Thursday, November 18, 2010

Impertinent Observations

On the agenda for next month’s Commission voting session is a measure creating an Athens Cultural Affairs Commission.  A couple of provisions that will have the net effect of driving up costs for the taxpayer are of particular interest to me:

Sec. 1-25-5. Funding for Public Art Program
Upon adoption of the annual General Capital Budget, the Mayor and Commission of the Unified Government shall appropriate one percent of the value of all approved projects in the Capital Budget excluding land purchases, leases, finance cost, and projects categorized as “Equipment”, to the Public Art Project Account. This account shall be a multi-year account used for the design, fabrication, installation, maintenance and implementation of community public art projects recommended by the ACAC and approved by the Mayor and Commission. In addition to the above noted capital funding for public art, the ACAC may submit to the Unified Government an annual operating budget request to further support its ongoing efforts to promote a public art program and other cultural community initiatives.

Sec. 1-25-6. Additional Funding for Public Art.
The Mayor and Commission shall identify projects within all Special Purpose Local Option Sales Tax programs, beginning with the SPLOST 2011 program, that are appropriate for the inclusion of public art elements as integral parts of the project construction and appropriate not less than one percent of the project’s actual construction contract for the purpose of funding public art elements for those specific projects. The public art appropriation shall be maintained as a separate item in the project budget. The ACAC shall assist the Unified Government in the selection, development and implementation of these art projects as noted in Sec. 1-25-4.

Congratulations to the Western Circuit’s Steve Jones on his appointment to a Northern Circuit of Georgia federal judgeship.  Though we have met a few times, I really do not know him in any meaningful sense – but his reputation is an enviable one.  I wish him well.

I still think that the overriding consideration in anything John Barrow does is staying in office – period – no matter to whom he has to sell his soul.

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Wednesday, November 17, 2010

Judicial and Legislative Aspects of the Nuçi’s Space Case (and why it is important)

The recent Georgia Supreme Court decision confirming the tax exempt status of the Nuçi’s Space property is but the latest chapter in a story that stretches back almost four decades.  Interestingly, most of the judicial and legislative action over that period originated right here in Athens-Clarke County, a point to which I will return later.

Back in the early 1970s, tax officials up in Rabun County sought to tax the property of a private school that generated revenue through its ancillary dairy operations.  Generally speaking, property owned by educational institutions is exempt from property taxes, but in its November, 1971 decision, Rabun Gap-Nacoochee School v. Thomas et al; and vice versa, the Georgia Supreme Court ruled that if the property was used to generate revenue, even if such revenue was used entirely for charitable purposes, the property was subject to taxation.  Note, though, that collection of the tax by the county government was optional, not mandatory.

Fast forward to 2003, the year in which tax officials here in the Classic City discovered the Supreme Court’s decision from decades earlier.  Upon reapplying for its previously held tax exemption after moving the location of its thrift store, Habitat for Humanity subsequently received a property tax bill on the new location.  Property tax bills for the Salvation Army on its thrift store and Athens Christian School on a couple of houses that it rented to faculty members quickly followed (in the event, property tax was eventually collected on church parking lots, concession stands at Sanford Stadium and Stegemen Coliseum, and the UGA Bookstore according to their income producing activities).  Needless to say, the property tax bills concerning the two thrift stores prompted appeals to the Board of Assessors and then the Board of Equalization.  Both bodies denied the appeals, being perfectly justified in so doing under existing case law.

During the following year, 2004, the matter shifted from the judicial arena to the legislative one. Louise McBee, a longtime member of the Georgia House of Representatives from Athens, got the ball rolling by asking the House’s legislative counsel to draft legislation that would exempt the kind of property in question from property taxes.  McBee retired from office before such a bill could be introduced into the House.

