Taxing times

Numbers tell a story: Times are tough and getting tougher for people and governments in Northwest Georgia.

Statewide, unemployment is at an all-time high, the budget deficit continues to grow and January revenue collections are lower than a year ago in most area counties.

“This downturn will be deeper and longer than anything we’ve experienced,” Catoosa County Finance Officer Carl Henson Jr. said.

Georgia’s unemployment rate of 9.3 percent in February is 3.9 percentage points higher than one year ago. The Georgia Department of Labor said February marked the 16th consecutive month the state’s jobless rate was higher than the national figure.

Fewer workers, frozen wages and a shrinking job market means people are spending less. That in turn means lower sales tax revenue for local governments.

Mr. Henson noted about a 7.7 percent drop in sales tax collections over the past 10 months.

“The downtown started last June for us,” he said.

Don Townsend, Dade County clerk and finance officer, said revenue is meeting projections now.

“I am happy to see the money but don’t want to build false hope,” Mr. Townsend said. “But for every 4 cents the state loses in sales taxes, we lose 2 cents.”

Everyone’s suffering, LaFayette City Manager Johnnie Arnold said. His city’s sales tax revenue was down 20 percent in 2008 from the prior year, he said.

People who’ve lost jobs have trouble paying bills of every kind, including property taxes. Everyone seems to be watching their money, he said.

“We had done a lot of cost-cutting in anticipation of a down year but it wasn’t enough,” Mr. Arnold said.

This month, city employees’ work weeks were trimmed two hours. This across-the-board 5 percent cut has meant no one has been furloughed or fired, he said.

“We’ve been making some amendments to our budget and we hope this action will get us through the year,” Mr. Arnold said.

City and county officials throughout the region may adjust already approved budgets, postpone purchases and, as a last resort, cut staff to balance their budgets.

“Payroll is 70 percent to 75 percent of our budget,” said Greg McConnell, finance officer for Walker County. “There may be a need to make downward adjustments but nothing has been decided yet.”

Statewide, first-time unemployment claims jumped 111 percent in February 2009, compared to February 2008, and included an increase of 148.7 percent for initial claims in Dalton.

Whitfield County Finance Director Ron Hale said even his county, so hard hit by a collapsing carpet industry, is prepared to weather a financial storm.

“Sales tax collections have not dropped as much as I expected,” Mr. Hale said. “We are at $3.7 million for the first three months of this year compared to $3.8 million a year ago, but for 2009 we budgeted based on the last six months of 2008.”

“The need to adjust the budget is not indicated now,” he said.

Through the first eight months of the 2009 fiscal year, net tax collections fell 7.3 percent over the same period last year, according to the latest Georgia Department of Revenue figures.

State and local officials said employment and sales tax collections are not expected to improve in the near future.

“We will see it turn ugly next month because Christmas will be behind us,” Mr. Henson said.