Analysis: County singing budgetary blues

Friday, March 5, 2010

Marshall County's budget faces a double whammy from a poor economy this spring as commissioners gather to write a spending plan based on lower revenues.

The publicized hit is Sanford closing its pencil factory. The November 2008 announcement led to lower county revenue from taxes on the equipment. Now, the company wants its real property assessment lowered.

Another hit was felt personally by those 355 workers who lost their jobs as the nation's economy was falling into a recession.

Now, many people can't pay their property tax bills on homes and some builders are deciding to pay the bank instead of the county. Collection of delinquent property tax bills is a long, drawn out process.

This week was the deadline set by county commissioners for department directors to submit proposed budgets to the county.

The March 1 deadline was two months earlier than normal. Last year, department spending requests were sought by May 8.

Commissioner Mickey King listed alternatives that have been refined to include elimination of some county jobs, instead of reducing pay rates. The other options were cut services and raise taxes.

However, the question floating through the Courthouse Annex is: How do you raise taxes when the people can't pay the old bill?

Another observation in the Annex at First Avenue and Commerce Street was during the last week of February. There was a line of people leading to the county trustee's office where they would pay their property taxes on the last day. A few other people waited until the last of the month to renew their vehicle tags and pay the wheel tax so they'd have the proper decals on their tag.

Some motorists waited in the wrong line for several minutes.

Here are some of the financial facts of life for the county.

As of Feb. 21, almost 96 percent of the taxes owed for 2008 had been collected. On that same day last month, a little more than 62.25 percent of the taxes for 2009 had been collected.

Budgets are adopted with a built-in delinquency rate and when the books were closed on June 30, almost all of the anticipated revenue was received. It's usually 100 percent. Some years, with back payments, it's 101 percent. That's not expected this year.

Appeals for appraisal reductions are up. Last year the appeals totaled nearly $45,000 - the amount the county could lose from an appeal that won. This year it's up to nearly $79,000.

Bankruptcies were costing the county $168,000 last year. That figure appears to be up to nearly $213,000 this year.

The property tax rate is $3.09 per $100 on assessed value. Last summer, the county's property tax base generated $48,800 from each penny on the rate, or $15,079,200.

The value of the penny hasn't been calculated for this year. However, the amount collected from property taxes last year is $679,800 less than the amount collected the year before.

Mathematically, that indicates that if spending stayed the same, and reserves weren't spent, the county would have to find $679,800 before it could start its next fiscal year at the bottom line instead of below it.

If, and that's the little speculative word if, the difference was made up by a property tax rate hike the tax rate would have to go up by about 14 cents, meaning the rate would be $3.23, an increase of 4.5 percent.