cherokee county board of commissioners 2012 outlook and impact on millage rate june 22, 2011 |...

Cherokee County Board of Commissioners

2012 OUTLOOK AND IMPACT ON MILLAGE RATE

JUNE 22, 2011 | JANELLE FUNK

2012 Outlook – Starting Shortfall

• In 2012 the County will not have $1.5M Blalock Land Sale

• The County will also not have the $2M option of reducing contributions to the defined benefit plan for General Fund

• In 2011 we budgeted $787k in General Fund Reserves (shortage of final inflows compared to outflows)

• In 2011 the Jail Fund is covering $600k of costs previously paid from General Fund (this required $470k of the fund’s reserves). The Sheriff Office has voiced concerns over continuing to use this fund as it is meant to cover unplanned jail emergencies.

• Several funds are using their reserves to make it through 2011 (Fire, V/W, E911, Animal Services, Senior Services)

• Starting 2012 with $5M shortfall in General Fund2

2012 Outlook – Decrease in Tax Digest

• Property Taxes are based on the property values in the Tax Digest

• In 2011 Property Taxes provide 67% of the General Fund Budget ($37.9M including collections of delinquent taxes)

• The 2011 Tax Digest dropped (for a third year in a row)

• Since the base dropped, if we applied by the same 2010 Millage Rate we will collect: – $2M less in 2011 for the General Fund– $0.9M less for the Fire Fund– $0.3M less for the Parks Bond 3

2008 2009 2010 2011Net Digest $8,647,647,873 $8,363,820,840 $7,657,673,935 $7,229,767,167Decrease $ ($283,827,033) ($706,146,905) ($427,906,768)Decrease % -3.28% -8.44% -5.59%

First Option – Rollup the Millage Rate?• In order to collect the same amount of property taxes as we did in 2010,

one option is to rollup the Millage Rate

• The calculation takes the lower property values and adjusts the rate to collect the same total

• Therefore, if a homeowner experiences the average 5.6% decline on their home value, they will not pay more in dollars, even though the rate has increased

• In 2010 the General M&O millage rate was 4.720 and assessed $36,144,221 in property taxes:– $7,657,673,935 x 4.720 = $36,144,221

• If we rolled up the millage rate in 2011, the rate would be 4.999, and we would assess $36,144,221 in property taxes:– $7,229,767,167 x 4.99 = $36,144,221

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Millage Rate Preview – Impact of Rollup

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Average Home in Cherokee County – Impact of County TaxesImpact of Rollup 2011 v 2010

2010 Property Fair Market Value = $176,7002010 Taxable

Value 2010 Rates 2010 BillGeneral Fund (M&O) 65,680 4.720 $310.01Fire Fund 70,680 2.950 $208.51Parks Bond 70,680 0.628 $44.39Total County Millage 8.298 $562.90

2011 Property Fair Market Value = $169,300 (Decrease of 4.2%)2011 Taxable

Value 2010 Rates 2011 BillGeneral Fund (M&O) 62,720 4.720 $296.04Fire Fund 67,720 2.950 $199.77Parks Bond 67,720 0.628 $42.53Total County Millage 8.298 $538.34

2011 Property Fair Market Value = $169,3002011 Taxable

Value 2011 Rollup* 2011 BillGeneral Fund (M&O) 62,720 4.999 $313.54Fire Fund 67,720 3.115 $210.95Parks Bond 67,720 0.664 $44.97Total County Millage 8.778 $569.45* Total Tax Digest decreased 5.6%, my home decreased 4.2%

Bottom Line: The Rollup is designed to collect exactly what the County collected last year. If a taxpayer’s home decreased 5.6% (avg Tax Digest), they will not pay more in 2011.The rate increases, but the base decreases, so the dollar amount stays the same.

Millage Rates – Full Rollup & Starting Shortfall

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Average Home in Cherokee County – Impact of County Taxes

2011 County Tax Obligation for Average Homeowner in Cherokee County100 % FMV of Home = $169,300

2011 PROPOSED MILLAGE RATES AND TAX BILL $ IMPACT OF CHANGE

Net Taxable Value @ 2010 Rate 2011 @ Rollup 2011 @ Rollup +

Rollup Increase

Increase for Shortfall

Total $ Impact

General Fund (M&O) 62,720 4.720 4.999 5.691 0.279 0.692 0.971Fire Fund 67,720 2.950 3.115 3.195 0.165 0.080 0.245Parks Bond 67,720 0.628 0.664 0.664 0.036 0.000 0.036Total County Millage 8.298 8.778 9.549 0.480 0.772 1.251Total County Tax Bill $538.34 $569.43 $618.23 $31.09 $48.80 $79.89

Bottom Line: If the Millage Rate is increased to cover the full value of the shortfall – the impact on the average homeowner would be ~ $49.00.

