Could Property Tax Hike have been Avoided?

Recent news of proposed property tax increases in Chattooga County caused the staff at AllOnGeorgia to take a closer look at the way County funds are managed. Chattooga County Commissioner Jason Winters (R) is citing powers beyond his control as the reason for the hike. The first cause Winters mentioned is the rising costs of housing inmates. The second reason is the rising cost of health insurance for county employees. Recalling a story several years ago from local businessman and insurance representative, Kevin Gilliland, AOG reached out to Mr. Gilliland to get his thoughts on the latest move to increase the tax burden on local property owners.

AOG: Mr. Gilliland, what is your take on the recent proposal of our County Commissioner to increase property taxes?

KG: As the owner of a rental property business in this county, it greatly and directly affects me. I think I am misinformed though. Did I read the proposal was a 33% tax increase? That can’t be the case.  Wow, that is huge. I really struggle every year to pay my property taxes as it is. With tenants often destroying my property, and just flat out refusing to pay their rent, my business isn’t profitable. It hasn’t been in a long time. I subsidize my rental business with money from my income from my job. This will certainly be a larger burden on me. I will feel the impact where it hurts. It is very disheartening. My properties are worth about what they were years ago when I bought them. I have seen no increases in value on my property from the day I bought them. They have been a poor investment. Values of real estate here have not kept up with the pace of real estate values in other markets across the state and country, yet we are facing this monstrosity of a tax increase.  Jason knows the voter is forgetful. Look at the record. It is blatantly transparent to me.  Why didn’t we get this news last year during an election year? It always hits the year after the election. Look at 2012. Same case. The last property tax increase was in 2013, the year right after the election. Guess we can go ahead and expect double digit increases again in 2021. You can call me Nostradamus in 2021 when it happens again. Call it what it is. It isn’t a proposal. There is no board or other Commissioners that have to vote on it. It’s not a proposal. It’s a declaration. It’s going to happen.

AOG: Mr. Gilliland, part of the Commissioners reason behind the tax increase is rising employee health costs. Can you recall the details of the insurance proposal that you pitched to Chattooga County and the City of Summerville governments back in 2010?

KG: Unfortunately, I can. It was a very disappointing and surprising experience. Increased taxes in Chattooga County is an especially sore subject for me. I literally think of my insurance proposal every year when I pay my property tax bill and monthly when I pay my water and gas bills at the city. Back in 2010, I had just opened an Allstate agency in Summerville and I was very eager to build my business. We had a line of supplemental workplace insurance products. One particular product was called Workplace Gap Insurance. As I learned more and more about how it worked, I thought that it would be a good fit for local governments. I will give you the cliff notes regarding how it worked. The product allows entities to raise their deductibles to a much higher level. At that point, you would insure the uncovered portion with supplemental gap insurance. So, in the case of the county and the city, both had Blue Cross Blue Shield Georgia and each entity had a policy with a $1500 deductible. I proposed that each entity raise their deductible to $5000 and let Allstate cover the annual amount from $0 to $5000. That would have been the only change to the major medical coverage for employees. In other words employees had the exact same coverage that they had before. Same copays same everything except their deductible would go from $1500 to $5000. Hardly any government entities or private companies have their deductibles set that high and insurance companies know this. What they do is charge a very high premium to cover those lower deductible amounts. The premiums for a $5000 deductible drops exponentially compared to a major medical policy with a $1500 deductible. Most claims are in that $0 to $5000 range per year anyway. The gap policy covers that $5,000 amount for a much, much cheaper premium.

AOG: How much cheaper are we talking?

KG: Well, if you take the premiums that the county pays for that $1500 deductible and compare it to the premium they pay for the coverage with the $5000 deductible plus the premium of the gap insurance, the savings are quite significant. It would have saved the county $274,000 per year, every single year. The city would have saved about $268,000 per year, every year. When I saw the savings I thought wow, I am about to sell some insurance!

AOG: This doesn’t sound right there had to be some cuts in benefits somewhere?

