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County Council, May 5

Higher taxes likely for next year
Deliberations to continue

Warwick Jones

After yesterday’s special Finance Committee meeting, it’s probably odds-on that property owners will be facing higher property taxes next year. It won’t be because of an increase in millage rates or assessed values. It will just be the need to make up the shortfall expected next year from the Local Option Sales Tax (LOST). In the past, the sales tax has been used to pay part of the annual tax liability of property owners. But County staff estimate that in Fiscal 2010, the County’s entitlement to the LOST will be down $10.5 million from the previous year.

Some Council members consider a cut in millage rates
Council members are not happy about this added burden placed on property owners and are divided as to the approach to the 2010 budget. Council members Schweers, McKeown and Thurmond wanted staff to prepare a draft budget that rolled back spending by $10.5 million with a concomitant reduction in the millage rate. Council member Condon wanted to look to further savings though not necessarily $10.5 million while Chairman Pryor seemed happy for property owners to fund the shortfall by leaving millage rates the same. He said that the $10.5 million represented only $15 on $100,000 of assessed value and in his opinion, most folk would rather pay the extra amount and not lose services. Council member Rawl made no commitment one way or other saying that the budget was a work in progress. Presumably his vote would be cast after viewing all the options.

Council members Schweers, Mc Keown and Thurmond seemed frustrated by last night's proceedings. At the close of the Finance Committee meeting last week, these members had asked for a broader discussion on the 2010 budget before deliberations began. Yet the Finance Committee meeting opened with a discussion and vote on specific funds while the general discussion came thereafter.

Cut in Internal and Debt Service Funds, and Enterprise Funds
In effect, the discussion on the two items seemed to roll into one. Council heard a presentation from staff as to the budgets for Internal and Debt Service Funds, and Enterprise Funds. In broad terms, to reflect the severity of the times, there were cuts in appropriations. The Debt Service Fund was facing an increase in spending to finance the completion of the new jail. A bond issue was anticipated in July. Until the bond issue terms were settled, it was not possible to be predict the millage increase needed but it was probably less than 1.5 mills, staff said

Sheriff Cannon explodes
Sheriff Cannon did not hold back words when he rose to address the Committee on its deliberations suggesting that members did not know what they were talking about. Staff had proposed savings of $2 million by deferring by some months the opening of the jail. With reason, he lambasted Council for even considering deferral. Considering that the cost of the jail was nearly $100 million, the savings from the deferral were hardly worth considering. Besides, there were major safety issues. New staff had to be hired and trained, and this would take time. There was also the need to occupy the building and to find defects if any. In our view, the Sheriff found his mark and there was no appetite on Council for deferring the opening.

Staff prepares a “mock” budget
Council members Schweers, Mc Keown and Thurmond insisted on the need to look at cost savings, acknowledging that it might not be possible to save another $10.5 million without cutting essential services. Chairman Pryor rebuked and challenged them by drawing attention to the “mock” budget presented by staff to reflect a reduction in the millage rates, as suggested at the end of last week’s Finance Committee meeting. This would mean all tax payments by property owners would remain close to those of the previous year and that the fall in LOST would be met by a reduction in County spending. To achieve the reduction, staff made some drastic assumptions including a 4.2 % pay cut for employees ($4.2 million saving)) an arbitrary 7% reduction in library staff ($1 million), elimination of funding for school crossing guards ($637,000), imposition of 10 unpaid holidays ($2 million) and others.

Unacceptable to Chairman and probably others
The alternative budget presented by staff was clearly unacceptable to the Chairman. It was also in some measure was unacceptable to the Council members seeking an attempt to find $10.5 million savings. But undaunted, they pressed still for a harder look for savings. They cited the balances that amounted to $5.5 million, accumulated by lower- than-projected spending in fiscal 2008 and 2009. This is available for 2010. With a fall in the total budget, from $171 million in 2009 to $161 million in 2010, Council could also draw on undesignated fund balances without affecting the County’s bond rating (Rating Agencies like to see an undesignated fund balance equal to about 1.5 to 2 months of spending. So the fall in spending would free up some $2 million in undesignated fund balances.) Without being so specific, Council member Condon also spoke to the possibility of finding areas whether savings could be achieved.

How much savings will be turned up by staff in other areas and the impact on the budget figures remains to be seen. . But there were sufficient votes on Council to pass the staff recommendations for the Internal Service and other Funds and the possible millage increase for Debt Servicing. The vote was 5 to 4 with Council members Schweers, Mc Keown Thurmond, and Condon opposed.

Accommodation Tax waiting comments from County Attorney
The other item on yesterday’s agenda was a discussion in relation to the Accommodation Tax. Council member Summey sought the discussion, though he ultimately withdrew his request. Council was reminded that County Attorney Dawson was to give an opinion as to whether the County could take a higher proportion of the Accommodation Tax than it has in the past. The Attorney’s response has been delayed, because, at least partly, the State Legislature had now loosened the legislation restricting spending and it needed to be considered.

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