Facilities tax redirected from utility to schools

Friday, June 25, 2010

Marshall County commissioners on Monday are scheduled to decide whether to redirect a tax on construction from the county water service to pay off school debt and other obligations.

Commissioners are to convene at 6 p.m. for their monthly session in the second floor conference room of the County Courthouse Annex at the corner of First Avenue South and East Commerce Street.

An adequate facilities tax is charged by the county for every square foot of new buildings constructed anywhere in the county. That money has been spent to support the Marshall County Board of Public Utilities, a wholly owned subsidiary of the county. It borrowed money to help finance a 57-mile water service extension project. That debt, however, is an obligation of the county since it owns the utility.

When the adequate facilities tax was started, the MCBPU was designated as the recipient of the first $300,000 of the revenue with the rest going for other county operational expenses. However, that tax revenue has dropped, especially with the economic downturn and the so-called housing bubble burst.

Nevertheless, MCBPU has "a fund balance of a couple million dollars," said County Commissioner Mary Ann Neill, a member of the utility board. Such a reserve fund and other factors secure the utility's budget and therefore commissioners see it as a way to help balance the county's general fund budget.

"With the economic situation we're in," Neill said, turning to how the redirected revenue may help every property owner, "it's probably 2-3 cents on the tax rate."

Property tax revenue is frequently discussed in terms of how much it will affect the rate applied to real estate value to compute a tax bill. Because industry has slowed during the recession, inventory is lower and personal property tax revenue has dropped.

"And so we've got a shortfall," Neill explained.

For that reason, the adequate facilities tax revenue could be redirected to the county general fund, a step made possible by significant reserves held by the utility.

In what only seems to be desperate terms, Neill explains a motive for such financial organization: "We're grasping at straws to protect the property tax rate."

The county property tax rate is currently $3.09 per $100 dollars of assessed value.

Commissioner Mickey King, chairman of the County Budget Committee, will introduce a resolution Monday night to redirect the adequate facilities tax from the MCBPU to the county general fund.

Meanwhile, the MCBPU buys its water from Lewisburg and the city's Water and Wastewater Board recently voted to increase water rates. As a result, MCBPU is likely to raise water rates.

Other financial decisions facing commissioners on Monday include resolutions to:

* Lower commissioners' pay by $200 a month to $130.19 per month from Sept. 1, when commissioners elected on Aug. 5 take office, until Aug. 31, 2011, a one year period.

Seated commissioners cut their own pay with a resolution that ends that reduction on July 1. That was done to raise money for volunteer fire departments.

* Reclassify $1,464.14 in money received from the federal government in so-called economic stimulus money from the American Recovery and Reinvestment Act. The money channeled through the state department of Education is for Internet connectivity at county schools.

* Spend $650 from the county's general fund balance account to finish paying for an advertisement in The Voice, a publication of the Tennessee Walking Horse Breeders and Exhibitors Association. TWHBEA headquarters are on Ellington Parkway. The association recently celebrated its 75th anniversary. The advertising bill was originally an obligation of the county's Tourism and Economic and Community Development Committee. It's funded with room rent taxes charged at hotels and motels.