Public officials debate costs, savings of Macon-Bibb County consolidation

mstucka@macon.comJuly 14, 2012 

A key question about Macon-Bibb County consolidation is phrased quite simply: If it passes, what will happen to my pocketbook?

The answer may depend in part on what scenarios and assumptions residents are willing to accept. Voters will have their say on consolidation July 31, but some of the most important financial decisions will be made in the months and years afterward.

Consolidation supporters who have scrutinized the issue say a merger would propel Bibb County into a new realm of financial stability, helping attract new industries with an efficient government and lower taxes. Opponents probe the same questions and forecast stagnated, ineffective government, tax increases and cuts to public safety.

The basic concept of the consolidation bill approved by the state Legislature is that, if voters give the green light, the city of Macon and the small community of Payne City would fold into Bibb County. A combined government could eliminate duplication of workers and services to work more efficiently, while nearly all city property taxes would be eliminated.

The consolidation bill that underlies the end-of-the-month referendum leaves hints and answers to some questions -- but not all.

How much can be cut?

Among the bill’s provisions are a demand for a 20-percent cut in the cost of government in the first five years, with an adjustment for inflation. But even that measure has an emergency opt-out provision in case the consolidated government’s board of commissioners decides that “extreme economic provisions” are present.

State Sen. Cecil Staton, a Macon Republican who pushed for the provision demanding the cut, said consolidation isn’t acceptable if it makes one plus one equal two.

“It’s got to (one plus one) equal 1.8, 1.7, 1.6, or otherwise, why do it?” he asked. “The whole idea is that there is duplication.”

Staton said forcing government to find cuts would lead to hard decisions, including layoffs.

“It’s got to come from duplicative personnel. That’s where a lot of the costs are,” Staton said.

But the consolidation legislation also expresses legislators’ intent to leave employees working in the same or better positions for the same or better pay and benefits.

Macon’s general fund budget for the 2013 fiscal year budget which began July 1 is $69.6 million, while Bibb County’s is $87.2 million. Together, that’s $156.8 million, so a 20-percent cut to today’s budgets would result in cuts of about $31.4 million. The government would have to prune nearly $8 million a year for four consecutive years.

Bibb County Commissioner Lonzy Edwards said there’s no way such budget cuts could be sustained. He noted that Bibb County’s budget is balanced this year only by drawing nearly $5 million from its reserves. He predicted a consolidated government would need major cuts to critical services, an emergency bypass of cost-cutting provisions in the law, or both.

“It would mean they’d have to do wholesale firings. Nobody would be spared,” Edwards predicted. “Policemen, firemen, everybody would be affected by it. I’m not sure people can stand for the reduction that would be had with some of these vital services. It’s one thing to say ‘we can cut. We can save.’ But tell me where.”

Staton said he had no specific cuts in mind, but that would be the role of the commissioners and a transitional team. He said the late state Sen. Robert Brown also agreed that such cuts were possible.

“In fact, I’ll never forget the day he walked into my office and said, ‘This is realistic, and I agree with you,’” Staton said.

Macon City Councilman Tom Ellington attacked the idea of cuts in a recent letter to The Telegraph.

“Consolidation supporters who believe a 20-percent cut is possible should identify specifically where those cuts could be made and what impact they would have on service delivery,” wrote Ellington, who raised the prospect of a judge ordering cuts to comply with the consolidation law.

Staton said the improper use of the emergency budget override could be challenged in court, but he doesn’t know how much money it would cost a resident to mount a legal challenge or whether such a provision has ever been used in Georgia.

Even with the emergency budget override provision, government costs cannot exceed 25 percent of the regular budget. By the fifth year, an emergency budget still couldn’t be more than 105 percent of the first year’s budget.

Calder Pinkston, a Jones County resident who owns a Macon law firm and participates in the pro-consolidation Macon-Bibb Wins Again group, said a consolidated government should be able to save enough money by not replacing employees who leave..

“Due to this attrition rate, you can remove the overlap,” he said.

Attrition doesn’t always work, however. Bibb County has had a hiring freeze in place for years, for example, but commissioners nearly always refill the positions after deciding they’re critical.

Commission Chairman Sam Hart said 20-percent cuts would not be possible “without, I think, a tremendous decrease in personnel. Any time you’re going to decrease personnel significantly, you’re going to decrease services.”

Effect on taxes?

Many of the studies on consolidation in Georgia communities have come from the University of Georgia’s Carl Vinson Institute of Government. Researchers there have emphasized how each consolidation bill is different.

