Picayune real-estate tax collections increase 46% to cover Utility Fund Losses?

Published 1:11 pm Monday, September 15, 2008

Editor:

The Picayune City Council held a public meeting on September 8, 2008 to hear comments concerning their intention to raise tax collections to include the real-estate portion of the ad valorem taxes in Picayune. In FY08, the city collected $1,104,434 in real-estate taxes and proposes an increase of $502,559 for FY09, a 46% increase. Increased taxes are not the avenue to prosperity, but rather will have a negative impact on businesses and will stymie economic development. Tenants will see rents increased as landlords scramble to adjust rental rates to offset the increased tax burden. Businesses must increase prices to offset the added expense.

To justify the notion of increased ad valorem taxes, a much-loved line echoed by our elected officials is we have not seen an increase in millage rates in years. This is very true. What is not disclosed is we have seen an approximate 39% increase in total ad valorem tax collections from 2000 to 2008, almost certainly caused by increased property valuations and development. With this current tax increase, tax collections will have increased 87% since 2000.

The pressing question remains unanswered by the Council and was avoided at the public meeting: Why has the Council been indecisive in addressing the continuing losses of the Utility Fund, which have occurred since 2002? The Council sat speechless as constituents pleaded for answers. In the FY 2004 Audit Report, finding 2004-2 states, “As in the prior two years, we noted that the City is unable to reconcile the amount of natural gas purchased to the amount of natural gas consumed and in inventory”, and further states, “the city has not hired a natural gas consultant to evaluate the City’s system as was recommended in the prior two years.” Why won’t our elected officials do what is necessary to immediately stop the hemorrhaging?

During the meeting we also learned for FY08, which ends September 30, 2008, the City is on track to lose an additional $1,100,000 in utilities. With all the reasons we have heard for increasing the ad valorem taxes, the likely truth is the increased taxes are needed to offset the millions lost by the Utility Fund over the past six years due to this administration’s mismanagement. What is troubling is this tax increase will almost certainly not improve any of our deplorable roads, repair substandard sewer and water distribution lines, nor improve the working conditions for city employees.

Councilman Guy was quoted in the July 2, 2008 Picayune Item as saying, “The City is not on the verge of going broke, or anything like that”. Mayor Mitchell was further quoted, “This city is working hard to be fiscally responsible.” The City Council’s actions to raise the collections of the real-estate portion of the ad valorem taxes by 46% add credence to the fact the city has been dreadfully mismanaged and is closer to going broke than we all care to imagine. Unfortunately, the taxpayer is held financially responsible for their shortcomings!

Wayne Gouguet