Upon succeeding McBee in the 2005-2006 legislative session, Jane Kidd introduced HB 370.  This measure, which had five cosponsors (including local GOP pariah Bob Smith but notably absent local Democrat Keith Heard), “relating to property exempt from ad valorem taxation, so as to provide for an exemption for certain charitable institutions” and further “to provide for a referendum” on the matter.  Kidd’s bill began the legislative and committee processes in the House in February, 2005 but never emerged from the Ways and Means Committee.

Undaunted, Kidd revisited the matter in the form of HB1388 in February, 2006.  This time, the bill had two cosponsors (again including Bob Smith but not Keith Heard).  The bill emerged from the legislative process on this second attempt and resulted in Referendum C, a constitutional amendment item on the general election ballot of November, 2006.  The statewide measure passed by an electoral margin of 68.5% to 31.5%.

It is only at this point that Nuçi’s Space enters the discussion, as under the 2006 amendment to the Constitution of the State of Georgia its location would have been exempt form property taxes.  The Nuçi Phillips Memorial Foundation, Inc., owner of the property, applied for the exemption at its first opportunity in 2007.  However, the Athens-Clarke County Board of Tax Assessors claimed that, since the Foundation sold alcoholic beverages for consumption on the premises, rented out space for private functions, rented out rehearsal space, and sold musical supplies it forfeited any claim to an exemption from property taxes.

Needless to say, the Foundation claimed that the location was, in fact, exempt from property taxes and appealed the matter to the Athens-Clarke County Board of Tax Equalization, a citizen panel appointed to resolve such disputes.  In the event, the Board of Tax Equalization ruled in favor of the Foundation.

The Board of Tax Assessors in turn appealed this ruling to the Superior Court of Athens-Clarke County.  Both parties stipulated a non-jury trial and Chief Judge Lawton Stephens heard the case in October, 2008.  In December of that year, Stephens issued his ruling in the case Athens-Clarke County Board of Tax Assessors v. Nuçi Philips Memorial Foundation, Inc. in favor of the latter, noting that:

By a preponderance of the evidence presented at the trial the Court finds that the Foundation has met the test for exemption as articulated by the Supreme Court of Georgia . . . The Foundation has proven by a preponderance of evidence that it is an institution devoted entirely to charitable pursuits, that the charitable pursuits of the Foundation are for the benefit of the public, and that the use of the property is exclusively devoted to those charitable pursuits.


All funds collected by the Foundation directly support the programs, services, and mission of the Foundation.


The Court finds that Nuçi Phillips Memorial Foundation, Inc. continues to operate as a purely public charity and has not deviated from the original purpose and vision of its founder Linda Phillips to honor the memory of her late son.

Not content with that outcome, the Board of Tax Assessors pursued matter up the judicial ladder.  In November, 2009 a three-judge panel of the Court of Appeals of Georgia reversed the Superior Court’s decision in Athens-Clarke County Board of Tax Assessors vs. Nuçi Phillips Memorial Foundation, Inc., noting that:

In support of its argument, the board points to undisputed record evidence demonstrating that the foundation rented space to individuals hosting birthday parties and wedding receptions.  The foundation also rented rehearsal space.  Based upon this undisputed evidence, the foundation cannot demonstrate that its property was “exclusively devoted to conduct that benefits the public by furthering the charitable pursuits of its owner.” (Emphasis supplied.) . . . An organization does not dispense purely public charity when a person obtains its services by paying a fee.

The Court based its opinion on the contention that even if the revenue generated by Nuçi’s Space went toward fulfilling its charitable purpose, the mere act of generating such revenue disqualified it from a property tax exemption, citing the requirements of O.C.G.A. 48-5-41(d)(2).

Unsurprisingly, the Foundation differed with the logic used in the appellate ruling and took the matter to the Georgia Supreme Court.  Earlier this month, the high court overturned the appellate court, saying in the case of Nuçi Phillips Memorial Foundation v. Athens-Clarke County Board of Tax Assessors that:

The Foundation is not disqualified from the tax exemption under the restrictions in OCGA § 48-5-41(c) and (d) (1). The institution issues no stock, makes no profit, does not distribute any dividends or any income to members, accumulates no retained earnings, and has a Board of Directors whose members serve without compensation. Although the organization periodically rents out part of its building to third parties, the primary purpose of the building is not to raise income but to provide services for those seeking mental health assistance. Any income raised is incidental to the primary use of the property, and the purpose of raising the income is to help fund the organization’s charitable services, including the payment for direct professional therapy for those who cannot afford it.

