Dunwoody eyes tax rate adjustment to boost revenue | Dunwoody News

DUNWOODY, Ga. — Dunwoody City government is facing a revenue dilemma that would be softened by increasing property tax collections.

Assistant City Manager J. Jay Vinicki spoke at length about city revenue collection and the impact from homestead exemptions at the May 23 City Council meeting.

Absent exemptions like those for owner-occupied residences, the city’s tax digest – the value of all property within the city – is almost equally split between residential and commercial. The value of all property is close to $5 billion.

Factoring in residential exemptions lowers the taxable digest by about $1.5 billion.

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Most city tax collections come from one-time revenue sources, not ongoing revenue. Only 5 percent of the overall property taxes paid in DeKalb County winds up in city coffers.

Commercial property accounts for about 70 percent of city revenue.

While the city has eight months of revenue reserves and has cut expenditures during the pandemic, there are concerns about revenue collection and a multi-million-dollar expenditure deficit. Despite the drawdown, the city has increased services and raised police salaries while facing a pay-as-you-go approach to other projects, like public works or parks.

Adding to the dilemma is that home values are locked for city taxes, meaning that some residents pay the same amount of property taxes as 2009.

The current 2.74 millage rate has not changed since the city’s incorporation. Many residents leverage a homestead exemption, decreasing that rate to 1.74 mills. Combining the property value freeze and homestead exemptions means that some residents pay less than 1 mill in taxes.

“When people start talking about their millage rate of 2.74, you can take off almost 60 percent at this time,” Vinicki said. “Houses are taxed at about 40 percent of the rate that actually shows up on the bill because of exemptions.”

The revenue structure designed at the city’s founding is not keeping up with resident demands, a presentation from the March 2022 City Council retreat concluded.

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Vinicki estimated that 95 percent of homeowners in Dunwoody are eligible, have applied for and receive exemptions, lowering the amount of property tax the city collects.

“The City Council has the authority to raise (the millage rate) to 3.04, that is what is in the charter and in the code as the cap on the operating millage rate,” Vinicki said.

Increasing the millage rate to the cap would boost annual city collections by $45 to $69 per home, according to a presentation that assumed home valuations averaging between $400,000 to $600,000. That would increase Dunwoody’s revenue almost $1 million per year.

Over the past two weeks, the city held public hearings on capital projects and the possibility of a bond referendum. If approved, the bond would be the first in city history.

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One estimate Vinicki discussed on May 23 showed the capped millage rate of 3.04 and a $40 million bond that increased city property tax collections between $116 to $177 for homes valued between $400,000 to $600,000.

“Even your total bill for your $600,000 home would be $636 a year, that’s $2 a day,” he said.

The mayor and council weighed in on expenditures and revenue forecasts.

“I want to make sure if we do raise the millage rate that a large portion of it goes to police funding, and if that were a mid-year adjustment that would be active sooner rather than later,” Councilman John Heneghan said.

Police Chief Billy Grogan said his department was fully funded to recruit new officers and to fill 10 vacancies, but that finding candidates who passed screening was difficult. The police department is offering a slate of benefits, including bonuses and a housing stipend to fill vacancies.

Councilwoman Catherine Lautenbacher said increasing the millage rate within the cap was in keeping with the city’s fiscally conservative principles.

Mayor Lynn Deutsch continued a message delivered at the March council retreat.

“We cannot build any more parks unless we address our revenue,” Deutsch said. “I think that’s a really important step if we are going to move Dunwoody forward is to look at our revenue realistically.”

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