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County wish lists could trigger 3-cent tax increase

Henderson County taxpayers may see a tax increase of up to 3 cents in order to fund the budget requests and of wish lists of department heads, new construction and higher school spending.

After a daylong budget workshop last week, commissioners agreed to funding requests that added $3 million to the budget County Manager Steve Wyatt recommended. The county is expected to take up the budget at its June 6 meeting. It must adopt the spending plan by July 1.
“I think we’ve got two or three things that definitely have to be dealt with before we can finalize how much it is,” said board Chairman Tommy Thompson. “I’m of the opinion that we’re looking at a tax increase, the amount I don’t know. There are a couple of things in that budget that have a big impact I guess you’d say.”
Among the budget drivers are an increase in school spending of $1.4 million, including $600,000 for Chromebook tablets; new training incentive pay for sheriff’s deputies and ambulance personnel; new debt service for economic development incentives and construction projects like the Health Sciences Center and a new roof on the county jail. The Board of Commissioners created a budget hole of almost $500,000 when it repealed fire inspection fees it had adopted just one year ago.

Schools get funding

Tax drivers

Budget requests of $5 million could result in a Henderson County property tax increase of as much as 3 cents per $100 valuation. Here are some of the major factors:

• School increase including Chromebooks: $1.4 million.
• New cooperative extension position to promote agriculture: $60,577.
• Revenue loss and refund total for scrapping fire inspection fee: $490,000.
• New debt service for buying land to sell back to G.F. Linamar: $1.2 million.
• New EMS crew: $651,936.
• Advanced training pay for sheriff’s office: $262,578.
• Advanced training pay for EMS: $222,108.
• New roof on jail: $966,900.
• Across the board pay increase (3%): $1 million.

“I believe that our board is in a consensus to grant the schools what they’re asking,” Thompson said. Possibly brought on by the board’s decision to override a School Board recommendation on Hendersonville High School construction, Thompson said: “What’s out there in the community is a concept that we’re telling the schools what to do with the money and that’s not the case. It’s their success, not ours. In any event I think all five of us are supporting the schools budget.”
One other wild card is how to balance the budget when it comes to the landfill and recycling center. Among the options were charging for recycling, an idea with little support, adding a countywide fee everyone would pay or lowering tipping fees to lure haulers away from cheaper landfills. More discussion and decision on that is also expected before the board adopts the FY2016-17 budget.

Taxes v. fund balance

The verdict of a tax increase, or the size of one, from 1 to 3 cents, is likely to come down to the board’s agreement on a mix of new taxes and spending some of its savings.
Historically a consensus builder as chair, Thompson likes to guide the board to a unanimous vote on the big issues like the budget.
“From what I have heard it sounds like they’re not all together on whether or not to use the fund balance or whether to raise taxes,” he said. “I’m against lowering the fund balance under 12 percent. You’re stifling your opportunity to borrow money and get a good interest rate. If you start lowering that fund balance that’s showing quite frankly you don’t have money in hand to take care of serious costs that might come forward.”
He’ll have some persuading to do to win Commissioner Bill Lapsley, who says the county can go below a 12 percent floor the board has set as policy. (State law requires that local government units keep a fund balance of at least 8 percent of their general fund.)
“There’s four or five issues out there that could impact the tax rate,” Lapsley said. “I don’t know necessarily that they will but they could. I’m still of the opinion that we don’t need a 12 percent fund balance. Those are dollars that the taxpayers have paid in. I think there comes a limit to what we should be putting aside.”
Lapsley says budgeting of fund balance is often more of a paper exercise because the county does well in holding spending under budget and generating revenue above projections.
“The point I’m making is we really have not reduced the fund balance, the actual cash,” he said, because the county has gained money.
Whole that’s true, Wyatt says, a positive cash outcome is not something the county can guarantee.
“Historically, the fact is that we’ve added about $800,000 a year on average to our cash position,” he said. “It doesn’t matter how much you budget in expenses and revenue. What matters is that you actually spend and how much you actually receive. There have been years when we haven’t improved our cash position.”
Revenue sources that are sensitive to economic ups and downs like the sales tax and unexpected or emergency expenses could cause the county to end the year flat or even with less cash.
“We’re very conservative but we’ve also been very successful” in conserving cash, he added.
Commissioner Charlie Messer favored many of the major funding requests.
“If you look at all the growth we’ve got in the county— with the sheriff’s department, the EMS and the schools — those three things alone, that’s $25 million worth of stuff,” he said. “I think if we sell ourselves short now I think it’s bad for the county. I’d like to leave the tax rate the same, fund the schools, pay for the new roof and do everything we have to do to make it happen.”
After observing the first half of the nine-hour budget session, Sheriff Charlie McDonald had an idea of where things were going.
“I suspect they’re going to be put in a position of having to raise taxes to give everybody that’s been here today even part of what they want, which is why I don’t envy them in their position,” he said.