So there you have it.  Where we may go from here has yet to be determined.  The Board of Tax Assessors, and by that I mean the Unified Government of Athens-Clarke County because the mayor and commission can bring this process to a halt at any time of their choosing, continue to debate the wisdom of further beating this dead horse.

So, other than as an academic exercise into the history and specifics of the Nuçi’s Space case, why does this matter?  It matters because this expensive and drawn out process demonstrates the lengths to which government – and in fairness, I do not mean just the folks down at City Hall – will go to generate revenue.  Since Athens-Clarke County officials discovered the case from Rabun County, this entire matter, be it in the state legislature or in the courts, has hinged on nothing but the fact that the Unified Government has consistently sought more revenue, going a mere one for four in the appeals and judicial proceedings assiocited with its quest.

I have maintained for years, in print, in person, and in the blogosphere that government, be it local, state, or national, suffers not from a revenue problem; it instead suffers from a spending problem.

The Unified Government of Athens-Clarke County will be desperate for revenue going forward, revenue to offset its spending problem.  The Feds have already shot their stimulus bolt, failing miserably (and predictably), so don’t look to Washington for more financial largess.  Similarly, the folks under the Gold Dome are not in a position to bail local governments out anymore, as evidenced by the discontinuance of Homeowner Tax Relief Grant back in 2009.

Instead, it will be up to the folks down at City Hall to fund their own spending.  They will do so through increased property tax assessments (remember the claim that every piece of property in the county is reevaluated every year), millage rate increases, never-ending LOST, never-ending SPLOST, increased water fees, increased sewer fees, increased trash pickup fees, increased landfill fees, imposition of the stormwater utility fee, a proposed increase in the hotel/motel tax, a proposed plastic shopping bag tax, a proposed trash hauler fee, a proposed septic tank inspection fee, a hoped-for tax on Internet sales, a hoped-for expansion of the existing sales tax to more items, etcetera, etcetera.  That – and that alone – is what the Nuçi’s Space brouhaha is all about.

For those interested, coverage of these matters over the years in the Banner-Herald, can be found here, here, here, here, here, here, here, here, and here.

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Monday, November 15, 2010

SPLOST 2011 Claim Busted

Some of my many concerns about the recent SPLOST 2011 ballot resolution revolved around the claim that half of the levy’s revenue would be paid by visitors to our fair community.  Conspicuously absent from this claim, as I and others pointed out, was any documentation or citation as to the origin of the claim, in what manner it was determined, or the definition of “visitors.”
Interestingly, rather than actually provide any documentation for the claim, supporters of SPLOST 2011 usually retorted, insofar as any attribution was made at all, that the source of the claim was John Culpepper, Director of the Unified Government’s Finance Department.  I write “interestingly” because none of the material supporting passage of the ballot resolution (direct mailings, web site, news articles, etc.) made any such reference.  Critics of the claim only had the word of its supporters that this was the case.  In fact, those supporters went so far as to declare validation of the claim due to the fact that critics could not disprove it. This, of course, constituted logical nonsense (and, in my opinion, tacit acknowledgment that the claim was fundamentally unverifiable – whether supporters realized it or not); how can a claim be disproved if no documentation or source is given for it and why should the responsibility of validating such a claim fall to its critics rather than to its supporters?  Of course, it cannot and it should not.

A few days before the election, I threw down the newsprint equivalent of a gauntlet to supporters of the SPLOST 2011 ballot resolution, in which I stated bluntly:

Whether it is in news articles, letters to the editor, on the SPLOST 2011 website or in the printed campaign material delivered to my door, absolutely no corroboration or documentation is given to substantiate the claim that half of the tax will be paid by those who do not live here - none whatsoever. The claim is simply presented as axiomatic and beyond question. I have serious doubts.