One study from the institute says both city and county taxpayers in Athens-Clarke County found tax rates at least 10 percent lower one year after consolidation compared to a year before consolidation. The merger of Augusta and Richmond County brought lower tax rates to city taxpayers and the same tax rate to people in the unincorporated areas.

In three smaller communities that consolidated, tax changes ranged from a 71-percent decrease for Cusetta city taxpayers to a 3.3-percent increase for unincorporated Quitman County taxpayers.

Another study found that in the six years after consolidation, Athens-Clarke County government’s costs rose about 21 percent, well under the rate of three comparison communities. The highest budget increase among the non-consolidated communities was Albany and Dougherty County, where expenses grew more than 58 percent in the same time frame.

It’s less clear what would happen with a Macon-Bibb County consolidation. Guesses about the tax rate in Bibb County depend on the assumptions people make.

In a letter to The Telegraph, Commissioner Elmo Richardson predicted that taxes could stay the same. Richardson predicted Macon’s property taxes of about $18 million could be more than made up with $6 million in franchise fees, $6 million in fire taxes to be levied on Macon residents, and about $7 million from the first year of cuts.

Franchise fees are government fees on utility companies and cable providers for the use of rights-of-way to run power, telephone, cable and other lines. Only Georgia cities and consolidated governments can collect them.

The franchise fees are collected from residents of the area in which they’re levied and passed through the utility companies to the government, said Bill Edge, a spokesman for Georgia’s Public Service Commission, which regulates utilities.

Georgia Power spokeswoman Lynn Wallace said customers who live in places with franchise fee agreements pay higher franchise fees. Currently that fee is 2.9 percent of a city customer’s bill before sales tax, compared to 1.08 percent for people living in unincorporated areas and other places without franchise fee agreements. She declined to release numbers on unincorporated Bibb County residents’ power usage. It is unclear whether those fees combined with other increased franchise fees for residents now in unincorporated Bibb would be more or less than the $6 million Richardson predicted if consolidation passes.

Macon expects to collect about $8.2 million in franchise fees this year, most of which is passed through Georgia Power but includes money from gas, cable and telephone companies. If consolidation passes, the franchise fees now paid by Macon residents would likely continue, but would be extended across the entire county.

Edwards argues that $6 million in new franchise fees on residents of what’s now unincorporated Bibb County would amount to $6 million in new taxes on them. Consolidation supporters, though, say it’s not a tax.

While consolidation would abolish Macon’s property taxes, it also would do away with property taxes for fire services. Unincorporated taxpayers now spend 2.65 mills on fire service. If similar charges were extended to current city taxpayers, they’d see an increase in their county taxes. That’s still less than a third of last year’s Macon tax rate of 9.8 mills.

Guesses about the short-term net effect on taxes if consolidation passes must depend on guesses and assumptions about whether the 20-percent cuts will come, whether franchise fees are considered to be equivalent to taxes, and what choices a consolidated government would make.

It’s even harder to predict what would happen long term.

In a 2000 study looking at Athens-Clarke County’s apparent financial savings after consolidation, the Carl Vinson Institute warned that the details of consolidation do matter.

“These findings suggest that a city-county consolidation can be efficient and can result in cost savings in some departments. However, this case also demonstrates clearly that to the extent to which money is saved in a merger will depend on the design of the new government, as reflected both in its charter and the policy and management decisions of its elected and appointed officials,” the paper’s authors wrote.

They continued, “The act of consolidating will not guarantee more efficient operations, despite what some of its advocates would have us believe. On the other hand, consolidating governments will not necessarily cause expenditures to increase as some opponents suggest.”

Transitional costs

The same Carl Vinson report found that Athens and Clarke County spent $470,353 merging the two governments. Under a recent service delivery strategy agreement, Bibb County expected to spend nearly $800,000 merging just the city and county engineering departments into a building that Bibb County already owned.

Bibb County’s government has already said it’s out of room in the Bibb County Courthouse, while much of Macon’s government works out of an annex building. In other words, no one building has enough room for a consolidated government.

A report from the Middle Georgia Regional Commission doesn’t try to calculate the actual costs of consolidating the government, but it does suggest where those costs could come in.

Among them: Consultants to figure out where staffs overlap, professional costs to set pay scales, payouts for unused vacation and sick time, and software and hardware costs to combine computer systems. Other big costs could include trying to ensure fairness of pay for former city and county employees, while making certain that pay is competitive.

If voters approve consolidation July 31, a transitional team will start looking at some of those questions. Staton said that team will face “heavy lifting.”

“There’s a lot of work to be done,” Staton said. “There’s simply no way to answer (all) the questions up front.”

To contact writer Mike Stucka, call 744-4251.

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