Computer glitch costs $3M
County, city, NCSS to lose projected funds

COVINGTON - Due to a computer error, taxable value of property in this year's tax digest was overstated, meaning the county, city of Covington and Newton County School System will not collect as much revenue as projected.

Revenue was overestimated by a total of more than $3 million, according to officials.

Chief Appraiser Tommy Knight said 50 accounts that should have received a freeport exemption were instead counted as taxable property. The mistake was made during conversion to a new software system. Those 50 accounts, mostly industrial property owners, represent property valued at a total of $85 million, Knight said.

The school system will be the hardest hit by the error, with a revenue reduction of approximately $1.5 million, according to Director of Public Relations Sherri Viniard.

"We are in the process of reviewing our (fiscal year) 2010 budget to determine an appropriate course of action in light of this revenue change in addition to the state cuts and other financial issues facing the district," Viniard said.

The county is expected to lose $929,000 in projected tax revenues, Administrative Assistant John Middleton said.

"The chairman and staff are currently evaluating the fiscal impact to the (fiscal year) 2010 budget. A recommended plan of action will be discussed with the Board of Commissioners at their regularly scheduled meeting on Aug. 18," he said.

According to City Manager Steve Horton, Covington will see a decline in revenues of about $650,000.

"Fortunately, we budgeted very conservatively this year with regards to anticipated property tax collections and, therefore, the error will not impact our budgeted revenues," he said.

Freeport exemptions are applied to inventories of goods in storage that will be shipped out of state, finished goods held by the manufacturer or producer for up to a year, or goods in the process of being manufactured. The percentage of exemption can be set at 20, 40, 60, 80 or 100 percent of the inventory value. In Newton County, the exemption is set at 100 percent.

But property that should have been counted under the freeport exemption was instead counted as taxable.

Knight said the mistake was caught about two weeks ago, and property owners that received erroneous bills were immediately notified. The Tax Assessors Office also contacted county, city and school officials, he said.

"We all dealt with it as properly and professionally and as quickly as it could be dealt with," he said.

Corrected bills have been sent to affected property owners.

"They understood and appreciated us catching that and making them aware of it," Knight said.

This is the first year the county has contracted with software vendor Governmental Systems Inc. of Macon, which was hired after the previous vendor retired.

As a result of hiring a new provider, the entire digest had to be converted to a new system. That included data on all 51,000 parcels in the county, some with up to 15 or 20 records each. All told, about 240,000 records, representing $3.4 billion worth of property, were converted.

"We're not at all blaming the vendor for this problem. When you're converting as many records as we did ... I'm amazed there wasn't more errors than just this," Knight said.

Once the error was discovered, staff "quadruple-checked" the rest of the data, he said.

"This is the only error we could find. As significant as it is, it is the only error," he said.

"In no way does this impact anything with the digest submission process. The state has already approved the digest. It's a matter of correcting these 50 accounts, and we've already done so," Knight said, adding that the state allows corrections to be made once the digest is submitted, which typically occurs between June 30 and July 10.

How the news will impact local governments and the school system isn't yet clear.

Just two months ago, county commissioners and the Board of Education were given "final" tax digest numbers showing more revenue than initially projected.

County commissioners, who had been struggling to make up a $5 million shortfall, expressed relief at the news that property taxes would bring in an additional $646,000.

Even with the extra funds, the county still terminated 16.5 employees, required remaining personnel to take 16 unpaid holidays, cut capital projects and departmental expenditures and took other cost-cutting measures to balance the budget.

The school system has also faced budget woes this year. State funds will be cut by 3 percent, or between $2 million and $3 million, this fiscal year, and the state will also reduce grant monies.

The Board of Education also recently approved three furlough days for teachers that were requested by Gov. Sonny Perdue to help with a state budget shortfall.

In June, the board was notified that it would receive nearly $1.2 million more than anticipated in tax revenues, based on the completed tax digest.

After receiving that news, the board added several positions that had been cut from the budget, including five school nurses, graduate coaches at the middle schools, a counselor at Sharp Learning Center, a college financial aid advisor and part-time paraprofessionals at elementary schools.

Staff Reporter Michelle Floyd contributed to this story.

Crystal Tatum can be reached at crystal.tatum@newtoncitizen.com.