County Looks at Revenue Options for Budget
Tax collections, fund balance and debt payoff captured the attention of the Moore County Board of Commissioners on the final day of a business retreat.
Sensitive to taxpayer reaction, the commissioners eyed revenue sources as they began planning for the 2012-2013 fiscal year budget.
“We need to get the word out that we’re one of the few counties to cut the tax rate in the past three years,” said Commissioner Nick Picerno in reference to the economic recession of recent years. “We’re not increasing the amount we’ve been spending.”
A summary of the general fund for the past two years shows that expenditures dropped to $82.1 million in 2011, down from $82.2 million in 2010. However, revenues went up — from $83 million in 2010 to $84.4 million in 2011.
Tax Administrator Wayne Vest reported that property tax revenue has been relatively level in recent years, despite drops in property values as a result of the economic slump. Vest said property with high value has not been selling as briskly as it once did, but he noted that some properties across the county have been selling at figures above the assessed value.
He added that sales of vacant properties continue to be strong.
“This is an $80 million a year business, and we ought to treat it like a business,” said Chairman Larry Caddell.
But Caddell went on to observe that private business must generate its own sources of revenue, rather than government’s reliance on taxation.
Vest had other good news. He reported that tax collections were at 91 percent as of mid-January and expressed confidence that his office would again be able to achieve a 99-plus percent collection rate for the 2011 tax year.
Property tax payments were due by the end of the year, and a penalty is attached to payments received later than an early January deadline. Most of the remaining payments come in before the county advertises the names of delinquent property owners in March.
Vest said his office uses a variety of remedies to collect from delinquent taxpayers, including setting up schedules for partial payments.
“We don’t like to use garnishment,” he said. “We use other remedies before resorting to the more severe remedies.”
Vest said that the tax collection unit starts its work on delinquent payments by reviewing accounts of county employees, then works through the general list.
County Manager Cary McSwain called the county’s consistent 99 percent collection rate “incredible.” He said his office has received only one complaint about collection policy in the five years he has served as manager.
“Collections are done with compassion and care,” McSwain said.
Vest said five or six golf courses are behind on tax payments, which is no surprise. He pointed out that golf courses usually enjoy their peak season in spring, and that’s when they get an influx of cash to pay taxes and other bills. Vest said no other major industries are behind on their tax payments.
‘A Lot of Variables’
In a review of the annual audit, Finance Officer Carrie Neal said the board’s policy of requiring a fund balance of at least 15 percent is a good policy.
The board has established a system whereby any funds beyond 15 percent go into the capital reserve fund to reduce bonded indebtedness on capital projects, such as schools and county buildings, and to reduce the cost of new capital projects.
The Local Government Commission requires counties and municipalities to retain a minimum fund balance of 8 percent, an amount designed to enable them to meet financial obligations for several months in case of a financial emergency. The commission strongly recommends that local governments retain larger balances.
The audit report, conducted by Martin-Starnes & Associates certified public accountants, was presented to the board at its regular meeting earlier in January.
The report, officially known as the Comprehensive Annual Financial Report, shows that the county ended the 2011 fiscal year with a $32 million fund balance, of which only $21.3 million would be available for appropriation. It represents 26 percent of the available expenditures. The difference includes $10.6 million described as stabilization by state statute. Not included in the 15 percent is money appropriated for other purposes but not yet expended.
Picerno wondered why the fund balance is not at least as high as it was the previous year, a difference of about half a million dollars, inasmuch as the county had continued its practice of reducing expenditures.
Neal said that restoration of the longevity pay policy was one of several factors in the lower balance.
“I wish the fund balance was quick and easy to understand,” Neal said. “There are a lot of variables that go into that.”
The auditing firm gave the county a clean financial bill of health but did question the lack of specificity in describing the purposes of the capital reserve fund. Neal said the CPAs want the capital reserve fund to include proposed uses for this set-aside money.
McSwain said the county can handle this issue by designating the expected use of the money, then can change the designation as needs become more specific.
Paying Off Debt
The commissioners also discussed a possible early payoff of bonded indebtedness. At previous meetings they have considered dipping into the capital reserve fund to pay off debts in order to reduce interest payments, especially in a day when interest rates are at historic lows. The see the county's outstanding bonds, click here.
One concern centers on the possibility that the state may penalize counties with especially large fund balances. The state, which has been hard hit by the recession, has reduced payments to local governments, including allocations to the schools.
Although the state would be unlikely to impound such balances, the legislature could decide to reduce grants and other payments to counties with large balances.
“They won’t come down here and physically take it,” said Commissioner Tim Lea. They’ll cut our state funds.”
Caddell said he did not think the state would be interested in balances as low as 15 percent. Instead, he said the state would be looking at balances of 30 to 40 percent.
One solution would be to reduce the fund balance by using it to pay off some of the county’s $114.7 million in outstanding debt balance. Since 2009 the county has paid off millions of debt for school and college capital projects, as well as such things as airport hangars, the animal shelter, vehicles and renovations at the Carriage Oaks complex.
“I’m all for paying off those old debts,” said Caddell.
Information gathered during the two-day retreat will be used in developing policy for the next budget. The retreat was held Jan. 19-20 at the Senior Enrichment Center.
This story was written prior to Florence Gilkeson’s retirement.
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