Shortfall $5M M&O, $0.4M Fire

Possible Offsets to the Shortfall

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5,003,000 General Fund Starting ShortfallOffset By:

(1,350,000) Sale of Admin Building (Using a portion of proceeds)250,000 Increased Costs for 2012 Elections

(650,000) Vacant Positions(125,000) Increased Fines200,000 Lower Business License Revenue

(200,000) Miscellaneous(400,000) Workers Comp281,008 New Debt Service on Tyson Property(50,000) Outside Agencies300,000 Increased Fuel Costs April 2011 YTD 24% > 2010 YTD

3,259,008 General Fund Final Shortfall

While these are possible offsets –

many are uncertain/not defined

for how to achieve.

Using these uncertain items to determine

the 2011 Millage Rate could be fiscally irresponsible.

Millage Rates – Full Rollup & Reduced Shortfall

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Bottom Line: If the BOC uses one-time items and other possible offsets - the impact on the average homeowner would be ~ $34.00. But it is uncertain if we can achieve the offsets.




Rollup Increase


Total $ Impact


Shortfall $3.3M M&O, $0.4M Fire

“More Certain” Offsets for Net Shortfall

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The decision was made to only include “more

certain” items in the Shortfall

Calculation to determine an appropriate

Millage Rate to advertise for public

hearing.

5,003,000 General Fund Starting ShortfallOffset By:

250,000 Increased Costs for 2012 Elections(654,485) Vacant Positions Confirmed By ADs/DHs to Not Fill200,000 Lower Business License Revenue

(100,000) Miscellaneous Target(400,000) Workers Comp281,008 New Debt Service on Tyson Property300,000 Increased Fuel Costs April 2011 YTD 24% > 2010 YTD

4,879,523 General Fund Final Shortfall

Millage Rates – Full Rollup & Known Net Shortfall

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Bottom Line: We will advertize a millage rate increase to cover the starting shortfall and new known items - the impact on the average homeowner would be ~ $48.00.

Known Net Shortfall M&O $4.9M, $0.4M Fire




Rollup Increase


Total $ Impact


SUMMARY• The following rates will be published in the Sunday, June 26th

edition of the Cherokee Tribune as the County’s “tentative 2011 rates.”– General Fund from 4.720 to 5.674– Fire Fund from 2.950 to 3.195– Parks Bond from 0.628 to 0.664– Total Millage Rate from 8.298 to 9.533

• These rates are subject to 3 public hearings:– July 5, July 19, and July 28 at 6pm in the Bluffs Board of Commissioners

Auditorium

• The Board of Commissioners is committed to exploring options to set the 2011 rates lower than advertised

• The Final 2011 Millage Rates will be adopted by the BOC on July 28

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GENERAL FUND Rates 2011 Tax Revenue2010 Rate 4.720 $34,124,5012011 Rate to Collect Same 2010 $ 4.999 $36,144,221

ROLLUP SUMMARY 2011 Mill Rate "Increase" from Rollup 0.279 $2,019,7202011 % "Increase" from Rollup 5.9%2011 Rate to Collect Rollup & Shortfall 5.674 $41,023,744

SHORTFALL SUMMARY 2011 Mill Rate Increase from Shortfall 0.675 $4,879,5232011 % Increase Related to Shortfall 14.3%2011 Combined Mill Rate Increase 0.954 $6,899,2432011 % Increase for Full Rate 20.2%

FIRE FUND Rates 2011 Tax Revenue2010 Rate 2.95 $15,976,0802011 Rate to Collect Same 2010 $ 3.115 $16,868,418

ROLLUP SUMMARY 2011 Mill Rate "Increase" from Rollup 0.165 $892,3382011 Rate "Increase" from Rollup 5.6%2011 Rate to Collect Incremental Shortfall 3.195 $17,301,853

SHORTFALL SUMMARY 2011 Mill Rate Increase from Shortfall 0.080 $433,4352011 Rate Increase Related to Shortfall 2.7%2011 Combined Mill Rate Increase 0.245 $1,325,7732011 % Increase for Full Rate 8.3%

PARKS BOND Rates 2011 Tax Revenue2010 Rate 0.628 $4,695,0972011 Rate to Collect Same 2010 $ 0.664 $4,961,564

ROLLUP SUMMARY 2011 Mill Rate "Increase" from Rollup 0.036 $266,4672011 Rate "Increase" from Rollup 5.8%2011 Rate to Collect Incremental Shortfall 0.664 $4,961,564

SHORTFALL SUMMARY 2011 Mill Rate Increase from Shortfall 0.000 $02011 Rate Increase Related to Shortfall 0.0%2011 Combined Mill Rate Increase 0.036 $266,4672011 % Increase for Full Rate 5.8%

TOTAL Rates 2011 Tax Revenue2010 Rate 8.298 $54,795,6782011 Rate to Collect Same 2010 $ 8.778 $57,974,203

ROLLUP SUMMARY 2011 Mill Rate "Increase" from Rollup 0.480 $3,178,5262011 Rate "Increase" from Rollup 5.8%2011 Rate to Collect Incremental Shortfall 9.533 $63,287,161

SHORTFALL SUMMARY 2011 Mill Rate Increase from Shortfall 0.754 $5,312,9582011 Rate Increase Related to Shortfall 9.1%2011 Combined Mill Rate Increase 1.235 $8,491,4832011 % Increase for Full Rate 14.9%

cherokee county board of commissioners 2012 outlook and impact on millage rate june 22, 2011 |...

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