EconSouth (Second Quarter 2009)

An Interview With Clint Mueller of the Association County Commissioners of Georgia

CLINT MUELLER Title Legislative director Organization Association County Commissioners of Georgia Web Site www.accg.org Other Before becoming ACCG's legislative director, Mueller was the organization's assistant director of financial and management services and assistant legislative director. Working with members of the Georgia General Assembly, he helped to pass laws including the special purpose local option sales tax, tax allocation districts, conservation use assessment, and infrastructure development districts.

Georgia has 159 counties, and the recession is affecting each of them in a variety of ways. Counties that relied heavily on property taxes have seen revenues decline in the face of falling real estate values, and those that counted on steadily increasing sales tax revenues have seen the stream slow to a trickle as cautious consumers have snapped their wallets shut. And Georgia is not an isolated case: The economic downturn's effects are being felt in counties and municipalities through the Southeast. EconSouth spoke with Clint Mueller, legislative director of the Association County Commissioners of Georgia, about how his members are faring and how they will adapt to evolving fiscal developments.

EconSouth: What are you hearing from your members about their budgets?
Clint Mueller: I think we're just starting to really feel the effects of the economic downturn, so it's going to get worse. We depend primarily on property and sales taxes. With property taxes, there's a year lag: We always base our taxes off values for the prior year, so taxes collected at the end of 2008 were based on sales in 2007, which is before the real decline in the housing market. This year the values are going to be based off 2008, so we'll start to really feel it in our property tax revenues this year. Especially because of sales taxes having been down since last year, we're seeing a lot of counties forgoing maintenance on buildings and infrastructure. A lot of them have to scale back capital projects. In our general operating budgets, we've got a lot of counties that are furloughing employees. We've got a lot of counties that are actually going to look at trying to raise the millage rate this year. At the county level of government, we have a lot of constitutionally mandated services. We can't stop providing them; we have to find ways to fund them.

ES: What are some of those services?
Mueller: We fund the court system. We know crime goes up during these times, so we've got more people running through the court system. We run the jail, so we've got more people in our jails. We're seeing increased demand for services as revenues are declining. That's what's really putting the squeeze on a lot of our counties.

ES: How much federal stimulus money will reach counties?
Mueller: Most of [the federal stimulus money] is getting swept up at the state level. There's some money we have access to—a little bit of road money and a little water and sewer money that's coming through the state. But [counties] are not finding a windfall of federal dollars that helps fill gaps in their budgets. That's been more the case for the state.

ES: What are some long-term implications of these budget cuts?
Mueller: We're all in a competitive environment globally, and we're not able to do a lot of things we need to do now to be in a more competitive position. For instance, we were working this year with the [Georgia] Legislature and have been for the past three years to try to get additional funding and come up with better planning for transportation. But those things are getting cut.

Courtesy of the Georgia Department of Economic Development Like their counterparts in other states, Georgia legislators (who convene in the Gold Dome, above) are considering a range of options to help counties and municipalities struggling with revenue shortfalls caused by steep declines in the property and sales taxes they rely on to provide services to residents.

ES: How is the recession affecting different types of counties?
Mueller: I think it's affecting our high-growth counties and cities worse. Some of our rural counties have never had much, and the downturn hasn't affected them as much. They didn't have a whole lot of new construction, and their values haven't declined as much. I live in Cherokee County, north of Atlanta. That county's been living off growth. Now there is no growth. Not only is there no growth, but existing values are starting to decline. They've never had to deal with that situation, at least not in the recent past.

ES: It's always hard to raise taxes, especially during a recession. But are county officials finding themselves pushed into a corner?
Mueller: I think we're going to see more of it [raising tax rates] starting this year, and especially next year because their digests are flat or declining. A lot of counties, too, this year are using reserve funds and different accounting techniques. There are things that they can do, because they've had several good years, to sort of get them by the first really bad year. They're going to exhaust a lot of those things this year.

ES: Is there much thought now about changing the revenue mix for county governments?
Mueller: I think we'll see diminished use of the property tax over time. Right now in Georgia, on average, counties rely on property taxes for about 40 percent of their revenues, whereas about 22 percent of our revenues are from sales tax. I think you're going to see that percentage from property taxes decline, and it'll be made up through a lot of fees as well as sales tax. There's an interest in the state in broadening the sales tax base to a lot of services that are not taxed now.

This interview was conducted by Charles Davidson, a staff writer for EconSouth.