KG: I know right! That’s just it, it’s actually the opposite, and employees would have actually had more coverage. The employees would have ended up with the exact same coverage except they would have had no deductible. Nothing out of pocket at all on ER visits, inpatient, and outpatient procedures. In fact, I had both the HR representatives at the county and the city to pull all the claims for the previous 6 months. We ran the scenarios at Allstate and every single instance would have resulted in the employee paying nothing out of pocket. I would say, without reservation, that the city and county employees who had those claims then, or any claims since then, would have been more than happy to present two insurance cards in order to avoid that $1500 hit. $1500 is a lot of money for a working man or woman. May as well be a million dollars for some folks. It’s just a lot of money.

AOG: This seems like a no-brainer. What was the reasoning that neither the county nor the city didn’t do it?

KG: Well, I have some theories, but I’m not exactly sure. You would have to ask them. I pulled all the policy info and delivered everything to Jason. I did the same thing with the city. I felt very confident that both would sign up. After a week or so I never heard back from Jason. I ran into him on the street one day and he really didn’t even slow down enough to talk to me. He told me that he didn’t think that it had “enough history” and continued walking down the street. No “history” on a company that has been around since 1931? Interesting. This isn’t some mom and pop fly by night operation. This is Allstate. They pay their bills. I stood there like a fool, talking to a man who kept walking and didn’t even think enough of me to stop and talk about it. I guess he had somewhere very important to be. As the sole commissioner, Jason has the final say, so I really didn’t have another avenue to appeal to. The next council meeting would decide the fate of the gap insurance with the city. I was a city council member at the time, so I recused myself from the vote. In fact, I didn’t even talk to any of the employees about it with the city as I felt that since I was the sales rep for Allstate and a councilman, this would have been a conflict of interest. At the time, the city sent all insurance issues to the “insurance committee”, which is made up of employees, mostly department heads. The members were all fine folks. Smart, competent, and good at their jobs. However, none of them had any real insurance experience and it was my opinion that they were not a panel of insurance experts. When the next council meeting came to order, the committee head received the floor and stood up and gave her recommendation. She said that the gap insurance just didn’t have “enough history” on it. I sat there in my council seat silent as, again, I felt like it would have been a conflict of interest to push the issue. I couldn’t believe that they had verbatim, the exact answer as the Commissioner. That just seemed suspicious to me. That one-line excuse was the only reason given. In hindsight, I should have spoken up. I could have seen the headlines in the Summerville news had I did, “Councilmen bullies his product into service at the city.”, or something along those lines. Don’t get me wrong, I would have loved to have got the account, but I have never represented services or products that aren’t helpful to people and aren’t on the up and up. I represented it because it was the right thing to do for the taxpayer. So I sat in silence and watched my fellow councilmen do the same. No one questioned the committee. This part was shocking. As a steward of public funds I promise you this, if anyone ever brings me a product or service that I must buy and the savings are that significant, I would consider it my duty to kick over every stone to get every question answered before I rejected it. Each councilman knew the savings, but no one asked a single question. I thought questions would arise and I would have a chance to address how the coverage works in a public forum. No one said a word. I really had to bite my tongue. It was so hard. I wanted to lash out and ask a barrage of questions. I found it insulting that I was told there was no history when no one performed the first bit of due diligence. See, I had provided the names and contact information for the HR directors for Atkins Ford, Athens, Ga. They have about 400 employees under coverage. I had also provided the same names and contact info for the HR directors at the City of Hialeah, FL and Miami, FL. All three of these entities had the gap coverage with Allstate, in addition to their major medical, and all three entities loved it. I called those HR directors and received the same answer from each. No one from the City of Summerville or Chattooga County had bothered to make one phone call to ask any questions, yet both had the audacity to look me in the eye and say it had “no history.”

No other councilman asked any pointed questions about how they came to that conclusion. We all just went on to the next order of business and left that money sitting there. I was disappointed with the Commissioner and my fellow councilmen as well. I appreciate the fact that the city gave employees the opportunity to look at a good or service, but at the end of the day, the councilmen are the ones elected. The councilmen are the ones who are accountable to the people. Not the employees. It was discouraging, shocking, and disappointing that our elected officials gave that little effort to an issue that burdens the taxpayer and water customer on the level that it does.

AOG: Do you feel that local officials should have dug deeper into the insurance issue?

