COVINGTON -- Whatever commissioners settle on to resolve the $5.2 million budget deficit, county services will be affected, Chairman Kathy Morgan said at a budget work session Monday night.
Whether it's fewer deputies patrolling the streets, increased wait time to pay for a tag at the Tax Commissioner's Office or a delay in getting potholes fixed by public works, residents can expect changes in service delivery, Morgan said.
"This is a revenue problem created by a property tax decline of 14 percent," said Administrative Officer John Middleton.
Preliminary estimates are that the county will have to lay off 100 or more employees if the millage rate is maintained at 9.73 mills. Adopting the rollback rate of 10.9 mills would generate an additional $2.7 million in revenue, which would largely go to decrease cuts at the Sheriff's Office and in the court system.
Under the current millage rate, a property owner with a home valued at $150,000 would pay $544.88 in taxes, Middleton said. If the property value does not change and the rollback rate of 10.9 mills is adopted, taxes would increase to $610.40, a difference of $65.52. If the property was reassessed and the value dropped 10 percent, to $135,000, under the rollback rate, taxes would be $545, an increase of 12 cents.
It would take a millage increase to 12 mills to generate enough revenue to overcome the budget deficit, Middleton said.
If that millage rate was adopted, that same $150,000 property would be taxed at $672, an increase of $127.12. If the value was reassessed at 10 percent less, it would be $600, an increase of $55.12.
Commissioners could also opt to pass a lower millage than the rollback rate. A millage rate of 10 mills would generate an additional $638,924 in revenue, while a bump to 10.3 mills would generate about $1.35 million in additional revenue.
Middleton also gave examples of other types of property and the taxes that would be levied under current and rollback rates, assuming no change in value. The examples were taken from actual property on the county tax digest, he said.
An industrial property valued at $13,412,813 at the current millage rate would be taxed $52,203. The rollback rate would increase that to $58,480, a difference of $6,277.
A commercial retail property with a value of $830,900 would be taxed $3,234 under the current rate and $3,623 under the rollback rate, a difference of $389.
A 93-acre agricultural property valued at $38,600 would be taxed $150 under the current rate and $168 with the rollback rate, a difference of $18.
Commissioner Mort Ewing said commercial and industrial taxpayers would be hit the hardest if the millage is increased.
Ewing said a large business owner in his district recently told him he laid off 125 employees and just rehired 25. The business owner said if his taxes go up, he will have to lay them off again, according to Ewing.
Commissioner J.C. Henderson also said he's not leaning toward a tax increase.
"I'm not sold on the tax increase. Even if we go up on taxes it wouldn't save a significant amount of jobs," Henderson said. "Basically I'm willing to listen, but right now, it's not in my heart to consider a tax increase."
Both Henderson and Commissioner Earnest Simmons questioned whether the county could draw from its fund balance. Middleton said that account is currently at $8.1 million, with about $3.1 million in cash. It's recommended that the balance be kept at 15 to 20 percent for credit rating purposes and in the event of an emergency situation where additional expenditures are incurred.
"We're right at about 15 percent right now ... I would suggest right now we don't have fund balance flexibility at this point. If we erode the fund balance any further we'll get down below that 15 percent mark," Middleton said.
Middleton said sales tax revenues are being evaluated and the most recent data has not come in, but added, "I'm not sure how much faith I would put in this economy on sales tax."
If the county lays off a large number of employees it would also be losing its investment of time and training and their expertise and familiarity with county policies and ordinances, Morgan warned. The county cut 16.5 positions, some part-time, during last year's budget process.
"We have already seen the effects of this on morale and on employees," she said.
Monday marked the last of the county's budget work sessions as announced; it's possible that additional work sessions could be called.
Public hearings on the budget are scheduled for 11 a.m. and 6:30 p.m. June 9, and 6:30 p.m. June 15 at the Newton County Historic Courthouse at 1124 Clark St. Adoption of the budget and the millage rate is expected to take place at 7 p.m. June 15.