By Jennifer Jacob Brown / jbrown@themeridianstar.com
The Meridian Star
MERIDIAN —
Last year, in hopes of giving their constituents a little break, county supervisors voted to cut ad valorem taxes. Now, it looks like that break will be a short one; the county is expected to push taxes back up for FY2011.
The county's proposed budget includes an ad valorem tax increase of 1.87 mills for county property owners, and a 3.95 mill increase for city property owners.
For FY2010, County Administrator Joe McCraney said, the county cut millage by 2.41 mills for county property owners and 3.78 mills for city property owners, so this year's proposed tax increase is the county's way of hitting the "undo" button on last year's decrease.
"The amount we are asking for is basically to get back to (the millage rate the county had) in (fiscal year) '09," said McCraney. "The tax decrease, it would have worked if the economy had helped out . . . but when you have other funds that have deficient balances in them and the economy is bad, it doesn't work out how you planned."
The proposed budget will increase ad valorem tax revenue by $1,700,557, or 6.99 percent, over FY2010, according to a legal advertisement run by the county. The county-wide millage rate will increase from 106.28 mills to 108.15 mills, if the increase is passed by the board of supervisors.
Despite the proposed tax increase, McCraney said he doesn't think property owners will have much sticker shock when they get their tax bills. "Your taxes shouldn't be any more than you paid in 2009 unless you improved your property," he said.
The proposed budget itself has been reduced down from about $46.7 million in FY2010 to $44.6 million for FY2011, McCraney said. McCraney said a number of factors contributed to the county's having to raise taxes even though the budget is smaller than last year's. He said last year's budget fell short, and will have to be made up for in 2011.
Part of that shortfall, he said, was caused by state budget cuts that trickled down to the county. State aid road funding, state auto tag reimbursements, and state homestead exemptions reimbursements have all been cut, sometimes without much notice.
The reduction in homestead exemption reimbursements, McCraney said, has delivered the hardest blow. While the county usually receives the payments twice a year, they've only received one so far this year, and it was reduced by around $86,000.
The FY2010 tax cut, McCraney said, also caused problems in the 2010 budget. The cut reduced the county's revenue for 2010 by $1.5 million. If the 2010 revenues and expenditures had been what the county expected them to be, McCraney said, they could have gotten by with the tax cut — but a drop in revenue and unexpected expenses have made it hard for the county to squeak by without that $1.5 million.
A third factor that contributed to the budget problems of 2010 was an abundance of negative cash balances in various county funds. The county had been operating with negative balances for a while, but an audit by the state in 2010 forced them to comply with a state law that says funds with a negative balance can't pay their bills.
To comply with the law, the county took $2 million from its general fund, which is the county's operating fund, and loaned it to funds that had negative balances. The garbage fund, McCraney said, took the bulk of that.
On top of all that, the economy got worse in FY2010, causing ad valorem tax revenue to be lower than anticipated.
That decrease in ad valorem revenue will continue into this year if the county does not raise taxes to their 2009 rate. The total assessed value for the county has decreased by about half a million dollars. The main culprit in the reduction of ad valorem value, McCraney said, is car sales; people are either not buying cars, or buying less valuable cars than they might have in a better economy, meaning the county cannot collect as much in automobile taxes.
Lower interest rates have also hit the county with a reduction in interest income.
To top it all off, there are several new expenses for FY2011. The largest is $303,400 for the county's debt on the Loblolly bonds, the result of an economic development project that died when the timber industry went south.
Other new expenditures include an increase in health insurance rates, the repair of the air conditioning system at the county annex building, improvements to the juvenile detention center that are the result of a lawsuit, and three countywide elections to be held in FY2011.
"All of these factors add together to make the perfect storm," said McCraney. "The most difficult time this year is going to be from October to the end of the year. We've got depleted cash in every fund and no significant revenue coming in. (The county must) restore our cash balance so we can operate and provide essential services during the fall quarter of the year."
The board of supervisors will hold a budget hearing Tuesday at 5:30 p.m., and will meet to approve and accept the budget Thursday at 10 a.m. in the Raymond P. Davis courthouse annex building on Fifth Street. Fiscal year 2011 begins Oct. 1, and the budget must be passed by Sept. 15.
Proposed city budget has few major changes
The City of Meridian will be voting on the FY2011 budget Tuesday morning at 9 a.m. at the police station courtroom on Sixth Street.
Meridian Finance and Records Director Ed Skipper said there are no plans for a millage increase for the city, though it is possible the city school district, which is a separate taxing entity, will ask for an increase.
Skipper said the city's proposed budget is similar to FY2010's, with a roughly $400,000 increase in both projected revenues and expenditures. The proposed general fund budget for the city is $34,449,685. Look in Wednesday's Meridian Star for more on the city's FY2011 budget.
