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Wednesday, 08 May 2013 01:54

Macon commissioner duo wants to spend down savings to bring on tax cuts

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Two tight-pocketed Macon County commissioners, who have voted consistently against all sorts of new government spending, have decided to go on the offensive and push for a tax decrease.

 

Ron Haven and Paul Higdon cited the recent move to give about $750,000 in raises to county employees as their latest justification for a property tax decrease. Haven said the property owners were the ones who deserved the raise.

“The ones we have forgotten are the taxpayers,” Haven said.

Haven said he wants to see a return to pre-2010 tax rates in the county, which was 26.4 cents per $100 of property value. In 2010, the commission approved a 1.5 cent increase to fund school construction.

Haven claims the tax increase was unnecessary — pointing to millions of dollars at the county’s disposal sitting in its savings account.

Known as a fund balance, the savings are a contingency fund. They provide a safety net in case of a cash flow crunch or emergency spending, like a natural disaster.

The state mandates counties and towns keep a fund balance of at least 8 percent of their annual operating budget — a rule of thumb equivalent to one month’s of operating expenses. Eight percent is the bare minimum, however, the average is more than twice that.

Macon clocks in with a fund balance of 42 percent, one of the highest percentages in the state among county governments. The county’s unusually large fund balance has been a source of pride for county leaders but also a source of criticism during the years.

In dollars, average fund balance of counties of Macon’s size — between 25,000 and 50,000 residents — is about $11 million, Macon County has about $18 million in reserves, according to recent statistics from the N.C. Treasurer’s Office.

Haven wondered why the extra money wasn’t being returned to taxpayers.

Higdon agrees.

“If government doesn’t need that money give it back to the taxpayers” Higdon said. “I don’t think the county government should be holding taxpayers dollars above what is required to conduct business.”

Higdon also wants to reverse the property tax hike of 2010. But he also wants to give back the extra tax money collected as a result of that hike during the past three years. That would mean a one-time tax cut of 4.5 cents in the coming year. He said that would translate to $45 off the next tax bill of a person paying taxes on a $100,000 home and about a $4 million shot back into the county’s economy if people spent their property tax savings locally.

Macon County has the lowest or second lowest tax rate in the state, but that doesn’t mean people pay exceptionally low property taxes. The county is due for a revaluation of property values in the post-recession economy, as a rule of thumb property values go down and thus tax rates are increased to keep revenues stable.

Since Higdon ousted Democrat Ronnie Kuppers’ from the board seat in January — presumably swinging the board to a more conservative majority — there have instead been a series of unbudgeted, high-profile spending proposals that have raised the ire of the fiscally conservative Republican. He has opposed a request from emergency services for nearly $400,000 for new cardiac defibrillators, a $500,000 purchase of property for county sports complex and the $755,000 in raises for county employees. Recently the county was approached with $1.9 million request from the school board.

“I’m not an economist, but I can read a budget sheet,” Higdon said. “There is no sign that we’re looking to cut anything.”

However, Democratic Commissioner Ronnie Beale said the notion of a tax decrease in the upcoming budget didn’t seem very realistic, although he said he would support it if it were possible without reducing the services offered.

“If we could find a way to do it, great, but without penalizing our school systems and other things we have going for us,” Beale said. “But if you cut taxes, something has to be cut out.”

Beale said Macon County has cut its overall budget during the last four years, and residents are well served by the fact that the county can afford things like emergency vehicles, school equipment and cop cars because of its reserve funds.

When the county was faced with the Peeks Creek landslide and countywide flooding, it had to make quick use of the contingency funds to provide disaster relief, he said.

“I’m very proud of our fund balance. It gives us latitude,” Beale said. “It’s not just like Monopoly money.”

At least one expert on county government was hesitant to dismiss the importance of a large fund balance. When disaster strikes you might be glad you have it, said Todd McGee, public relations director with the N.C. Association of County Commissioners. Also, according to a survey of counties in North Carolina, about a quarter of them used their fund balance in the current fiscal year to help with revenue shortfalls.

“I think it’d be hard to say that any fund balance is too big,” McGee said. “What happens if the county courthouse burns down?”

However, Bill Rivenbark, a professor of public administration in the UNC School of Government, said once the baseline amount is reached in the balance, the decision is left up to policy makers as to what to do with the rest.

“Some elected officials see that the fund balance as a safety net; others want to spend the money,” Rivenbark said. “You can make a case for either side.”

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