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Officials OK 14-cent property tax increase

July 29th, 2011 11:32 pm by John Thompson

ELIZABETHTON — After soundly defeating the recommendations of its Budget Committee, the Carter County Commission voted 13-6 Friday night to set the property tax rate at $2.1528 per $100 of assessed value.
The approved tax rate is 4 cents lower than the $2.1928 that the Budget Committee had recommended. The lower tax rate funds all the recommended budgets for all the county offices and departments for the year.
The new budget includes a $1 million increase for schools divided approximately 70 percent to 30 percent between the Carter County School System and the Elizabethton School System. It also includes an additional $1.3 million to fund 37 new positions for the new Carter County Jail, an additional $344,720 for the Carter County Highway Department and $378,783 more for the General Fund to cover increases in costs of fuel, utilities, insurance and maintenance agreements.
Commissioners Lawrence Hodge, Joel Street, Richard Winters, Harry Sisk, Charles VonCannon, Charlie Bayless, Dickie Renfro, Ken Arney, Steve Chambers, Sonya Culler, Russell Kite, Bill Armstrong and Pat Hicks voted for the tax rate. Nancy Brown, Ronnie Trivett, Tom Bowers, John Lewis, Scott Sams and Robert Gobble voted against the increase. Commissioners Ernest “Gebe” Ritchie, Steve Lowrance, L.C. Tester and Jo Ann Blankenship were absent. There is one vacancy.
The meeting began when Budget Committee Chairman Bowers presented the recommended tax rate agreed upon by a 5-2 vote of the committee on July 18. That recommendation was for a rate of $2.1928. That was an 18-cent increase over the state certified tax rate of $2.01.
One of the key factors of the proposed tax rate is that it kept taxes lower by making a one-time withdrawal out of the county’s $8 million fund balance for debt service. The proposal would place the property tax rate for debt service at 12.6 cents. That would bring in $991,000, but the payments from debt service would be around $3.2 million.
“Personally, I cannot recommend it,” Bowers said as the introduced the committee’s proposal. “As always, I encourage you to vote your conscience.”
There was no immediate motion or second on the committee’s recommendation. Instead, several commissioners asked questions. Lewis asked if the committee had looked at ways to save money, such as limiting the number of county employees with vehicles and gas cards.
Mayor Leon Humphrey said the $2.19 tax rate represents an increase of $45 per year for an owner of a $100,000 house. He said that works out to an additional $3.75 per month.
The committee’s recommendation was eventually defeated by a vote of 8-11.
After the defeat, several commissioners offered suggestions to lower costs. Trivett suggested cutting all departments by 5 percent. Mayor Humphrey said the committee had considered the same cut but had found state mandates on maintenance of effort by local funding bodies prohibits the county from lowering the amount it provides the school, sheriff and highway departments. That meant that only the courthouse offices would be eligible for the cuts, which would not have a large impact on the overall budget.
Lewis suggested that since the new jail is behind schedule for opening that the county just leave it closed for another fiscal year. Humphrey said the punch lists for all outstanding corrections on the new jail should be completed in a week or so. The only outstanding problem is the gouging and discoloration of the new floors. The biggest remaining problem in opening the new jail is now staffing and training the new personnel. Chief Deputy Ron Street said that should be accomplished by December or January.
Following these discussions, Bayless offered his compromise proposal of setting the tax rate at $2.15. The 4-cent reduction in the proposed tax rate increase was made possible by taking even more from debt service, reducing the amount to be paid in this year to only $600,000. Finance Director Ingrid Deloach said that even factoring in the interest earnings and other income, the fund balance should decline by about $2 million this year.
That money should eventually have to be replaced, but the repayments can be spread over several years. In addition, some large payments coming out of debt service will be going away, especially payments of near $1 million a year for Cloudland Elementary School that will end in 2014.
But Bowers warned that taking money out of fund balances can be dangerous. “It is like a cancer. It feeds upon itself until it is all gone,” Bowers said.

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