KG: No doubt! Now more than ever, it is crucial that elected officials take the time to study the ever changing landscape of health insurance. Times are hard and money is scarce. When you are an elected official it is your duty to study it and understand the intricacies of insurance options. When that kind of savings comes along you, must take advantage of it. You must investigate it whether it be buying insurance, water pipe, fire trucks or whatever. You owe it to your constituents or you don’t need to serve. As a last ditch effort, I found out that we could implement the gap insurance with Blue Cross Blue Shield in the middle of the coverage cycle. I am sure we could do this right now. The insurance cycle is April to April. Every April the local governments have to redo their insurance for the upcoming year. To implement this in the middle of the cycle means you start gap insurance coverage in say November then you have to redo it again in April. In my mind this mitigated the risk even further. In other words, the city or county would only have to carry the insurance from say November to April, instead of all year. That way, if they didn’t like it, they could have dropped it in April. Like a trial period. My plan was to do it six months, interview every employee who had a claim and ask them about their experience. I never got that chance. This proposal also fell on deaf ears at City Hall and the Commissioner’s office. To say the least, I was frustrated and perplexed. How dare they be so apathetic with taxpayer money. I am a fiscal conservative and some of these guys claim to be the same, but their actions or lack thereof proved otherwise.

AOG: After the disappointment in lack of interest from local governments, what did you?

KG: There was little I could do. I took both folders for the city proposal and county proposal to Jason Espy’s office at the Summerville News the next week, since it was never discussed in the council meeting and since nothing that goes before the Commissioner is public. The people needed to know. I was ready to throw my friends and colleagues under the bus and damn the political implications. I gave Espy the files and went over everything with him. I looked forward to seeing the headlines on Thursday. I wanted a public discussion started about this. Guess what. Again I was shocked to see the City’s new Christmas lights or whatever it was in the news that week. Nothing about insurance. Nothing. To this day, I will see an article about how this municipality or that municipality spent extra money on some travel or a councilman ordered a steak instead of the meatloaf on some municipal trip and I see the public outrage in the headlines. I just shake my head in disgust. Think about it this way. There is a cumulative effect here. Let’s break this down. Had both local governments participated in this program, over 7 years’ time, the county would have saved $1,918,000 to date for an entity that has about 10 million in annual revenue. That is about 20% of total annual revenue! The city would have saved about $1,876,000 to date on about a $16 million per year budget. In 7 years the county taxpayer and city water customer combined has missed out on a total of $3,794,000 savings to date and counting. If that doesn’t get people’s blood boiling in light of the cited reasons for the most recent property tax increase then I don’t know what would. The revenue numbers I gave were from 2010, but I don’t know what they are now. Every year that goes by that a complacent official doesn’t take advantage of these savings is another year the taxpayer loses. Meanwhile, I continue to read about tax increases and water rate increases and the threat of more property taxes from the city. That’s the wound. Then the salt really hits the wound in the fact that rising insurance costs are one of the specific reasons cited for the need for a property tax increase! Really? It’s ludicrous. The fact that the rising costs of health insurance was one of the reasons given for the increase on property taxes just didn’t sit well with me given the experience I had. Think about what I really tried to do here. I am not a fan of insurance companies. I was using one insurance company to beat another insurance company out of a portion of premiums and the beneficiary was the taxpayer. I attempted to make that major medical provider lose that extremely high margin business on that first $5000 of coverage in the free market. They don’t usually have to compete for that portion of the business. They should have lost in the free market and, if the money had been the official’s private funds vs. public funds, I feel I would have gotten more due diligence and won that free market competition.Truly an example of where the consumer would have benefited from competition. I will publicly debate anyone, anywhere, anytime regarding the benefits of insuring this way. It, or something comparable, should have happened every April since. I’m not affiliated with any insurance company anymore and I still believe that.

AOG: Why do you feel our citizens missed out on this deal?

