Holding the line, for now
WINTON – Faced with a downward trend in local property values, Hertford County Manager Loria Williams could have chosen the easy route in an effort to generate the current amount of tax dollars needed to continue the same level of county services.
In other words, Williams could have proposed a tax increase to help build the county’s 2019-20 fiscal year budget.
Fortunately for Hertford County residents and business owners, the 84-cent tax rate remains intact….at least for now.
Williams presented her annual budget message at Monday’s regularly scheduled meeting of the Hertford County Board of Commissioners. The Board will now weigh all the information presented, hold a few budgetary workshops, and then pass final judgment on the annual financial spreadsheet, to include setting the tax rate.
Once approved, the new budget takes affect July 1.
The top story in Williams’s budget message was the octennial reappraisal of all real property in Hertford County. Williams said that reappraisal revealed a loss of nearly $200,000 in the local tax base ($1,624,667,688 for the current 2018-19 budget year compared to $1,602,614,365 after reappraisal).
“We have some challenges to face with the 2019-20 budget,” Williams said in her opening remarks. “This reappraisal, which comes in an eight-year cycle, impacts our new budget and the budgets to come.”
Topping the list of challenges, Williams said, is generating the equal amount of revenue the county is now using to offer services to its citizens in the 2019-20 budget and do so with a loss of property value.
“That’s called the revenue neutral rate,” she observed. “The law requires me to make a statement to you all (the Commissioners) and the public what tax rate would generate the same revenue that’s in the current year budget.
“Unfortunately, we’ve joined a fraternity that I would rather not join…counties where the tax base fell after reappraisal,” Williams added. “After all of our 16,000 parcels of property were reappraised, the value was reduced.”
That reduction led to a revenue neutral rate of 86 cents (per $100 of value)….a two-cent increase over the current tax rate.
Additionally, figuring in the average growth factor (improvements made since the last reappraisal in 2012), led to another two cents on the tax rate, bringing it to 88 cents.
“The loss in tax base coupled with the loss of anticipated growth leads to a total loss in revenues at an estimated $450,000,” Williams stressed. “We’re starting our budget planning with a $450,000 deficit.”
To help overcome that loss, Williams said the county is expecting to receive an additional $100,000 in interest income; another $200,000 in anticipated increases from state sales tax revenue; combining GIS and Planning departments (that will save $55,000 annually); changing the county’s healthcare provider (saving $40,000 annually in the process); and a recommendation that the county employees contribute to their health insurance plans (which would result in a $100,000 savings).
There are other suggested revenue-generating ideas, to include more possible DSS funding and retiring some county debt to the tune of nearly $300,000 annually.
The leading sources of revenue to build the 2019-20 budget – which Williams suggests at $26,028,330 – will come primarily from ad valorem taxes ($13.54 million), state sales tax ($5.04 million), intergovernmental funds ($3.47 million) and using nearly $1.5 million of the county’s fund balance. The latter is nearly equal to the $1.435 million in fund balance used in the current year budget.
The lion’s share of expenditures in the County Manager’s proposed budget will go to Public Safety ($7.31 million), General Government ($5.95 million), Human Services ($5.48 million), and Education ($5.45 million). All other departments are at level funding, Williams said.
In Enterprise Funds, Williams suggested no increases in user fees for county residents in the Northern and Southern Rural Water Districts as well as the Tunis Sewer District. However, she is suggesting a $20 annual hike (from $150 to $170 per household) for Solid Waste Disposal. Williams said that department has proven troublesome to build any fund balance over the years, money needed to make improvements.
“After their budget workshops, the Commissioners will make the final determination, within the confinement of the revenues they have, as to meeting the varied needs of the county,” Williams noted. “Right now I have a budget balanced at 84 cents (property tax rate), but that doesn’t allow us any growth. You all have some decisions to make, not just for this budget year, but the impact of setting the rate for ensuing years.”