Without a property tax increase the county is facing the possibility of having to borrow money to operate at some point during the 2015-16 fiscal year.
Steve Bates, the county's financial advisor, delivered the news during an all-committees meeting of the county commission Tuesday night at the courthouse.
It was the first time the county commission had met in a work session since the budget committee made its recommendation last Tuesday night, June 30 for passage of the proposed $41 million spending plan with a sixteen cent increase in the county property tax rate. If approved the rate would go from $1.62 to $1.78 per $100 of assessed value.
"If we don't increase the revenue this year then more than likely you're going to start having to borrow money in order to just meet payroll. That is not a position that DeKalb County has ever been in and doesn't want to be in," Bates told the commission.
Wayne Cantrell, Fourth District Commissioner and Chairman of the Budget Committee urged his fellow commissioners to support the recommendation for the tax hike. " I figured this thing up on a $100,000 house which is the average home in DeKalb County. It will raise it (tax bill) three dollars per month if we pass this sixteen cent (increase). This will be enough to get us through all our terms on here and probably even further. People are going to rag you about raising taxes, sure. But they're going to rag you a lot more if you go back in the community and say we've had to borrow money to run the county on. If we don't pass the sixteen cent (increase) and do eight or nine or ten cents instead we'll be right back up here next year doing it again. And nobody wants to be nickeled and dimed to death on this tax rate. So we're going to have to do something (raise taxes). Either that or we're going to look like idiots borrowing money to run the county government on," said Cantrell.
According to Bates, the county's budget woes are due to a stagnant economy in recent years in which revenues have been down while the cost of government has increased. Extra added costs due to the Affordable HealthCare Act (ObamaCare) and lower than anticipated receipts from the ambulance service are also factors.
"This budget is approximately a $41 million budget. For the last couple of years the county has been going into cash (fund balance/reserves) in the general fund. Some of the biggest factors was loss of interest income. There was a time when the county Trustee was earning 3% on the county's money. Now they're (county) earning .4%. That is just like having a tax cut. Then when the financial crisis happened (property) assessed values went down in the county which is also like having a tax cut. It's just gotten to where with the Affordable Health Care Act coming on (etc) it was just time to do something and this was the year it had to happen," said Bates.
"There is not really anything in this budget document that stands out any different than it was last year. Last year the county approved a budget going into cash by almost $800,000. We don't think the county went into cash that much. The books aren't closed yet but we do feel like we probably went into cash. We went with another company to do the billing for the ambulance service. Those receipts were down dramatically this year. We did not collect what we had budgeted so we know we went into cash we just don't know how much yet until the books are closed. But we're pretty confident that we went into cash by at least $250,000," Bates continued.
According to Bates, the county maintains an excellent bond credit rating and with increased revenues from a property tax hike, the general fund should stabilize. "The county is currently rated A1 by Moody's. That's a great credit rating and that's really where you want to be."
"The budget committee believes the tax levy ($1.78 per $100 of assessed value) is sufficient to get you by and stabilize the general fund. It gives a couple of other funds a little bit of growth money. We want to make sure we meet our maintenance of effort for schools. The county is doing that. Looking forward as the 2003 school refunding bond pays off in 2019 there will be some money left in that local purpose fund where you can absorb some school debt instead of letting them (schools) pay their pro rata share of that energy loan that they have just done, for the three million dollars that they have just borrowed. There is some things we can do to help schools along going forward," said Bates.
"Really the only uncertainty going forward right now is solid waste. We know that the transfer station will be coming on and you will be shipping some waste out of the county. We know there is going to be some transition. We don't know how much we'll be able to save by doing that. We do think there will be some. We just don't know how much yet. But until that gets on line we'll either have to use some of the money from the capital projects fund to help close the landfill or to issue a one and a half million dollar note or bond, which the county adopted a reimbursement resolution, because we want to make sure we have enough cash remaining in that solid waste fund so that it cash flows on a monthly basis," Bates said.
The proposed new rate breaks down as follows:
County General Fund: 94 cents (a 12 cent increase)
General Purpose Schools: 57 cents ( a 2 cent increase)
Debt Service: 12 cents
County Highway Department: 4 cents ( a 1 cent increase)
Capital Projects Fund: 11 cents ( a 1 cent increase)
The last time the county commission raised taxes was in 2011 when a ten cent hike was imposed with five cents of the increase going to schools and the other nickel to help fund the county general budget.
All five members of the budget committee last Tuesday, June 30 voted to recommend the new budget and tax rate for approval to the county commission. Members of the committee are Chairman Wayne Cantrell and Larry Summers, Jack Barton, Jimmy Midgett, and Jerry Adcock.
As required by law, a public notice will be published on Wednesday, July 15 in the newspaper. A public hearing will then be scheduled on Monday, July 27 at 5:30 p.m. followed by the regular monthly meeting of the county commission at which time the new budget and tax rate will be considered for passage. The meeting and public hearing will be held in the downstairs courtroom of the courthouse.