Budget coming down to crunch time
♦ Commissioners seek to adjust expected revenue, cut expenditures across departments by 1 percent
The Polk County Commission made real progress in decisions on how to fund the needs laid out by administrators for the coming year.
Additions to some areas of revenue collection where commissioners think more will likely come in over what was projected with the budget submitted back in May, plus a 1 percent cut in expenses for all departments across the board might be enough to balance the FY 2019 budget.
County Manager Matt Denton promised to have updated numbers after press time for the commission to look over and discuss in an upcoming budget work session on Monday, along with their August work session ahead of Tuesday votes.
The budget needed another $315,848 in revenue to find or expenses to cut, plus an additional $603,202 in requests over what was planned for when commissioners received numbers in the spring.
Long discussions have ensued since as they seek to find savings and avoid doing what no one wants: raising local property taxes.
A group of commissioners sought last year to vote for a slight millage rate increase, but the rate ended up being settled and approved at 11.061 mills.
Denton provided the commission with a list of what rates the board could set before the end of the month to send out on the coming tax bills, starting at a millage rate that would be the rollback if commissioners stayed on that track.
It provided him the ability to get into a deeper discussion over property tax collections and ultimately what commissioners should expect to get in from Tax Commissioner Kathy Cole’s office by the time bills are supposed to be paid by a usual due date of Dec. 1.
This was before a discussion of where commissioners felt the amount of anticipated collections can be raised, and what expenditures they need to cut.
Tax Trends
Before moving forward, it is worth explaining the difference between budgeted and actual tax collections for a fiscal year, and how those collections work.
Every year as summer is winding down, county tax commissioners are required to prepare and send out bills to local property owners after they create an annual digest of the value of all the homes, buildings, land, timber and much more within the borders. Each of those are taxed up to a certain point, and bills go out in the mail in the early fall that are due before year’s end.
Many homeowners get these bills in the mail and have since 2015 seen the millage rate stay at the same 11.061 level.
Depending on new construction, property transfers via sales, delinquent taxpayers, foreclosures, and many more factors, those collections can total up to more or less than what was budgeted.
For instance, in 2014 the county set a millage rate then of 11.12 before it went down to the current rate in 2015. The rate set on all the property was expected to generate $9.8 million in dollars to come into the county, but actually by the time the auditors finished looking over the figures the county actually took in $9.4 million in tax dollars for the year.
Instead of increasing the amount expected in, the county adjusted in the following years downward and instead of coming in under what they’d budgeted, they ended up being above conservative estimates.
So in 2015, the $9.4 million expected came in at $9.7 million, and in more specific terms meant a net positive in tax collections of around $280,000.
Conservative estimates continue to provide the county with positive gains in tax collections even at the same millage rate, but only for one reason: the changing level of how many people are paying their taxes.
Denton explained that most years, there’s around 90-plus percent rate of people sending in their checks and keeping up with the county. In most recent years, collection rates are as high as 96 percent.
Going above expectations on tax collections is not a bad thing, but because the number of how many people actually send in checks – or get their bills changed because of adjustments made after bills go out, and a variety of other reasons too – it can affect how much money is actually available by the end of the fiscal year to operate on overall.
Meaning that if not all the collections come in and it falls short of the budget, adjustments have to be made and money borrowed from other areas to keep the budget balanced.
This is one reason why the Tax Assessor’s office pushed in years past for the county to spend money to have aerial photographs shot of the entire landscape, to see if they’d missed some area of say, new buildings on land that weren’t approved by the building inspector and can be taxed, or timber cleared and sold but not reported to the county or state, which changes the value of property and also creates additional income the owner of the land should have to account for.
With a full picture overhead of what is actually over the county at a specific time, it can then provide a real value for how much is actually here in Polk County – call it $932 million in overall value for everything taxable in the county – and only $10 million of that actually sought to be collected for taxes each year in the 2018 fiscal year.
It also allows for the county to see new development happening, which then provides a larger digest value and allowing the county to get to the same budget numbers without having to charge more on the millage rate.
Where the problem lies for the commission is how to account for shortages that might come in for property tax collections in a variety of areas, from whether car sales are higher or lower to whether they make additional interest off of people not paying on time.
Making adjustments
If the money is coming in higher than expected, even with people not paying their taxes, why not just adjust the figures upward to account for it in the coming year’s budget?
That’s what commissioners proposed to get the numbers to line up better, but they’ve still got some more work to do.
For instance, commissioners looked at an increase in the amount of money budgeted for the cost charged to utility providers like Georgia Power and Charter Communications to use public right of way to string power and cable lines.
