Net cost of Buckhead deannexation includes services no longer provided: Report
By David Pendered
The sky’s the limit in some discussions of the cost to Atlanta and its public school system if Buckhead deannexes. Figures that have not changed are cited in a report commissioned by the Buckhead Coalition.
The “Buckhead De-annexation Fiscal Analysis” provides an analysis of the budgetary impact of Buckhead’s deannexation from Atlanta. The report considers revenue that could be lost and expenses the city no longer would incur in Buckhead. The report was released in August and observes:
- Atlanta would face a net loss of $80 million to $116 million a year in taxes and fees. The general fund budget is $710 million for the fiscal year that started July 1. This net loss is based on lost revenues minus costs of government services no longer to be provided by Atlanta in Buckhead.
- Atlanta Public Schools would face a net loss of $232 million a year collected in Buckhead and spent elsewhere in Atlanta. APS collected $607 million in taxes revenues in the year cited in the report.
The report is making the rounds as the General Assembly prepares to consider legislation that would enable Buckhead residents to vote to deannex from Atlanta. The session begins on Jan. 10.
Sen. Brandon Beach (R-Alpharetta) and others introduced Senate Bill 324 on Nov. 18, 2021. Beach’s paper joins House Bill 854, introduced March 31, 2021 by Rep. Todd Jones (R-Cumming).
The Buckhead Coalition retained KB Advisory Group to prepare the analysis. Ken Bleakly opened the original company in 2001. For the previous five years, Bleakly had headed a nonprofit entity formed by Central Atlanta Progress, a business group that fosters Downtown Atlanta. CAP established the nonprofit to promote development efforts around Centennial Olympic Park after the 1996 Summer Olympic Games.
The Buckhead Coalition, a business organization that fosters Buckhead and was headed for years by former Atlanta Mayor Sam Massell, is a longtime client of the company, CEO Geoff Koski said Wednesday.
For the evaluation of the financial impact of deannexation on the City of Atlanta, the report estimates a loss of $251.96 million in total recurring revenues. Lost revenue estimates, in millions, include:
- Property taxes: $151.57.
- Sales taxes from retail spending: $49.34.
- Lodging tax: $10.43.
- Business license fees: $40.62.
To estimate the net impact on Atlanta’s budget, the report subtracts from estimated gross revenues the cost of services Atlanta no longer would deliver. Those costs are estimated to range between $135.7 million and $171.7 million.
The difference stems from the two methodologies used to estimate the cost of services. The report describes results as “broadly similar.”
Debt payments are one item that has become particularly significant.
The report issued in August estimates that Atlanta pays $81 million a year from its general fund budget to service general obligation debt. Buckhead tax revenues pay between $24.6 million and $32.1 million of this $81 million.
These calculations preceded a vote by the Atlanta City Council’s vote in December 2021. The council voted for a measure that adds a poison pill in a $188 million bond package that closed in December. The language approved by the council requires an area that’s deannexed from Atlanta — meaning Buckhead — to pay its full share of $188 million in bonds within one year after a vote to deannex from Atlanta.
The amount of payment is to be decided by a person or entity appointed by Atlanta. There is no process to appeal the amount set by the person, according to the legislation approved by council.
Regarding Atlanta Public Schools, the report provides an evaluation separate from the one for the City of Atlanta.
The report determined that APS collects $332 million from Buckhead, which represents 55 percent of total tax revenues collected, $607 million.
APS spends about $99.8 million to educate the estimated 8,170 students from Buckhead enrolled in a public school, according to the report. These students represent 16 percent of APS enrollments, according to the report.
APS spends about $12,200 per pupil, according to the report.
APS’s net losses from deannexation would range up to $232.4 million, or about 28 percent of the school system’s budget in 2020, $843 million, according to the report.