Hotel/motel tax is simply taxes

collected from people staying at local lodging establishments.

2. "Significant events

from 2001" is code for the property tax rate cut during the Lenox

administration.

3. Health insurance premium

increase means that the cost of providing medical insurance to city employees

is climbing.

4. Peachtree City employees

have a defined-benefit pension plan. In a defined-benefit plan, the employer

(in this case, Peachtree City) guarantees pension payments based upon

an employee's final salary and years of service. To support this plan,

the city sets aside money that's invested in assets (stocks, bonds, money

market funds) whose value is expected to appreciate.

Now that we're acquainted with

the Big Four, let's try to understand what's happening with the city's

finances.

1. The nation's economy has

been anemic this entire millennium. Fayette County arguably has fared

better than many areas in our country. Nevertheless, it's safe to assume

taxable purchases would have been greater had the economic boom continued

unabated. Therefore, tax revenue is lower than it could have been in a

vibrant economy.

Hit number one: Less total

money is available to share among the governments within Fayette County.

At the same time, as PTC approaches build-out, growth of the city's population

slows relative to, say, Fayetteville's.

Hit number two to PTC because,

remember, taxes are shared based on relative populations.

Hit number three is the share

negotiated by PTC and Fayette County officials. The cities' share has

dropped from 52.5 percent to 50 percent.

It's safe to say the first

and second factors are beyond the control of even our wisest officials.

However, the third is absolutely under the control of those officials.

Negotiations have left PTC

(and the other towns within the county) with a smaller share of total

sales tax dollars collected by the county. Over the 10-year budget period

reported, it looks like the share change will drain an estimated $2 to

$3 million from PTC's coffers.

That seems like a lot of money

until one realizes that this loss is used to justify this year's property

tax rate increase that during the same period will yield an estimated

$15 million for the city! Not to mention the property tax rate increases

planned for the following two years.

Add it all up and the city's

planning on collecting $40 to $45 million through property taxes to replace

$2 million lost in sales taxes. If I'm in government and I can't resist

spending other people's money, right now I'm in high cotton.

I note, too, an interesting

approach to budgeting that our city officials take. They forecast sales

tax revenues and then plan spending upon the forecasted revenue. Nothing

wrong with that. But as time passes and actual revenue falls short of

projected revenue, these same officials seem to ignore the amount they

actually collect and project future increases with previous projections

as their baseline.

If I ran my household budget

this way, I'd have the fanciest car in the neighborhood till the repo

man dragged it away in the middle of the night.

2. The prior administration

did provide tax relief in the form of a cut in property tax rates. However,

because of increases in value of taxed properties, total collections of

property tax increased every fiscal year from 1999 to 2003. Enough said.

3. Increasing health insurance

premiums challenge every public and private entity. The city reports an

increase of just over 15 percent this year. Someone in our government

deserves kudos for limiting the increase to only 15 percent in an environment

where insurers commonly demand increases twice that rate.

4. Covering its pension commitments

is becoming more expensive for PTC. Since benefits are guaranteed but

returns on the city's investments are not, depreciating value of investments

such as we've seen the past few years hurts the city's ability to pay

its pension commitments. What was expected to grow has shrunk, so there's

less available to pay expenses that don't decline. So the city must dip

into other funds to make up the difference. In a worst-case scenario,

the city will have to issue debt to pay its pension obligations, which

in November of 2002 were underfunded by nearly $1.7 million. Not listed

as one of the four major contributing factors to current woes, loss of

impact fees receives honorable mention in the budget report.

Falling impact fees, fees that

developers of property pay the city because their activities create increased

demand for public safety and protection, roads, utilities, services, are

described as a "problem." How times change? Not long ago building

was a problem and now not building is a problem. We'll need awfully wise

leaders to sort out that one.

What's all this mean? For much

of its history, Peachtree City has lived on growth. The town nears the

end of its growth and the steadily increasing tax revenues resulting from

that growth.

Therefore, leaders of the city

have to start making tough spending decisions or continue to increase

tax rates. It's that simple.

Of course, the voters select

the leaders. With the financial sea change before us today, it's important

we select the best leaders available. The best leaders are identifiable

willingness to accept responsibility. They are going to understand that

Peachtree City's gravy train has departed and isn't returning. They will

make spending decisions that are not popular with everyone in the community.

In short, they will lead.

With the upcoming elections,

it's important for each of us to talk to the candidates, consider their

positions, and decide who best can help steer the city through uncharted

waters. Since all candidates for two contested council seats have filed,

now is a good time to start.

Rex Green

DIRECT PAC

Peachtree City