By way of response, no one from the SPLOST 2011 citizens committee, no one from the ACC SPLOST 2011 ballot committee, and no one from the Unified Government’s Finance Department offered any rebuttal whatsoever (not that I expected any from the latter, for the simple fact that I had no belief that it was involved in the calim).  The only “proof” offered was vague, secondhand (or third-hand or fourth-hand) references to Mr. Culpepper on the comment boards of the Banner-Herald.

So, even though it was not incumbent on me as a critic of the claim to validate anything, on 05 November I went above and beyond my due diligence and posted the letter below to Mr. Culpepper:

Mr. Culpepper

Though I realize this exercise may seem a bit tedious I ask your forbearance, as I think that my request serves a legitimate public policy interest.

The ACC SLOST 2011 ballot committee, in radio advertisements, in direct mail literature, and on its web site, made the claim that “visitors will pay for half of SPLOST 2011.”  This claim was similarly repeated by supporters of the resolution in various news articles, letters to the editor, online comment boards, and blog posts.

My concern stems from the fact that no documentation as to the source or accuracy of this claim was cited.  I did hear from a member of the SPLOST 2011 citizens committee on WGAU 1340’s Newsmakers that the claim that half of the levy’s revenue will be paid by those who do not live here came from “estimates we got from city-county government” – a verbatim quote – with the estimate given that 45-50% of the levy would be paid by “visitors.”

It stands to reason that the Unified Government’s Finance Department is the source of these estimates.  That being the case, I would appreciate your responses to the following questions.

  • What statistics (population figures, sales tax revenue, etc.) were used to generate the estimates?

  • What is the source(s) of these statistics?

  • What method(s) of calculation were used?

  • What assumptions were used in these calculations?

  • How is the term “visitors” defined?

In other words, I am asking that you walk me through the process of how the 45-50% estimate was determined, with as much specificity as is reasonably possible.

Please understand that I am attaching no opprobrium to anyone and am not calling the integrity of either you or your Department into question.  I am merely seeking this information for my own edification and for whatever contribution I may make to the discussion of local public policy.

Besides which, the issue will continue to be of interest, as the same question will undoubtedly arise next year when the Clarke County School District begins the process of renewing its own SPLOST program.

Your assistance in this matter is greatly appreciated.


James Garland

Mr. Culpepper’s response, the promptness, succinctness, and honesty of which earn him high marks, arrived in my mailbox on 13 November.  The body of the letter read, in its entirety:

Dear Mr. Garland

The Finance department did not generate this information.  The Chair of the SPLOST 2011 Committee should be contacted about referendum campaign issues.


John Culpepper
Finance Director

So there you have it . . . in writing . . . on Finance Department letterhead . . . over the signature of Mr. Culpepper himself.  The claims that he or the Finance Department provided the basis of the claim, ubiquitous in the materials and advertisements in support of the SPLOST 2011 ballot resolution, that half of the levy’s revenue would be provided by “visitors” – however that term may be defined – is totally and completely specious.  Just as many of we critics believed it to be from the outset.

Thus, it is time for the proponents of SPLOST 2011 – and their myriad anonymous and pseudonymous sycophants – to come clean and admit that the claim has no justification.  And please note that my intent is not merely to re-fight the last war, as the Clarke County School District has already begun its push to extend the collection of its own version of SPLOST, and it will undoubtedly employ this same unfounded argument.

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SCHS Pigskin Finale

The season for my alma mater Indians came to a close last Friday with a 63-20 loss to the Carrollton Trojans in the first round of the AAA state playoffs at The Reservation in Toccoa.  With the defeat, SCHS finished the season at 8-3, a decided improvement over last year’s uncharacteristically poor 3-7 mark.

