Irresponsible Georgia Law I

Under Georgia Law, Municipalities are not really limited much by the Debt Limitations imposed by the State. Cities can borrow up to 10% of the assessed value of all taxable property located within a municipality. 

The assessed value of all property located within the City of Dunwoody is $1.92 billion.  That means, the borrowing limit for Dunwoody is $192 million.  Dunwoody has annual revenue of about $25 million and an Asset Value reported in the 2012 CAFR of $90.3 million.  A more responsible State Law would limit city borrowing to 100% of City Assets. 

What hubris allows the State Legislature to presume that our private property can be viewed as collateral for goofy City Councils being bribed by the federal government to spend and borrow all they can.

The Handbook for Georgia Mayors and Councilmembers; Part 5 Financing & Revenues for Municipal Indebtedness states:

Debt Limitations

Generally, the Georgia Constitution limits indebtedness to 10 percent of the assessed value of all taxable property located within a municipality.

This provision also states that no new debt may be incurred without the assent of a majority of the qualified voters voting on the question of whether the city should incur the debt.

Exceptions to the 10 percent limitation and the required election include:

• funds granted by and loans obtained from the federal government or any agency pursuant to conditions imposed by federal law,

• funds borrowed from any person, corporation, association, or the state to pay in whole or in part the cost of property valuation and equalization programs for ad valorem tax purposes;

• temporary loans; and

• funds to pay for damages caused by the city's breach of a contract.

Counties and school districts have their own 10 percent limitation. A city may enter into a contract with an authority and levy taxes to meet its contractual obligations to the public authority as long as the contract between the city and the public authority is authorized by the intergovernmental contacts clause of the state constitution.

Contracts that are authorized by the intergovernmental contracts clause and require a municipality to pay an amount sufficient to pay the debt services on an authority's debt do not create new municipal debt.

Source: Handbook for Georgia Mayors and Councilmembers.pdf

Norb Leahy, Dunwoody GA Tea Party Leader