KG: I think the council members, the Espy’s and our commissioner are fine people and I consider them my friends. Heck, Jason Espy is even my cousin-in-law, but I guess in this county, who isn’t. They are smart, talented and usually have their heart in the right place and all have done some fine work for our communities in this county, but I speak the truth about how this whole deal played out. They were dead wrong about this issue. I don’t understand their motives or reasoning regarding this issue.I can sleep well at night because I did my best to help the taxpayer and I did the right thing by them. Doing the job and investigating every option on the table regarding different types of coverages is the right thing today just as it was seven years ago. Their excuse for not participating, or at least trying it for a short period on a trial basis is questionable, unacceptable and short-sighted. I am honest and straight forward in all of my business dealings. I wanted to help our taxpayer burden and I took a very simplistic approach. I have no ill will toward anyone in office. In fact, I root for them. If they win, we win. I don’t grant this interview with the intent to inflict any political damage on anyone. I do it because this is important and I want to push a mindset of digging in and finding solutions versus an easier, more traveled path out of problems. Politics is a very hard job. It can be thankless and I respect anyone willing to subject themselves to the scrutiny of the public eye. I thank everyone I have mentioned for their service. Thank you for listening to me on this. It’s never too late to change our approach to problems.

AOG: Since it is the other reason regarding the upcoming tax increase, do you happen to have an opinion about the Commissioner’s stance regarding the rising costs of housing inmates?

KG: The Commissioner is right on a lot of issues and I’d say the Commissioner is 100% right about that. What can he do? He has to make sure money is in the bank for checks he isn’t even writing yet. He has zero control over it, he just has to pay it. We need to consider and take a hard look at incarceration rates among nonviolent inmates in the county, who we are locking up, and why. Officers certainly have a lot of discretion regarding ticketing vs. arrests. I’d really like to see data regarding what percentage of arrests in this county are nonviolent misdemeanors. In many, many cases, incarceration isn’t paying a debt to society. It ends up being a burden on society. That’s what we’re seeing here. People can, and do, get incarcerated for a minor offense and, if they don’t have the resources to get out, the situation can and often does perpetuate itself. They sit in jail a few days, lose their jobs, end up losing the ability to pay their child support or something and they end up right back in there for that. I don’t know about you, but I’d rather see a man working and paying back a debt than sitting on his sorry butt in jail and letting the taxpayer keep him up. This is an unsustainable path were on and it’s not effective. We lock up more people per capita than Russia, China, and N. Korea. How does that make you feel as a tax payer? Is that who we want to be as a community and society? Let that stew a second. You like that value for your tax dollar? What is our goal? Do we even know? Shouldn’t the goal be true rehabilitation? Don’t misunderstand me. I’m not advocating for a no-consequence kind of system, and I’m not advocating that we take it easy on people who break our laws. Not at all. There are just more effective, inexpensive ways to approach these issues. We wouldn’t even have to reinvent the wheel. There are numerous platforms for Sheriff’s community work programs, Jail counseling programs for nonviolent criminals, Inmate work programs, Court ordered  book/print/release processing, and Sheriff House Arrest Programs. The impact on overall inmate housing costs could be substantial with a few adjustments in how we think and operate. It is an area that we need to study as a community and come up with some alternative plans vs just spending millions on unnecessary, ineffective incarceration. I think Waylon Jennings said it best, “I’m for law and order the way that it should be, but this song’s about the night they spent protecting you from me.”

At the end of the day, responding to these two issues is being reactive vs. proactive. Are we looking at every opportunity to be better and find other options and opportunities for savings? How much real effort and consideration have been put into options like combined services with the county and its municipalities? Again, this is being done in partnerships with cities and counties all over the nation. It isn’t a new concept and it’s been proven to be mutually beneficial for all parties involved time and time again. When we pool our resources as a county and its communities, we become a stronger county with stronger communities. You don’t have to look too hard to find multiple redundant services that are being provided by both the county and municipalities all over the county. I urge all tax paying citizens to hold your elected officials accountable and insist that they put your interests first.

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All On Georgia attempted to contact Commissioner Winters to get his side of this story. After two failed attempts an Open Records Request was submitted.

 

Chattooga County residents will have three chances to voice their opinions about a property tax increase proposed by Republican Sole Commissioner Winters.

The three public hearings will be held at the Chattooga County Civic Center located at 44 Highway 48 in Summerville. The meeting times and dates are:

• Monday morning, August 7 at 11 am
• Monday evening, August 7 at 6 pm
• Monday afternoon, August 14 at 2 pm