Up next for Carrollton (11-0) is the St. Pius X Golden Lions (9-2), the third seed from 5AAA.

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Monday, November 8, 2010

SCHS Pigskin Update

My alma mater Indians ran their record to 8-2 with a 56-0 thumping of the Johnson Knights last Friday evening at The Reservation.

Thus, SCHS emerges as the fourth seed from 8AAA.  Next up for the Indians in the first round of the state playoffs are the Carrollton Trojans.  With a perfect record of 10-0, Carrollton comes into the contest as the first seed from 6AAA, having outscored their opponents by a margin of 485 points to a mere 55 points.  The Trojans are ranked #4 in the AJC poll.

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Thursday, November 4, 2010

SPLOST 2011 Final Thoughts

I fully expected the SPLOST 2011 ballot resolution to pass, though I had hoped by a smaller margin than such measures typically have in the past.  In the event, voters approved the resolution by about a 3 to 2 margin.  Those who know this to be a bad idea did their valiant best to derail the damned thing, so that a leaner and better project list could be put forward next year – but this is the bluest of blue counties and is full of folks who worship at the alter of government (especially those who do so with hands extended).  So, we will be legally bound to this monstrosity for the next decade – and it will not be pretty (see ‘tennis center, “parking deck,” etc.).

When the Unified Government of Athens-Clarke County raises taxes next year (and remember that any millage rate over and above the “rollback” rate is by definition a tax increase, even if the millage rate remains static – not that I expect City Hall’s portion of the millage rate to remain so), think back to all of those promises about SPLOST keeping property taxes low.  City Hall’s budget for FY 2012 will be tight in the extreme.  But unlike the current fiscal year, however, the Obama Administration cannot ride in and sprinkle “stimulus” dollars around, either directly or through the apparatus of state government; that bolt has been shot already, failing miserably.  Nor will the State of Georgia ride to the rescue, as its budget must be balanced just as is that of cities and counties, evidenced by the state’s recent canceling of that property tax grant thing.  The local fiscal outlook will be grim, indeed.  I fully expect property taxes are going up next year – just like this year . . . and last year . . . and the year before that.

I finally did hear from a member of the SPLOST 2011 citizens committee (on Tim Bryant’s Newsmakers) that the claim that half of the levy’s revenue will be paid by those who do not live here came from “estimates we got from city-county government,” the actual estimate being that 45-50% of the levy would be paid by “visitors.”  Even so, just how that “estimate” was determined remained conspicuously unstated and “visitors” includes UGA students who may well be fulltime residents, own property, and be registered to vote here.  In other words, the claim remains fundamentally unsubstantiated.

Funny how all of those “quality of life” projects, meaning stuff we may want as opposed to stuff we actually need, suddenly morphed into economic development projects (you know, just like the ill-fated “tennis center”  from SPLOST 2005 did).  If you really want to bring jobs and economic development to Athens, developing a trained and competent workforce, shedding the very real anti-business attitude that permeates local government, and maintaining predictable zoning ordinances, rather than throwing dollars at “green space” and nebulous concepts such as “public art” would seem a far better strategy to me.

Spending tax revenue to take more property off of the tax digest is a concept that I have fought against for years (according to the pro-SPLOST folks, 47% of the county’s land area is already exempt from property taxes).  In so doing, the Unified Government is voluntarily shrinking the amount of land liable for property taxes, while simultaneously increasing the general fund obligation to cover operating and maintenance expenses for its new holdings.  This strikes me as fiscal insanity.

The project list approved by the Mayor and Commission calls for additional operating and maintenance expenses of over $3 million per year, which, of course, cannot be paid out of SPLOST funds.  Seeing as how property taxes remain the single largest revenue source for county governments, it should not be unanticipated that the majority of those new operating and maintenance expenses will come rely on increases in the general fund budget (meaning, in all probability, property tax hikes).  Yes, yes, I know that we are supposed to make revenue off of the new jail but, quite frankly, given the way government promises have worked out in the past, I may be forgiven my doubts.  Besides which, critics may also be forgiven if they note that estimating the operating and maintenance expenses of projects, the details of which will not be determined for years, is a dubious proposition at best.

