Metro Atlanta's new cities show mixed record on millage increases

May 14—A key promise from advocates of all four of Cobb County's proposed cities has been that the creation of a new government "closer to the people" won't come with any new taxes.

Studies commissioned from Georgia universities in recent years for East Cobb, Lost Mountain, Mableton, and Vinings have reached the same findings — that all four new cities would be financially feasible without levying a tax increase.

Cityhood advocates likewise point to success stories around metro Atlanta, especially some of the earliest new cities in north Fulton County, as case studies in keeping taxes steady.

The first three metro Atlanta cities created during the 21st century incorporation drive were Sandy Springs, Milton, and Johns Creek. Both Sandy Springs and Milton have held their millage rates steady at 4.731 mills since incorporation, while Johns Creek's dropped from 4.614 to 3.986.

(Millage rates are the property tax rates imposed by local governments, with one "mill" representing $1 of taxes on every $1,000 of taxable property.)

Dunwoody in DeKalb County has likewise maintained a steady millage rate since incorporation, while Brookhaven's has dropped.

Yet budgets for those cities have only grown over the last decade. In large part, that's been made possible by steadily rising property values which grow the city's revenues without requiring a millage hike. Those revenue increases have consistently outpaced the budgetary growth of those cities, the MDJ found.

In other words, taxes collected from property owners can increase while the millage rate stays the same.

There's a catch, however. Under Georgia law, rising property value assessments that are not offset by a millage "rollback" to offset the costs are considered tax increases. A Georgia State University study from 2016, in fact, found property values — and thus taxes — are more likely to increase in areas that decide to form a new city.

Sampling seven cities around metro Atlanta, the study found a 4% to 5% increase in taxes relative to unincorporated areas in the first two years of formation, with a 12% to 13% rise over the course of about 15 years. At least part of the reason is that cities, once formed, create greater cachet and desirability among buyers, subsequently driving up property values.

"People have voluntarily chosen to incur additional costs to receive the real and perceived benefits of having a municipal — rather than county — government provide services," Carlianne Patrick, a co-author of the study, said upon its release in 2016.

That trend isn't unique to the new cities, as local governments are often reluctant to institute a rollback and cut their own revenues. The last time Cobb County rolled back its millage rate was in 2016, when then-Chairman Tim Lee was facing a primary challenge from Mike Boyce (the tax rate was promptly hiked back up by Boyce two years later).

East Cobb is the only one of the four proposals on the table proposing to create its own millage rate of 2.86 mills. But the tax would not be a new one, per se. Instead, by creating its own police and fire departments, East Cobb would be able to collect the same 2.86 mills Cobb County currently collects for its own fire department.

Mableton, Vinings, and Lost Mountain, meanwhile, would fund their cities through franchise fees, permit charges, occupation taxes, and other sources of revenue.

The three "new" cities that Georgia State University found most comparable to East Cobb — Brookhaven, Dunwoody, and Johns Creek — are all among those that have managed to avoid any millage rate hikes.

Not all new cities have stayed that course. Tucker, for example, incorporated in 2016 without a property tax millage rate. In 2019, the city elected to take over parks services from DeKalb County, requiring it to levy its first millage rate of 0.9 mills. City officials said at the time the takeover would be a cost savings for residents against the 1.458 mills DeKalb County was collecting for parks.

Stonecrest likewise began without a property tax levy, but today charges its residents 1.336 mills. South Fulton has increased its rate from 11.579 to 12.899 since incorporation, and Chattahoochee Hills in south Fulton County nearly doubled from 5.659 to 9.46.

One city, meanwhile, operates without collecting a cent of property taxes — Peachtree Corners. Cityhood advocates in Cobb have pointed to the Gwinnett suburb as another success story, especially given that it follows a similar "city lite" model of limited services.

In the case of Lost Mountain, the University of Georgia found Peachtree Corners to be the nearest available model, "because it is the only city of substantial size that provides a limited set of services like the proposed new city."

Opponents counter that the city is a cautionary tale. Not only does its disproportionately high number of commercial parcels buoy revenues from business fees and licenses, but its feasibility study estimated a municipal budget of $760,000. Today, it's more than $22 million.

As all sides will readily admit, the ultimate question of cityhood, especially in tax-shy Cobb — "Will my taxes go up?" — isn't one that can be answered by any feasibility study, no matter how exhaustive. That decision rests solely with the future elected officials of a potential city and the voters who choose them.

As a 15-year-old study first examining the viability of Johns Creek and Milton put it, "Because circumstances change and because no one can predict how decision makers in the future will manage the finances of a new government, it is impossible to forecast with complete accuracy the fiscal health of a city yet to be formed."