A newly constituted grassroots group in Macon County has called for a refund of county tax dollars, claiming that the county’s reserve fund too high.

The Macon chapter of Citizens for a Sound Economy recently purchased advertisements in local newspapers urging residents to push county commissioners for a refund.

“Taxpayer alert. Your property taxes are higher than necessary. Macon County Taxpayers need and deserve a tax cut,” read the ads. “The County has more than twice as much cash — $22,000,000 — than is needed to provide all necessary services and more!! Contact Allan Bryson, County Commission Chairman 526-4925, and tell him you want some of your money back through a tax cut.”

However, county officials have debunked the claims, saying that the group’s numbers are wrong. In a written response to CSE’s claims, county manager Sam Greenwood said that the group overlooked $5.4 million the county uses to make debt payments.

The general fund balance currently stands at $15.4 million, or 35 percent of the general operating budget, said county finance officer Evelyn Southard. The balance is higher — both dollar and percentage wise — than either Jackson or Haywood county.

Jackson’s fund balance is at $11.2 million, which is 28 percent of last year’s operating budget. Haywood’s is approximately $14 million, which is 17 percent of last year’s operating budget.

Fund balances are akin to rainy day funds, money put aside in case of emergency or to make regular monthly expenses if there is a cash flow interruption for some unexpected reason.

Fund balances were relied upon this past fall as a quick source of funds to help recovery efforts from Hurricanes Ivan and Frances, though the money appropriated did not seriously reduced the fund balances.

The state recommends that counties reserve at least 8 percent of their operating budgets for these funds, which means that of Macon’s $15.4 million balance, approximately $4.2 million cannot be spent. Of Jackson’s $11.2 million, approximately $3.2 cannot be spent. Those numbers fluctuate with each budget cycle.

The minimum 8 percent reserve plays a factor when counties wish to issue debt or take out a loan to pay for a project. Before a county is allowed to take out a loan, officials must first submit an application to the N.C. Local Government Commission, which determines whether the county has adequate funds to make debt payments.

“Your interest rate lots of times will be determined by your strength,” Southard said.

Jackson Finance Officer Darlene Fox agreed.

“It’s to the county’s advantage to have a good fund balance,” Fox said.

Whenever a fund balance dips below 8 percent, counties are subject to closer monitoring and must file monthly reports with the LGC.

And while members of Citizens for a Sound Economy have said that counties should be kept out of debt, Southard said that issuing debt is more of a fairness issue than anything else.

“One of the reasons, if it’s a long-term issue, is the people who use the service pay for it,” Southard said.

For example, if Macon County suddenly decided to build a new water system to plan for future growth and did not borrow the money, it would be today’s residents and taxpayers who would fund that project — not the future residents for whom the project was planned.

In the past, Macon County has drawn criticism for high property tax burdens. A report by the John Locke Foundation stated that in 2003 residents paid an average of $145 more per capita than the rest of the state. County officials say the comparison is wrong, as it does not account for the high number of seasonal residents who pay property taxes but are not counted as part of the permanent population.

And Macon County has seen tax rates go down from 45 cents per $100 valuation to 37 cents. This year the tax rate is expected to stay the same. Jackson’s tax rate also decreased from 48 cents per $100 valuation in 2003 to 36 cents in 2004. That rate is expected to hold steady this year. Haywood’s tax rate stands at 61 cents per $100 valuation, a figure that also should hold.

While some residents may push for decreasing fund balances and cutting taxes, Fox said that you can’t do both.

“If you pull from your reserves and lower tax rates, you can’t continue to do that,” she said.

At some point, the money will run out.

Another reason for high fund balance percentages is that in counties with smaller budgets, higher percentages represent less money, said Haywood County Finance Officer Julie Davis.

“The smaller the entity, the larger the fund balance needs to be,” Davis said.

For example, Haywood County has a larger operating budget than either Jackson or Macon — the total proposed budget this year is slightly more than $63 million — and therefore only holds 17 percent in reserve. Davis said the county tends to have higher expenditures than it does revenue and therefore appropriates funds — this year about $2.7 million — from reserves, with the hope that those monies will not have to be used.

Macon County commissioners operate under a self-imposed mandate that their general fund balance will never dip below 25 percent of the operating budget. Jackson and Haywood commissioners do not operate under that scenario. However, Macon did not actively work to secure the 35 percent fund balance.

“There’s not have a lump sum that goes into a reserve account,” Southard said.

What ends up going into the reserve is simply the difference between collections and expenditures.

“We are doing our best to determine what the actual revenue stream is going to be, and then the expenditures are pretty much based on history,” Southard said.