HC property tax rate proposed
Published 8:33 am Thursday, May 19, 2011
WINTON – Higher assessed property values are traditionally accompanied by a lower tax rate.
Such is the case of Hertford County’s proposed operating budget for the upcoming 2011-12 fiscal year.
Hertford County Manager Loria Williams pitched her new financial plan to the commissioners during their regularly scheduled meeting on Monday night.
As noted, the new budget comes on the heels of the revaluation process, one conducted every eight years. Assessed property values have increased, but that does lower the tax rate.
Williams said her proposed $22.38 million budget is built on an 83-cent (per $100 of value) tax rate. The current rate is 91 cents.
She pointed out that this budget presentation is a bit different than last year since 2011 represents a revaluation year for Hertford County. Statutorily, she is required to reveal “revenue neutral” – the property tax rate estimated to produce revenue for the next fiscal year equal to the same amount of revenue generated by the current tax rate if no reappraisal had occurred.
Currently, real property in Hertford County is valued at $1.21 billion. The tax levy (91 cents per $100 of value) currently generates $11,012.645 in taxes that county officials use to operate the local government entity. Following the reappraisal process, the value of real property in the county increased slightly to $1.39 billion. Applying the revenue neutral rate of 79.26 cents to the new valuation number generates the same amount of real property taxes ($11,012,645).
“The new value is only about 15 percent above the value of eight years ago,” Williams said. “That’s not a lot of growth countywide between reval years.”
The county’s budget officer (Williams) can increase the revenue neutral rate by figuring in the county’s growth factor, one that charts the average annual percentage increase in the tax base due to improvements since the last general reappraisal.
According to chart Williams presented, the assessed property value eight years ago (2004) was $1.149 billion.
“We’ve been in a recession over the last two years where we’ve experienced little or no growth,” Williams noted. “When you have that amount of limited or zero growth, you must be mindful that your expenditures are not outpacing your revenues.”
Another key element of the budget is the tax collection rate. Williams stressed that she does not build a budget on 100 percent of the tax levy, instead using the projected percentage (95%) of collections. That five percent difference drives the projected tax levy of $11,115,426 down to $10,559,651. The latter figure translates into $131,996 for every penny assessed in real property tax.
“That truly is the magic number,” Williams said. “For every penny you go above revenue neutral, you are generating an additional $131,996 in revenue.”
As an example of the revenue neutral impact, Williams said a homeowner paying at the current rate of 91 cents on a $150,000 home is taxed $1,365. If the revenue neutral rate is applied on that same value of the home, the tax bill would be lowered to $1,200.
For the upcoming fiscal year, one beginning July 1, Williams recommended a general fund budget of $22,381,039 and a real property tax rate of 83 cents. Her proposal is less than the $22.72 million budget approved by the commissioners in June of last year for the current year operations.
“Even though this budget proposal reflects an increase of three cents over revenue neutral, there is a lot going on in this budget,” Williams said. “I have made a lot of concessions within my budget proposal to hold my recommended tax rate at 83 cents.”
Williams noted a downturn in revenues – four percent decrease in intergovernmental funds; sales and services are down by 10 percent; permits and fees are about 50 percent lower; vehicle tax is down by $100,000 and the county is only generating a fraction of interest income (based on previous years) due to national economic factors. Williams said prior to the recession, the county was banking $300,000 annually in interest on its money; that figure is now at $10,350.
“I have to lower expenditures to account for those losses,” Williams stated. “Even though there’s an increase over the revenue neutral rate, there are cuts I’ve had to make.”
She also reminded the commissioners that the county’s recently implemented quarter-cent local option sales tax has been removed entirely from the general fund budget and placed in a capital reserve fund to help make the debt service payments on the new Hertford County Courthouse (still in the planning stages) or other capital needs.
“We promised out citizens if they approved the quarter-cent sales tax that it would be used for capital improvements,” Williams said.
That quarter-cent tax generates roughly $448,000 annually.
The new proposal uses $1.269 million in appropriated fund balance, marking an increase over the $1.1 million used from that same fund during the current fiscal year. Williams said that amount of fund balance represents six percent of the operational budget, which is one percent higher than what the LGC (Local Government Commission) recommends.
“I would have loved to have lowered that appropriated fund balance amount needed to help balance the new budget,” Williams stated. “However, the downturn in the economy would not let me do that.
“We still have a healthy fund balance and we can ride out this storm if we are prudent in what we do with our fund balance. Some people do not have that luxury,” Williams added.
Her proposal reflects no cuts to any of the outside agencies the county provides funding – Hertford County Public Schools, Roanoke-Chowan Community College and the Hertford County Public Health Authority. Williams said her budget proposal gives current year funding to those entities. The county school system currently receives $4.17 million in local government funds while the community college netted $778,839 from the county during 2010-11.
Williams said that outside agency requests for the new budget year totaled $444,565 above current year levels. If granted, they alone would add 3.3 cents to the tax rate.
“Even though we’re holding everybody to (current year) funding, we have made concessions just to hold everyone level,” Williams said.
Additionally, the proposed budget makes considerable cuts to non-profit organizations that the county is not contractually obligated to fund.
There are no planned lay-offs of county employees or mandatory furloughs in an effort to cut costs. While the proposed budget does not include a cost-of-living increase for county employees, it does fund their health insurance at 100 percent, despite a hike in health insurance premiums.
“This is a working document,” Williams reminded the board. “Once I turn this over to you, the floor is open for discussion on what to keep on the table and what to take off the table. That could include a cost-sharing of health insurance premiums between the county and our employees.”
She added that part of the budget reflected a re-organization of the county’s maintenance department as well as merging the Addressing Department with Land Records.
After hearing Williams’ proposal, the commissioners agreed to schedule two work sessions (May 27 and 31) to further discuss the budget. It was recommended that the June 20 night meeting of the commissioners to be used for the required public hearing on the budget and then hold a special meeting prior to June 30 to adopt the measure.