Tax base drops precipitously

Wednesday, June 23, 2010

Marshall County's estimated property tax revenue has dropped by one eighth of what it's been - largely because industries reduced inventory in response to the recession.

That's what two members of the County Budget Committee said after their committee meeting last week when the panel received reports from the county assessor and budget director.

The effect on the average Marshall County resident remains to be seen. Commissioners oppose a property tax rate hike. They've asked department directors to cut their own budgets. That could mean county employee layoffs or pay cuts. It could reduce government services or slow service. And while the proposed sales tax rate hike - subject to an Aug. 5 referendum - might bring new revenue, it wouldn't start until several months after the election.

Furthermore, commissioners hoped to have the budget adopted before the fiscal year starts on July 1. Now, a continuing resolution is ready for Monday's commission meeting. It's to freeze spending rates at the current level and give commissioners more time to adopt a budget for fiscal year 2010-11.

"We're going to pass the budget in August," Commissioner Mickey King, chairman of the Budget Committee, said. Budget adoption would then be after referendum results are known.

Adoption in August also means that those in office now will provide a spending and tax plan to be managed by commissioners elected on Aug. 5. Newly elected commissioners don't take office until Sept. 1.

Budget problems are, however, largely a result of the economy, financial projections and spending.

"We did get some bad news last Thursday," King said after the Solid Waste Committee met in the Courthouse Annex on Monday night.

"People are reporting lower inventory," King said of basic materials used for manufacturing.

That includes equipment, tools, parts, products ready to ship and various raw materials such as metal plates, plastic pellets, bolts, screws, fittings, paint, solder, glass, wood and whatever's used to manufacture something. Since Sanford closed its factory on Spring Place Road, the company known for its Sharpie marker removed the machinery used to make pencils, officials have said.

All of that is personal property that is subject to a property tax. The value of those things that were on the property tax rolls last year dropped by $16 million, King explained with Commissioner Don Ledford, another member of the budget committee.

However, there was some new personal property put on the tax rolls, they said. It was valued at $4 million, so the net loss was $12 million to the personal property tax base.

These broad figures were used to provide a simple explanation of what the Budget Committee heard from Budget Director Freda Terry and Property Assessor Linda Haislip.

The personal property objects are subjected to an assessment and the current property tax rate of $3.09 per $100 of their valuation.

The result of the computation shows that - combined with real property -- the county was getting $48,000 in revenue for every penny on the tax rate. It is now expected to receive $42,000, a decline of 12.5 percent, or one eighth of the revenue from property tax collections.

"My stomach got to hurting when I heard that," King said.

Budget committeemen had trimmed spending in all general fund departments' proposed budgets. Those departments include the sheriff, clerks' offices, planning, zoning, codes and appropriations for nearly everything except schools. Budget committeemen had been trying to eliminate $400,000 in spending because they believed that was the reduction in revenue.

"We were close to getting it done," King said.

The information from Haislip and Terry effectively doubled the previously estimated loss of revenue. Instead of $400,000, it's more than $800,000.

"We're back to the drawing board," King said.

Ledford said, "The things we had done helped."

One factor that prevented Haislip from reporting earlier on basic figures for budgeting was the county Board of Equalization. Only recently has it completed its hearings on appeals from property owners who dispute the county's appraisal of their real estate. A lower appraisal has a direct effect on the property tax bill.

Lower inventories and removed factory machinery are other reasons.

Yet another factor for the county's tax base - and therefore its revenue - has yet to be reported. Trustee Marilyn Ervin will soon be reporting the effect of bankruptcies on county revenue.