It isn’t that I want to rain unjustly on Suwanee’s Town Center Park or any of its other accomplishments, especially when more rain is the last thing that we need. But whenever I hear the politicians prattling on about how wonderful they are, I feel compelled to tell the other side of the story.

My purpose here isn’t to make them look bad, but to teach you something so that you can elect better representatives in the future.

Suwanee leaders are touting the confirmation of the city’s AA-minus bond rating by Fitch Ratings. In part, the Fitch report reads:

“The city continues to generate positive net income within the general fund, improving upon an already strong balance sheet since the last Fitch rating. The unreserved fund balance at the close of fiscal 2008 totaled $7.5 million or a very strong 73% of total spending, up from $4.8 million or 59% in fiscal 2006.”

In other words, Suwanee has a lot of money in the bank and is consistently adding more.

For a business, this would be a good thing. But for any level of government, a bloated bank account could indicate that city fathers are taking more from the taxpayers than is required to pay for public services, or failing to return to the taxpayer the benefit of a thriving economy in the form of lower taxes. At the very least, it could be proof that they really stink at budgeting.

In Suwanee, it’s overtaxation. Years of it.

In 2005, I analyzed the tax rates of all Gwinnett levying authorities. In that year, Suwanee adopted a general fund millage of 3.820 even though, based on the finance staff’s own numbers, the CORRECT millage was 2.216. Although Suwanee only needed $1,534,160 in property tax dollars to fund its 2005-2006 budget, the rate that the City Council adopted (a 1.604 difference, 72% higher than necessary) overtaxed the property owners of Suwanee by at least $1,110,310.

(The “correct” rate, I am sure you will agree, is one that takes no more and no less from taxpayers than is required to fund a conservative budget after all non-tax revenue has been maximized.)

The owner of a $150,000 home in Suwanee paid $229.20 in city property taxes to fund the M&O portion of the budget, $82.77 more than his/her fair share that year. (Details and caveats here.)

Although I have not analyzed tax rates in more recent years, there is every indication that the overtaxation has continued. The City Council has increased the tax rate for maintenance and operations almost every year since 2005, yet maintained more money than it could ever need in a “rainy day fund.” And the bank account continues to grow. Even worse, it appears that city leaders have artfully hidden the overtaxation and the tax increases from unknowing taxpayers.

“Wait!” you say. “Suwanee’s millage rate has remained the same for years!”

That is what the politicians want you to believe. They are happy for you to remain blissfully ignorant of the truth… heck, most of them do not understand how it works, either.

What follows are Suwanee’s millage rates from 2005 to 2008:

2005: 3.820 + 1.950 = 5.77
2006: 3.900 + 1.870 = 5.77
2007: 3.730 + 2.040 = 5.77
2008: 4.090 + 1.680 = 5.77

The first number (in 2005, for example, 3.820) is the millage rate that the city charged for Maintenance and Operations (M&O)… the daily cost of city government. The second number (in 2005, 1.950) is the millage rate charged to retire debt. The final number is the total tax rate assessed by the city in that particular year.

The debt millage is extremely predictable. The government calculates how much it will pay on debt for the year, then sets a millage rate to cover it. The M&O millage, on the other hand, is entirely dependent on the politicians’ ability– or willingness– to hold the line on the cost of government and reduce your tax burden by increasing non-tax revenue sources.

As you can see, the tax rate for debt decreased each year– as it should as debt is paid– except for 2007 when, apparently but unconfirmed, the city incurred more debt.

In every year except 2007, the city increased the tax rate for M&O, meaning that the cost of government– at least the portion to be funded by property tax dollars– allegedly increased each year.

I say “allegedly” because, in Suwanee, there is no mathematical connection between the tax rate and the cost of government. In other words, the City Council failed adopt a rate calculated according to the procedure recommended and taught by the state Department of Revenue for decades. [How to...]

In 2005 (and probably other years as well), Suwanee’s finance professionals “did the math,” but the politicians ignored them. In that year and every year since, the Council has adopted an arbitrary, politically palatable rate… the highest rate that they could without angering you, the taxpayer… a rate that had absolutely no connection to the actual cost of government. [The problem detailed.]

As you, the Suwanee property owner, paid down the public debt, your tax rate should have decreased accordingly; at least, as long as the City Council held the line on the cost of government. Instead, city leaders maintained the same arbitrary total rate and, in essence, rolled your overpayment into M&O. They have essentially used the decrease in the city’s debt responsibilities to fund increases in the cost of government.

But you don’t know this. Your City Council has told you that it has not “raised taxes” in seven years including 2009 and, “on paper,” that is true. In reality, the Suwanee City Council has consistently overtaxed its property owners while quietly growing the size of government.

A loophole in state tax law has allowed the Suwanee City Council to hide potential fiscal irresponsibility with a tax rate that has not changed in seven years. While what the City Council has done for at least the past five years is not illegal, it is despicable, nonetheless.

(Lest you conclude that I am picking on Suwanee, every Gwinnett taxing authority perenially adopts an incorrect tax rate. Some, like Suwanee, Sugar Hill and Duluth, overtax. Others like Gwinnett County under-tax, which brings its own set of problems.)

Suwanee city leaders will argue, “Regardless of what we spent tax money on, it is a fact that the tax rate has not increased in seven years! If not lower taxes, we have provided our taxpayers with stability.”

If you accept that argument, you would likely accept the argument that the politicians should set the price of gasoline at an even $3.50 a gallon for the next seven years because the price might fluctuate! After all, didn’t we see $4/gallon gas this year? Never mind that it is closer to two bucks a gallon now… what we want is STABILITY, right?

Moreover, Suwanee property owners should realize that their tax rate has not decreased when it should have. In 2004, Suwanee charged an M&O tax rate of 3.820. In 2005, the Net Tax Digest (the value of all taxable property in Suwanee) grew by a whopping 12%. Had Suwanee passed along the benefit of the booming local economy to you by assessing a mathematically correct millage, your property tax rate would have dropped from 3.820 to 2.216.

Instead, the Suwanee City Council overtaxed you and put your money in the bank.

[Disclaimer: Links to this or any other TalkGwinnett article do not constitute nor imply endorsement of any candidate.]

More on This Topic:

• Pay Lower Property Taxes
• Gwinnett`s Financial Woes Many Years in the Making
• The Tax Increase: Sufficient For the Day Is the Evil Thereof
• More Budget Shenanigans in Gwinnett
• My Two Cents