Proposition A: Clayton City Property Tax Increase?
The County is holding a special election on Tuesday August 3. The ballot for Clayton will include Proposition A which, if approved, will raise the Clayton property tax rate for the General Fund by 35%. After reviewing the City’s public financial records, and considering the recent spike in inflation, the Clayton Condominium Building Association (CCBA) Board of Directors believes the tax rate increase is not justified. Voters should vote NO.
BACKGROUND INFORMATION:
The City’s revenue has remained relatively stable in recent years.
Total revenues have exceeded expenses in eight of the past ten years.
Property tax revenue has increased in nine of the past ten years (driven by increasing property values and new commercial developments).
The City’s surplus of money in their General Fund (that pays for operating expenses) at the end of 2020 was 70% of expenditures, well above their minimum target of 25%.
The negative impact of COVID curtailed the City’s revenue for 2020, but the effect will be short-term.
2020 General Fund revenue was down 3% but, CARES ACT and ARP Funding monies covered the loss.
The estimated revenue for 2021 will increase by 5%.
From the City’s 2021 budget report: “the City expects significant short-term revenue gains when full economic activity resumes.”
The basis of the tax increase and the process of recommending it was misleading and not fully transparent to the public.
Proposition A states “the City’s property tax rate…has not been increased since 1991.” The City’s own public records, along with the county’s, does not support this assertion. In accordance with the rules of the Hancock Amendment, property tax rates increased five times in the past ten years.
In developing projections for future property tax revenue, the City is assuming a very modest 2% inflationary growth rate which is inconstant with published projections of the growth of the consumer price index for future periods.
The Mayor and the Board of Aldermen met in an unscheduled special session on May 18, 2021 to discuss “Financial Planning”. Three days later they met, without public notice, to approve the ordinance for an election to increase the City’s property tax rate for the General Fund by 35%.
RECOMMENDATION:
The CCBA Board of Directors does not support Proposition A. Property tax revenue is expected to grow in the years ahead as property values continue to increase and new commercial developments are completed. Furthermore, if inflation continues to increase as the economy recovers from the pandemic, property tax revenue will automatically increase beyond what is in the City’s budget. The CCBA Board believes the City’s surplus of money in its General Fund will be sufficient to maintain services for its residents.
Vote NO on Proposition A.