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Wednesday, 10 June 2009 19:13

Haywood commissioners exhaust search for budget cuts, tax increase looms

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A proposed tax increase that Haywood residents have fought hard against could likely be avoided if residents would just pay their taxes on time in the first place. But property tax collections are down this year, presumably due to the economy, and is a major factor in the county’s budget woes.

The amount of delinquent property, personal property and vehicle tax payments is so high among Haywood County taxpayers that the total amount owed in back taxes could make up for the county’s budget shortfall and help commissioners avoid raising the property tax rate.

The situation was brought to light at a workshop commissioners held last week in an effort to take a last look at the county’s budget for the upcoming fiscal year. Public outcry over a proposed property tax increase prompted commissioners to make a final evaluation of places to trim, but to no avail.

The outstanding revenue from delinquent property taxes is about $1.4 million, according to county tax collector David Francis. Additionally, another $500,000 in vehicle taxes and personal property taxes is past due, bringing the total amount of past due taxes to about $1.9 million.

In a normal year, the tax collection rate is about 97 percent, but collections for the year are currently running about 94 to 95 percent.

The estimated revenue that would be generated by the proposed 1.7 cent property tax increase is just $1.2 million. The current property tax rate in Haywood County is 49.7 cents per $100 valuation.

Commissioner Skeeter Curtis argued that the county had not figured delinquent tax payments into the budget, and therefore was not considering all options when it came to balancing it.

“We’re going to let 5 percent of our people who have not paid their taxes have a tax increase for all of (the residents), and we haven’t put one dime in the budget for this money,” Curtis said. “We would not have to have a tax increase. I don’t understand how we can sit here and put a budget together when people owe us.”

But other commissioners cautioned against assuming that everyone will pay up.

“We are making a lot of assumptions right there that everybody is going to pay and everything is going to get better,” said Commissioner Bill Upton. “Some people think it’s going to get worse.”

The county hopes to recoup $500,000 of the outstanding taxes over coming months and factored that into the proposed budget. But that’s just an estimate of what the county could recover, said Chairman Kirk Kirkpatrick.

“There’s no guarantee,” Kirkpatrick said. “If everybody paid their taxes when they ought to, we wouldn’t have this problem.”

County taxpayers have indeed been hit hard in the recession, and the effect has trickled down to the county’s budget. Francis said that the county has experienced two major bankruptcies in the past year — Ghost Town in the Sky theme park, which owes the county $43,000 in back taxes, and an excavating company, which owes the county $21,000.

Francis said that personal bankruptcies throughout the county have risen dramatically this year. Last year at this time, there were 30 declared bankruptcies; this year, there are 65.

Commissioner Mark Swanger joined the chorus cautioning against assuming the county can recoup too much of the outstanding taxes.

“It’s not a projectible revenue stream,” Swanger said. “You can’t spend anticipated collections.”

The county is still stuck between a rock and a hard place as it looks to make up for a projected budget shortfall. Many of the budget cuts suggested by citizens have already been made, or they are mandated services that the state says the county must provide.

“At the end of the day, the state and the federal government tell the counties in North Carolina that you will provide these services,” said County Manager David Cotton. The county doesn’t have cart blanche discretion to cut anywhere wants, but instead has few areas where it can actually cut.

The county has already trimmed back personnel, where it spends the majority of its dollars. Cotton said the elimination of a proposed 32 full-time positions will put the county back six years in terms of staffing levels.

The state is also talking about passing on more mandatory expenses to counties in order to make up for its own severe budget shortfall, so counties are anticipating the possibility of deeper budget cuts in the future.

Still, citizens are none too happy about the county’s proposed property tax increase.

“The burden is falling too heavy on us,” Johnnie Cure, a leader in the tax opposition movement, told commissioners at the budget workshop. “Where is this going to end?”

Kirkpatrick said commissioners have almost exhausted every option in looking where to cut.

“Who else can we pass it on to?” Kirkpatrick responded to Cure. “It’s not going to come out of the sky. If the state says the county has to do it, we have to do it. We don’t have a choice. We’re trying to be the best stewards we can.”

So far, the county commissioners have been unable to come up with a good alternative to offset the proposed property tax increase, so that option still seems likely to pass.

The county commissioners will vote on the budget at their regularly scheduled meeting at 5 p.m. Monday, June 15.

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