Local News - June 2003

Board seeks to avoid tax hike

Published June 4, 2003

By ALICE SMITH, LTN Staff Writer

If you’re a Lincoln County resident and you thought your property taxes were sure to increase this year, think again.

Toward the end of a nearly 6-hour meeting Tuesday, county commissioners directed Manager Stan Kiser to look at ways to fund his proposed budget without raising property taxes, including reducing funding and using the county’s fund balance.

Commissioner Larry Craig voted against the motion, saying he feels Kiser has cut all he can He spoke in favor of using money from the fund balance to avoid a tax hike.

Kiser’s proposed budget calls for a 4 cent increase in the property tax rate to cover school funding, payment on the voter-approved school bonds and a significant rise in insurance costs.

The board heard from several department heads on why they needed the funds they requested, and some commissioners were not convinced it is necessary to raise taxes to meet those needs.

Commissioner Larry Craig first mentioned the possibility of taking money out of the fund balance, or savings account, to cover the additional needs of the county without having to raise taxes.

Finance Director Leon Harmon estimated that by June 1, the fund balance would be about 12 percent of the county’s budget, or around $9.5 million.

The state recommends that counties maintain a fund balance of 8 percent of their budgets.

The county needs about $1.8 million in additional funds this year. A 4-cent property tax increase would provide just that.

Harmon advised against taking the money out of the fund balance, citing the uncertainty of the economy and not knowing what the state may do in the coming year. This year, Lincoln County suffered a severe blow when the state withheld $2 million in inventories and intangibles.

Craig said that even if county started out “in the hole” next fiscal year, that could be alleviated with the coming revaluation.

If commissioners agreed to maintain the tax rate next year after revaluation, the county could make up for money lost by not raising taxes this year, he said.

Commissioner Tom Anderson said never in his years on the board have commissioners faced a financial situation like the current one.

“The circumstances we’re under are just imponderable to me,” Anderson said.

Commissioner Carrol Mitchem suggested looking at what county departments are requesting this year and cutting their proposed increase over last year’s allotted amount by 25 percent.

“When you look back on years after years after years on the budget of Lincoln County and it keeps going up, somehow there’s got to be a stopping point,” Mitchem said.

With most of the additional funds departments are requesting going toward rising Medicaid costs and other uncontrollable increases, there’s not much room to cut, Kiser said.

“At some point you’re going to have to realize you’re going to have to cut people and services,” he said.

Anderson said that many governments are having to do just that.

“If we’re going to have to cut government services, we are not going to be alone,” he said. “I think we have hit the wall, folks. If we are at the point where we’re going to have to cut services, then that’s where we are.”

Craig said he does not believe the county is at that point and turned back to the fund balance.

“I don’t think it’s wrong if we’re sitting on that kind of money to touch it that lightly,” Craig said.

Anderson said North Carolina has the highest income tax of any southern state except Georgia, as well as the highest sales tax.

“I’m just very uncomfortable at this point adding additional county property tax on top of the state burden,” Anderson said.

“If the fund balance is not for use in times like this, what is it for?”

Anderson, like Craig, said it is “absolutely critical” that if money is taken out of the fund balance this year the board must agree to keep the tax rate at the same level following revaluation.

He’s also convinced that department heads can cut some of their projected expenses.

But Kiser said the only place left to cut could leave many county employees without jobs.

“You don’t realize we’re up against the wall,” Kiser said. “I can cut out paper, pencils, electricity … The only thing left of any significance to cut anymore is staff.”

Commission Chairman Jerry Cochrane, who remained relatively quiet toward the end of the meeting, said he doubts the tax rate and revenues will be able to sustain Lincoln County for years to come.

The county is deeply in debt, Cochrane said.

School debt service has gone from $3.3 million in 1999-2000 to $6.3 million in 2003-04. That’s a $2.9 million increase.

County debt service has risen by $3.6 million during the same time period.

“Every year it gets worse and we get deeper and deeper in debt,” Cochrane said. “We’re worse than most counties as far as trying to keep the tax rate low and borrowing for these things.”

Kiser will present his findings to the board during another budget work session set for 3:30 p.m. Thursday.

© 2001 Lincoln Times-News  

Terms and Conditions