☆ The city that’s never hiked taxes: “Live within your means” (4/4)
Sandy Springs, Georgia services its general obligation debt with the general fund—not by targeting homeowners to pay back school and infrastructure bonds. Their food bank and recreational programs are successes because the city provides basic funding and infrastructure but leaves the rest up to the community. So say the Mayor and City Manager in Part 4 of an Opp Now exclusive Q&A.
Opportunity Now: So how has the public private partnership affected Sandy Springs’s reliance on general obligation bonds and tax hikes?
Mayor Rusty Paul: We have never had a tax increase in the 20 years we've been in operation.
City Manager Eden Freeman: We cannot change our tax rate. It is set by our charter at 4.731 mills.
RP: We were so confident that we could operate this city very successfully on that tax rate that we put that into the charter, and the only way we can raise the millage rate is by a referendum.
So that forces us to be very frugal with our expenditures because we don't have the ability to go out and just say, "Alright, we need another $50 million, so we’re gonna raise taxes to get it." We can't do that.
We’re living on a limited income, and it's perpetual; so we manage our city accordingly, without the ability to raise taxes. We have both a Standard & Poor's and Moody’s rate of AAA. They figured out that we know how to run cities on tight budgets and limited ability to raise revenue.
EF: And to your question about general obligation debt, we have only issued debt twice. We were debt free for the first 10 years of our existence.
In 2015, we issued the first tranche of debt to build our City Springs campus, which is where City Hall and our performing arts center are. We were creating the downtown of Sandy Springs.
The second was to build our police headquarters, a municipal court complex, and two fire stations. And we finished the fire stations, and we are moving into police headquarters in April.
RP: So we use bond financing for long-term capital needs that are going to last 25, 30, 40, 50 years. Our theory is, why should the people who live here today pay for an amenity that's going to last, that people 25 years from now will be enjoying?
Those people should pay a portion of it. I think the responsible use of municipal debt is to put it into long-term facilities that are going to be used over a long period of time, and so you can amortize those costs over 20, 25, 30 years.
ON: And those bonds have to be voter-approved?
RP: No.
ON: Here in California, despite Proposition 13 protections, they can still tax property owners to pay off certain infrastructure and school bonds.
EF: We pay roughly $11 million a year in debt service, and it comes off the top in our general fund each year during the budget. The general fund is a blend of property taxes, business occupation taxes, sales tax, right? Multiple revenue sources that go into that. But it's not a separate millage rate that’s levied above the flat 4.731 mills.
ON: What lessons can a big city like San Jose draw from your model?
RP: Well, you have to live within your means. The fact that our ability to generate additional revenue through millage rate increases requires a referendum, and the state of Georgia requires us to operate on a balanced budget.
But when you have limited resources, it energizes your community to go out and do things so they're less reliant on the government. They go out and raise money for projects. They do things themselves. They take care of it.
Our food banks are largely run by volunteers. We have one food bank here that's totally volunteer, and they serve thousands of people a year, so it motivates the community and engages your community to do more. When you just simply say, "Well, the government's going to take care of it," you lose that community engagement. And that can-do attitude among your citizens to go out and help you identify problems and then help you solve them.
ON: But doesn’t the city provide some sort of funding to the food bank?
RP: It’s nominal. The food bank relies on corporate donations. They are very good at working the grocery stores. They're very adroit at mobilizing the resources in the community to take care of those families and individuals that are at food risk. So, when the government doesn't do everything, the citizens then feel empowered to go out and do things for themselves.
EF: In Georgia, we have a gratuities clause in our constitution, so we can't give money to any nonprofits. It must be a contract for a service. So, they have to provide a service in return to work. The money we provide to the food bank is a contract for service for them to provide food for individuals that are in need of assistance.
ON: Mark Moses talked to us about how cities lose focus of their mission. He said recreation departments are often an area of mission creep, where the city gets overly involved and even gets in the way of a good sports program. We noticed you have an inhouse recreation department. What aspects of recreation services do you take on, and what do you leave up to the community?
RF: We build the fields, we build the infrastructure, and we maintain it. But it's run by a nonprofit that is basically the parents in the community. They provide the coaches. They go out and raise the money for the uniforms and the equipment and everything else.
We give them some money to help that out. They take that and leverage it in the private sector to run, I think, probably one of the best youth sports programs around.
ON: If you build it, they will come.
RP: We provide the infrastructure. They provide the program. Our Tennis Center is totally outsourced—
EF: They pay us to operate it.
RP: Right, they give us money to operate the tennis program, rather than us paying for it. So we still have a lot of those kinds of things going on in Sandy Springs that maintain that nimbleness and flexibility and innovative approach to providing services.
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