Remember these arguments, as you will hear variations of them next year when the Clarke County School District, incessantly claiming paucity as it does, presents hat in hand to the taxpayer yet again to extend its version of SPLOST (or ELOST if you prefer)

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Wednesday, November 3, 2010

Fear The Boom And Bust

As a follow up my rant below about the conduct of the folks up in D.C., see this video sent to me months ago by John Marsh.  You can view a full screen version here.  Hayek rules.

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Impertinet Observations (local, state, & federal)


At tonight’s regular voting session, our betters down at City Hall will extend one moratorium and enact another.  The first continues the original six month suspension of pretty much everything on Carr's Hill until February 2011. The second ceases the acceptance of applications for new solid waste haulers for a full year.  These moratoria demonstrate the complete unpredictability of the county’s zoning ordinances (being subject to outright suspension at the drop of a hat – talk about making economic development much more difficult that it should be) and the impending government takeover of trash hauling in the general services district (not that the Unified Government will provide said service, mind you), respectively.


Also on the agenda is City Hall’s annual wish list for the upcoming session of the General Assembly.  Those items of particular interest to me are:

D. Support comprehensive tax reform.

Translation: The state, and by extension counties, should raise taxes by, among other things, “expand[ing] the sales tax base by adding selected services to the current list of taxable services in Georgia,” and “expand[ing] the sales tax base including internet sales.”  There are other suggestions, such as “closing corporate tax loopholes,” “modernizing income tax brackets,” and “reviewing tax exemptions,” that all sound well and good on the surface but, as always, the devil would be in the details as to how those ideas may translate into policy.

H. Support increase in hotel/motel tax to 8%.

Translation: Let us raise taxes for ourselves.

J. Support abolishment of unanimity rule in support of local requests for legislative issues – none of us operates on such a stringent rule and our requests should not be held to such a high standard.

Translation:  The current rules do not let us impose our progressive madates on the little people with complete impunity; therefore the rules must be changed.


Now that the dust has (more or less) settled from the elections, one thing remains constant: Fire Station No. 6 is still closed.  For what it is worth, that chain-link fence surrounding the station for the last twenty months has come down.  Even though major construction appears to be complete, no reopening date has been announced.


The Federal Reserve is poised to purchase Treasury notes – and in a big way – so as to ostensibly promote inflation, thereby reducing unemployment (yeah, like that is going to work).  This is nothing but an insider shell game.  When inflation takes off, and given the dubious fiscal and monetary actions out betters in Washington (Donkeys and Elephants both, but more so the former) have taken over the past several years it certainly will, the genie will be out of the bottle and we will all have to pay (and pay and pay).


The growth in the size and expense of the federal government typically lessens during those periods when one party controls the White House and the other controls one or both of the House and Senate.  Works for me.  Besides, had the Republicans taken both chambers, the Obama Administration would have blamed the GOP (you know, that "punish our enemies" mentality) for its own manifest failures (not that it won’t do so in any event), just as it has heralded supposed Republican obstructionism during its first two years (which is obviously disingenuous because the Republicans didn’t have the votes to stop anything and the Democrats got precisely the legislation they wanted).  Facts being such pesky things and all.

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Monday, November 1, 2010

SCHS Pigskin Update

My alma mater Indians scored a 43-37 shootout victory over North Hall last Friday night at The Reservation in Toccoa.  With the win, SCHS (7-2, 4-1) emerged as the second seed in Region 8AAA (Division A), trailing only White County's 5-0 mark.  Needless to say, this is quite a turnaround from last season’s 3-7 campaign.

This coming Friday, the Indians will host the Johnson Knights (2-7, 2-3), the third seed from 8AAA (Division B) in the “play-in” game for both schools.  The Knights are coming off of a 41-0 blowout loss to Monroe Area.

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