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Posted: Thursday, November 14th 2013 at 3:05pm

Tax changes hit Gainesville 2014 budget

By Marc Eggers Staff
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Melody Marlowe addresses Council
GAINESVILLE –Over the past several weeks recent tax changes, both legislated (House Bill 386) and negotiated (Local Option Sales Tax distribution agreement), have collided with the 2014 approved city budget necessitating adjustments to be made to that budget.

At Thursday morning’s work session Administrative Services Director Melody Marlowe briefed the Gainesville City Council on the adjustments that her department felt best accommodated those tax changes.

Marlowe explained, "There are three major events that have substantially impacted the city’s tax revenue: the institution of the Energy Excise Tax, the new tax system for taxing motor vehicles registered in Georgia, and the Local Option Sales Tax negotiation and the…distribution certificate."

"At the time that we developed the fiscal year 2014 budget we knew these were out there but we really had no idea how to budget for the impact…so at the time when we developed the budget we moved forward on the status quo," Marlowe said.

"Now that we have some history behind us on those revenue streams…we can look at some real numbers and make some adjustments to the budget."

Marlowe said that it appeared that the change in taxes paid for motor vehicle registration was nearly a wash, possibly an improvement. "The good news is the increase (from the new method of calculating the one-time ad valorem tax) is greater than our decrease (loss of annual payments made by vehicle owners)."

Marlowe then addressed the adjustment to the 2014 budget caused by the reduction in Local Option Sales Tax revenues agreed upon in a last-minute negotiation with the county.

All LOST funds were on the verge of being forfeited unless the county and its municipalities agreed to a distribution formula before 4:30 p.m. on October 17th.

In a last-hour concession Gainesville agreed to a plan that reduced its share from 19.87 percent to 17.38 percent. "That equates to about a twelve-and-a-half percent decrease in our revenue or about $600,000 per year," Marlowe explained.

Pro-rated against the 2014 budget and the fact that nearly four months of the fiscal year have already passed lessened the impact to the budget "to a decrease of $400,000, or there about," Marlowe said.

"I was a little miffed about the new distribution of the Local Option Sales Tax," Councilman George Wangemann said. "I don’t think we had much of a choice, though, otherwise the alternative was for the tax to go away. And we couldn’t stand that."

"I give the credit to my fellow Council members here in saying, 'Blessed are the peacemakers.' I really believe that that tax was retained because of the peace we wanted to leave between the cities and the county," Wangemann added.

Meals-On-Wheels program effected by Sequestration

City Manager Kip Padgett said, "We were notified November 1st by the state that because of the sequestration cuts by the federal government, that the Meals-On-Wheels waiting list would be put on hold. It will also affect the Senior Center and our Coordinated Transportation Program."

"Late last week Phillippa (Lewis Moss, Community Service Center Director) received more information from the state that the cut to the programs would be about $84,000 from the state and federal government," Padgett added.

"In talking with our finance staff…we do have a significant amount of fund balance…that we could use to close that gap for this year while we see what happens at the state and federal level," Padgett said.

Lewis Moss cautioned, “These sequestration cuts (can) last for ten years. We will be looking at expenses that we can cut," Lewis Moss added.

"In the past we have had a waiting list for Meals-On-Wheels whenever we are either short on volunteers or short on money. We’ve actually being doing very well at raising private funds to support the Meals-On-Wheels program."

"People in our community have been very generous. However," Lewis Moss continued, "the state of Georgia…has imposed for the first time in history a waiting list…so even with funds from fund balance have to wait for the state to give us its blessing to open our doors again to receive from our clients."

"People give and donate because they want to see that their donations make a difference and it’s hard to make a difference if we have an imposed waiting list," Lewis Moss said with a touch of frustration.

Associated Categories: Homepage, Business News, Local/State News, Politics

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Gainesville, GA 30501
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