Last year, the county anticipated the state-mandated rates to generate some $850,000 in income for the county, but instead it brought in higher than that with Denton reporting some $941,000, a difference of more or less $91,000 unexpected increase. The amount the county receives annually is determined by utility rates set by the state, and thus from year to year it can change.
For instance, those rates provided $25,000 less in revenue in FY 2016, but by the next year shot back up.
Commissioners Jennifer Hulsey and Scotty Tillery suggested the county increase the amount they expect to take in for the FY 2019 budget to help account for shortfalls in needed revenue to balance the budget and pay for items needed.
“In the meantime we can figure out why it is going up and down,” Tillery said.
Changes too in the amount of ad valorem taxes received when someone buys a car and registers it locally also will see an increase as well.
Those figures have increased after a change in policy in years past to charge the full amount of taxable value on a new car up front instead of changing the cost annually on drivers when they get a new tag sticker each year.
Revenue generated from annual tag renewal collections on older vehicles have decreased as they are replaced, and the fees paid as part of the sticker price at the dealership when a new car or truck is purchased and then registered in Polk County.
Thus the amount generated from new car sales can vary from year to year as the economy either improves and prices go up, or it retracts and people hold onto their vehicles longer instead.
Also seeking adjustment is a change to the amount of money the county believes it will make as more people come back to pay delinquent taxes from years past, with penalties and interest as part of the overall bill.
Commissioners agreed to increase that amount slightly as well.
Much of the shortfall was met with increasing amounts across revenue streams from conservative estimates to more realistic figures, but Denton and Finance Director Muriel Dulaney both cautioned commissioners that if they didn’t meet the budget by more than 10 percent in any category of revenue or expenditure, they’d have to explain to auditors and later the state when submitting figures why those figures didn’t fall within that margin of error.
Cost cutting
One decision the commission also agreed to seek was a 1 percent spending cut across all departments.
They sought to gain further wiggle room within the budget with the measure, and talked about efforts to cut costs by saving on each building’s utility bill to future efforts like how to bring retirement costs within reason, or how to cut down on the costs of group insurance overall.
Hulsey said no changes were acceptable to the insurance plan for this year, but further study of the saving on costs as the amount needed to cover employees continues to rise each year.
In the proposed budget, insurance costs going up about 23 percent on the year.
Some items that were requests above the budget were added into updated budget figures that will be paid out, among those a $13,750 grant match for the District Attorney’s office and the Carl Vinson Pay Study costing $30,000. A $20,000 cost for house demolition on Lowery Road and inmate food and medical increases were also built in and have to be paid, and those total some $48,741 needed in the Sheriff’s Office and didn’t include requests for additional deputies and jailer staff.
Commissioner Chuck Thaxton said there were many items on the list he wants to fund, but in order to get close to making it possible, the county was going to have to come up with cuts in other places, or adjust revenue to the point where expectations would be liberal.
Before any adjustments were made, the county administration presented a balanced budget of $22.1 million in revenue and expenditures for FY 2019. It doesn’t include any spending for Special Purpose, Local Option Sales Tax spending items which has additional rules for how those collections can be used.
If the county were to not vote for any changes at all to the FY 2019 budget’s revenue and expenditures, they’d need an adjusted rate of 11.395 mills to fund all the government functions without the additional $603,202 in requests either included or not in the budget as it stands.
Those requests alone account for a .647 mills of revenue to fund.
The millage rate has adjusted upward some over the past years in the years before and following the recession.
From 2005 when the millage rate was 10.012, it has increased a full mill and only brought down slightly from 2014 to the current rate set in August 2017 at 11.061.
It sat from 2009 to 2013 during the deepest years of the last recession at 10.850, and forced cuts to the county government in a variety of areas.
Down to the wire
Commissioners were expected to meet for another budget work session at the start of the week, and if after press time on Tuesday hadn’t settled on budget numbers need to before the end of the month.
If tax bills are to go out by the end of September and start coming back by a traditional Dec. 1 due date, the county needs to vote on a millage rate and how much they’ll need to collect for operations by a end of August target deadline to keep the process working on time.
They also are expecting to vote on the intergovernmental agreement for the forthcoming 2020 SPLOST vote, which knowing they’ll be working toward having capital improvement funds for future use through 2026 gives them some freedom to work on tax collection figures.
Expect more reporting on those decisions and more to come as August continues in forthcoming editions of the Standard Journal. Also, see this week’s advertisements on Page A5 to find out more about the five year tax history digest and an advertised millage rate, which is set higher than what commissioners usually decide to set it at.