Jim Thornton, other Georgia mayors urge feds to provide relief to local governments

Published 1:30 pm Tuesday, July 28, 2020

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LaGrange Mayor Jim Thornton and the Georgia Municipal Association are calling for the federal government to include relief funds for local governments in its next COVID-19 aid package.

On a Monday press call, Thornton, the first vice president of the GMA, outlined the financial challenges facing LaGrange. Thornton said revenue from the city government’s utilities — electricity, gas, water, sewer, sanitation and telecom services — was suffering, along with hotel-motel tax revenue. 

Thornton said utility sales are down because businesses are operating at reduced capacity, if not closed completely. The fixed infrastructure costs, however, remain the same. 

Enterprise funds generated through utility sales also contribute yearly to the city’s general fund, Thornton said. In effect, utility revenues and sales tax fund much of the city’s budget, which has allowed the city to not collect ad valorem property taxes for more than 20 years.

Thornton shared some numbers to illustrate the impact on utility sales.

4Compared to 2019, electricity sales declined in April by 13%, in May by 17%, and in June by 12%.

4Compared to 2019, gas sales declined in April by 44%, in May by 35%, and in June by 23%.

4Compared to 2019, in April, May and June the city made about $2.6 million less in electricity and gas revenues — going from about $14.3 million in 2019 to about $11.7 million in 2020. 

The city estimated that the net revenue that would have been generated had they sold that $2.6 million in utility sales would have been $436,000. If that trend continues, by the end of the year the city could lose $1 million in net revenue that would have been reinvested in infrastructure or transferred to general government services.

Assuming the pandemic continues for the rest of the year, Thornton pointed out the city could be facing $1 million less in net revenue, just from those utilities.

“Over time, that’s going to make it very difficult for us to not only serve our current customers, but more difficult to expand our system as we take on additional load and as we grow and expand our manufacturing base,” Thornton said.

In an average year, Thornton said 15% of net electricity revenue is reinvested in expanding the system, and that number is 30% for the gas system. 

Since the city relies partially on utility sales to balance the budget, Thornton said funding for first responders will be affected, even as demand for police and fire stay the same. In its most recent budget, the city had to deny requests for police and fire training, renovations for fire stations, and two new police department positions.

Tax revenue dependent on tourism has declined at even sharper rates. Total hotel-motel tax receipts for April-June were $581,000 in 2019. Thornton said that number was $89,000 this year, a decline of 85%. 

Asked if the city would consider levying property taxes for the first time in decades, Thornton said there wasn’t a “current appetite” among councilmembers to do so, saying the city was more likely to cut its existing budget and dip further into reserve funds.

“I don’t think anyone wants to go there, although depending on how long this crisis lasts, it could become necessary in the future,” Thornton said, before acknowledging that property taxes tend to be more stable. 

Also on the call were the mayors of College Park, Union City and Tifton, as well as Larry Hanson, executive director of the GMA. Hanson argued the fate of the state’s economy was directly tied to the wellbeing of its local governments. 

“Approximately 20% of Georgia’s workforce is comprised of public employees, and as they lose jobs and face furloughs, the state’s economy is impacted and recovery further slowed,” Hanson said. “If the federal government fails to support cities, they will succeed in setting back the nation’s recovery by years.”

The federal CARES Act, signed in March, only allocated relief funding to counties and cities with a population of more than 500,0000. In Georgia, that meant only the governments of Atlanta and four metro counties qualified.

The Democratic-controlled House of Representatives passed a $3 trillion aid package, the HEROES Act, in May. Senate Republicans, in turn, are working on a $1 trillion package that will likely not include relief to local governments. 

Union City Mayor Vince Williams said Georgia Senators David Perdue and Kelly Loeffler have heard from the mayors and understand their situation, but that “there has been no commitment.” 

Thornton said the City of LaGrange operates like a business, providing services with a “laser focus” on quality, and saying relief for local cities was as important as Paycheck Protection Program loans.

“I would like to see Congress recognize the efficiency and the effectiveness of our local cities, particularly in Georgia … I hope that Congress will consider that in this next act and this next round of funding,” Thornton said.