IOW tax rate increase not necessaryPublished 9:09am Friday, September 14, 2012
by Al Casteen
Tax rate increases take on a life of their own and are seldom removed.
Arguments by the Isle of Wight Commissioner of the Revenue and one board member that a four-cent tax rate increase would be “revenue neutral” does not compute for me.
After paying a 25 percent increase last year, if taxpayers’ property lost value this year, are they not entitled to pay lower taxes? Why not consider reducing expenses instead of raising taxes?
As for my reasoning in not increasing the tax rate, here goes:
• Tax revenue is $1.7 million short due to the reassessment.
• The county received on Friday, Aug. 17, $947,000 from the sale of an easement on the Blackwater property, which can be used for any purpose.
• In 2011, the board set aside $315,000 to offset the loss of revenue from the reduction in the machinery and tools tax rate, but did not include it for funding the 2012-13 budget as intended; thus there is a total of $1.3 million that could be used to address the revenue shortfall without raising the tax rate at all.
• In 2012, the board set aside $300,000 for potential additional funding to the schools. The board is very unlikely to do that (barring any unforeseen emergencies) in light of the school board’s recent action to deprive the taxpayers of the $1 million in debt service savings realized by actions of the board of supervisors in 2011.
• The budget does not reflect $279,000 in machinery and tools tax that the county will receive this year from International Paper.
• During this year’s budget process, we discovered an error in the 2011-12 projected budget revenue wherein projected revenue of $150,000 for taxes on recordations/wills should have been more like $500,000. The clerk of the court reported that revenue was $494,000 at the end of June, yielding an actual yearend surplus of $344,000.
Those last five total $2.185 million; $518,000 more than the projected shortfall without a tax rate increase.
Of course, it looks like the sale of surplus county property will take longer than expected so we may not get the full $1.1 million budgeted as revenue this year. But the budgeted amount is only half of the total assessed value so selling half of the property at the assessed value would still get the $1.1 million needed.
Subtracting $518,000 from the $1.1 million reduces the potential shortfall to less than $600,000 on a budget of $95 million if we don’t sell any of the surplus real estate.
Also, keep in mind that $360,000 advanced to the sheriff for new vehicles from the unassigned fund balance will shortly be returned when the new bonds are issued.
In conclusion, all of the above assumes that every penny for the 2011-12 budget was spent by the end of June and there is no carryover of excess revenue other than the $344,000 from taxation on recordings/wills.
Based on the financial reports for the end of May, we could well end up with a surplus approaching $1 million as we did last year. This is only one percent.
Given the strict budget control measures in place and carefully watched the whole year, this is quite possible.
All of the above considered, Isle of Wight has no significant shortfall for the 2012-13 year.
In the future we may well need to increase taxes. But, the county will also begin to realize considerable additional revenue from the three recent successful economic development projects that are expected to bring 1,120 new jobs over time. These projects are done deals and are being implemented.
We don’t need a tax rate increase in these very difficult economic times. The residents of the two towns and business people are going to pay proportionally more of the new revenue that will come from a rate increase.
It will not be revenue neutral to folks in the towns or to folks owning commercial property and multi-family homes, according to the commissioner.
Does that seem business friendly?
I’m counting on folks to think this through and help prevent this tax rate increase by sharing their views with the rest of the board and the commissioner, and speaking out at the public hearing on Sept. 20. It’s your wallet.
AL CASTEEN is chairman for the Isle of Wight County Board of Supervisors and represents the Smithfield District. He can be reached at firstname.lastname@example.org.