SPLOST Becomes Dreams Deferred in Down EconomyPosted: February 21, 2012
In the time when wallets tighten and pennies are pinched, Athens-Clarke County is beginning the first fiscal year of nine in the newest SPLOST (Special Purpose Local Option Sales Tax) program. And as over $195 million dollars is being slated for use over 35 projects, the retrospection of previous SPLOST programs demonstrates the lofty aspirations of a town with limited cash flow.
Looking back to the 2005 SPLOST, the timetable and budget allowed for completion on 18 of the 34 projects (with several of these nearing completion), according to the Athens-Clarke County website. Although the program stayed under budget in the six fiscal years, the sales tax revenue has far underwhelmed expectations in the last three tiers of the project, according to the Athens-Clarke County financial report.
“Back when that vote took place, I was pretty busy with a 2-year-old boy and a 6-month-old girl,” Judy Johnston says in an op-ed published by the Athens-Banner Herald in 2010. “I certainly wasn’t paying much attention to the details, but five years later I saw the impact of it years down the road.”
Despite the $1.46 million revenue shortfall over the six year cycle, the interest accrued over these years has produced $3.88 million to compensate. However, with the last three years of sluggish revenue, future SPLOST projects could be in danger of overdrawing funds on an already depleted bank account.
“Some projects were put on hold by the mayor after the economy went so bad,” Jacqueline Harrington said, administrative secretary for the Athens-Clarke County SPLOST. “But they are in progress now.”
“Several [projects] were placed on-hold in 2012 by the Mayor and Commission to delay completion and avoid adverse impact to operating expenses of the Government,” Don Martin said, program administrator for SPLOST.
Of the top five projects given priority, only two have been completed. The irony of the projects shows the difficulty of this expansive program; although the new fire station(Project #2) has been built, Public Utilities is still at work on building more fire hydrants(Project #1), according to Jacobs Engineering Group.
SPLOST 2005’s accomplishments include the records management and vehicle purchasing projects. Both are timely and accurate. Resources and funds were allocated correctly and on time to the sheriff’s department and the rest of the Athens police to provide each officer with a vehicle, according to Jacobs Engineering Group.
Shimmering from the SPLOST disappointments is the project that has had everyone talking: the new parking deck. Finally completed in fall 2011, the new Clayton Street mixed-use facility got everyone talking, like Johnston.
“I began to look more closely at the SPLOST process…when I heard about the 575-space parking deck…in downtown Athens,” Johnston said. “When I raised questions with my county commissioners about the effect of this structure on downtown traffic congestion, I was told that there was no choice…because it was part of the SPLOST 2005 referendum.”
Despite the majority vote to approve these programs, the dollars and cents become the issue at hand. Larger projects in SPLOST have been accruing bond debt in the millions being issued by city departments and the SPLOST program itself. Bonding allows the mayor and commission to “acquire the funding upfront, and then use the tax revenue over a number of years to pay back the borrowed money,” according to Martin.
Athens-Clarke County is not alone in this battle of dreams vs. the dollar. The state legislature passed a law last year that allowed unfeasible projects to be abandoned, if deemed so by referendum. From Cobb to Barrow Counties, the realization of incompletion is ringing through county governments across the state.
“During the good times when the money was coming in, sales taxes were up and a lot of counties were able to do projects that may have made sense, but right now they may not,” Clint Mueller, legislative director for the Association County Commissioners of Georgia, said to the AJC in 2011.
The ADDA must now back $5.1 million to cover costs not included in SPLOST, and the two largest projects of 2011(jail expansion and Classic Center development) are borrowing $20 million from the future revenue of the program to be completed early.
“Traditionally, what ACC will do is, we wouldn’t start a project until we had the tax revenue pretty much collected,” Martin said. “But when you have $24 million or $76 million (referring to the Classic Center and jail projects, respectively), you’re waiting a long time before you have that money collected and before you can get started.”
With an $8.06 million dollar shortfall over the last three fiscal years estimated in the report, the expectations will not meet reality with the future projects. If the program wishes to raise $21.7 million per year in revenue, and the 2011 amount raised was $16.2 million, the needs of the project may not be met.
The 2011 SPLOST will run on a different set-up compared to previous programs. While programs were formatted to be on five or six year deadlines in the past, the new system, established in 2004 under Georgia law, allows the county to choose a nine year plan to raise money flexibly.
“The first two are time limits, and you just collect whatever you can and do what you can,” Martin said. “With the third option, you can collect the tax revenue as long as it takes to get that amount.”
New planning/schedules for SPLOST 2005 is under review for approval on March 6, 2012, with all projects scheduled to be completed by the end of 2014.
“I wonder how the wants and needs of our city will change by 2020,”Johnston said, “when my children, now in first and second grade, will be looking at colleges and planning high school graduation.”
According to the new Census estimates, the percent under the poverty line is now at 36.3 – as reported by GeorgiaStats – a 4.1 percent increase since 2008, the last year that revenue collected exceeded revenue expected. And with larger and larger debts being taken out against future earnings, the projects can create a bubble that may burst in the next generation.