill awaits the signature of the governor.
H.B. 604 was inspired by a growing concern that Fulton County cannot or will not control its spending. Despite cutting its budget from a high of more than $600 million by $100 million over the last few years, spending is still outstripping county revenues.
It is alarming that Fulton’s fund budget – its cash reserves – have been used to make up shortfalls in the budget at an unsustainable rate. What was once a gaudy $150 million only two years ago will have shrunk to $48 million by the end of this year.
H.B. 604 was the Republican legislators’ attempt to force the county to act with more fiscal circumspection. But the bill also added fuel to an unanticipated fire.
When the Fitch Ratings Service downgraded Fulton County’s rating a couple of weeks ago, one of the reasons Fitch pointed to was the legislation to impose a cap on the county’s millage rate. Fitch also cited a bill it described as pending, which would double the Fulton homestead exemption – already the highest in the metro area – from $30,000 to $60,000.
So in addition to capping the millage, it would take $48 million in county revenue off the table. That would leave – perhaps not coincidentally – the county with no reserves at all by the end of the fiscal year.
Now Fulton Finance Director Patrick O’Connor says the headlines about the credit downgrade far outstrip the reality. He admits Fitch is sending the county a warning shot, but the county is still in good fiscal shape, he said.
“We will still have more than the minimum in reserves that good accounting practices require,” O’Connor said.
But Fulton County will hit a wall next year because it cannot sustain the current budget without raising taxes.
Meanwhile, H.B. 604 has gotten the attention of county commissioners across the metro area, Republican and Democrat, who are alarmed about the precedent that bill sets.
H.B. 604 has prompted all of the metro county commission chairmen to put in writing their objections to the bill and its interference with home rule. They note just the bill’s existence could affect their credit ratings and certainly open the door for similar legislative activism in their counties.
It seems the Fulton Republican plan is growing awry.
The North Fulton Legislative Delegation is that committee comprised of members of the General Assembly who have at least one precinct in Fulton County. The main function is to carry local legislation – such as a change in a city charter – forward to the General Assembly where passage is required.
With the redistricting of the state’s Senate and House districts required after the 2010 Census, Fulton Republican legislators saw the opportunity to pack the Fulton delegation with GOP legislators who might not live in Fulton County, but shared North Fulton’s concerns over spending.
With their new majority on the Fulton delegation, the Republicans created a laundry-list range of reform bills designed to restructure Fulton County.
Of course, none of these activities involved their fellow Atlanta and South Fulton legislators. In fact, there were no open meetings, no public input and no transparency in the process that produced these bills.
That in itself is worrisome. A Star Chamber group dictating its own legislative agenda and then using the clout of its members in the General Assembly to push that agenda forward is not the Republican Party most of us signed up for.
Now we are seeing more of the unintended consequences.
Fitch’s credit downgrade should have been a wakeup call to the county commissioners they could not ignore. Yes, the millage cap and the homestead exemptions proposed by the Fulton Delegation also give Fitch concerns. The wheels of the county’s credit downgrade had already been set in motion by the county’s growing reliance on its fund balance.
Also of concern to Fitch is the growing reliance on tax anticipation notes (TANs). These are short-term loans the county must use because it can’t collect its taxes in a timely enough manner to satisfy the budget needs. Due to its calendar year/fiscal year, it must borrow every year until tax collections catch up.
Mostly fueled by the huge number of challenges to the county property tax evaluations, the reliance on those TANs have grown to an astonishing $200 million. That is 40 percent of the entire budget.
But instead of concentrating on these pressing issues, the Democratic majority on the County Commission is diverting attention on those problems by blaming Fitch’s action on the interference of the Fulton delegation that will upset the county’s ability to operate.
Now all of the metro counties are involved in this, which further muddies the water. As the blame game continues, we are free to mull the effects of unintended consequences through this new brand of legislative activism.
It is active all right, but it seems to only exacerbate the political, racial and territorial divisions that exist in the county.