Forsyth County – Fiscal Impact of Sharon Springs

At the request of Forsyth County Board of Commissioners the Center for Economic Development Research (CEDR) at Georgia Tech examined the fiscal impact that the proposed City of Sharon Springs would have on Forsyth County.   In 2015, House Bill 660 was introduced to provide for the incorporation of a significant portion of south Forsyth County into the City of Sharon Springs.  By population, the proposed City of Sharon Springs would be the 17th largest city in Georgia — falling just behind Valdosta, Smyrna, and Brookhaven — and would be nearly 10 times larger than Cumming, the only other city in Forsyth County and the county seat.

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A report examining the fiscal feasibility of this new city was published in February 2015.  While this report met the requirements of the rules set forth by the House of Representatives Governmental Affairs Committee of the Georgia General Assembly, there were many important questions that the Georgia General Assembly did not ask regarding the fiscal impact that the municipal incorporation of Sharon Springs would have on the county.  For example, will the county lose revenues that currently fund services that will still need to be provided county-wide?  If so, how much of a millage rate increase to ALL county residents will be needed to make up the difference?  To what extent will the county be able to reduce service costs due to the creation of the city? How will capital expenditures be impacted if the new city does not collect the county impact fee?  These are just a few of the questions that needed to be answered in order to get a complete picture of the true fiscal impact of creating Sharon Springs.

It turns out that the creation of the City of Sharon Springs would lower county operating revenue by approximately $6.2 million.  The primary revenue losses would have been in alcohol licenses and excise taxes, business licenses and occupation tax, cable franchise fees, planning and zoning permits and fees, and insurance premium taxes.  On the other side of the equation, the county would save nearly $770,000 in operating expenses in both code enforcement and the planning and development departments.  These savings are primarily due to the reduction of 13-15 positions with the associated salaries, benefits, and other related expenses.  Because the revenue loss is significantly more than the cost savings, the county would have been left with a revenue gap of approximately $5.4 million.  Given the size of the Forsyth County net tax digest, it would require an additional 0.623 mills to recover that amount of revenue.  That is equivalent to a property tax increase of 12.9 percent for ALL Forsyth County property owners.