THIS WEEK'S TOP STORIES
Budgets in the balance: County draws on reserves to close gap in revenue
By Jackie R. Broach
The deficit in Georgetown County’s proposed budget has been cut nearly in half, but whether property reassessment will leave the county with an additional $1.6 million shortage is still unknown.
The S.C. Department of Revenue might be headed toward a decision that would allow counties to include delinquent tax revenue in calculations to determine the new millage rate when reassessment takes place, County Administrator Sel Hemingway told County Council at a budget workshop this week.
“That may effectively take care of our problem … at least for this year, to the point that we wouldn’t recommend delaying,” Hemingway said. “Hopefully by next Tuesday, we’ll have a much clearer picture.”
A public hearing on the budget and the second of three readings by council are scheduled for Tuesday at 5:30 p.m. in council chambers.
Hemingway alerted council members two weeks ago that if they proceed with reassessment this year as scheduled, it could mean a loss of $1.6 million a year in property tax revenue, beginning with next year’s budget.
If some action isn’t taken to eliminate the problem, Hemingway said he sees no alternative to a delay.
That action is sure to displease property owners expecting their tax bills to decrease as a result of reassessment. The town of Pawleys Island is already encouraging council to move forward with reassessment.
But the county simply can’t afford to lose $1.6 million in revenue, Hemingway said.
Reassessment is supposed to result in no increase or decrease in revenue, but Hemingway said a combination of the reassessment formula and Act 388, property tax reform legislation that took effect in 2006, could make that impossible. The formula that determines the property tax rate is based on the previous year’s revenue and assumes a 100 percent collection rate, but Georgetown County historically collects 95 percent of what it bills property owners. That would automatically create a loss in revenue if the county isn’t allowed to include delinquent taxes in its collection rate.
Normally, the county would raise the tax rate to make up the difference, but a property tax cap in Act 388 for residential properties restricts that action.
The S.C. Association of Counties is lobbying for legislative action that would correct the problem. Council Member Jerry Oakley said he was told some progress was made with that late Tuesday evening.
The legislative session ends next month.
If legislative action isn’t taken until next year, even if it is retroactive, Hemingway said council would likely have to vote to raise taxes in 2012 to recoup the funds lost in 2011.
County staff is still working to see what the financial effect of reassessment would be for the county if it is allowed to include delinquent taxes in the reassessment formula.
Hemingway said he doesn’t expect to know until next month how property values have changed, but the assessor’s office is on track to mail out assessment statements in July.
Two weeks ago, council was looking at a deficit of just over $1 million, including a $619,000 deficiency in the general fund.
In the latest draft, presented Tuesday, county staff had cut the total deficit nearly in half, bringing it down to $551,000.
Through line-by-line cuts, the shortage in the $21 million general fund was whittled to $475,000, which will come out of the county’s reserves. That will leave nearly $9 million in the county’s surplus fund. The county’s policy is to keep at least $8 million for use in case of a disaster, such as a major hurricane.
Staff eliminated a $332,000 deficit in the $5.1 million environmental services budget, largely by delaying some capital equipment purchases.
But staff’s review actually increased the deficit in the county fire department’s $2.3 million budget from $30,000 to $46,000. Hemingway said that was a result of lowering projected vehicle tax revenue and expanding a firefighter program for students into Carvers Bay schools.
The county still has a $30,460 deficit in its $188,460 victim services budget.
“I don’t know if we can solve it,” Hemingway said. Without cutting staff positions, there’s not enough leeway in the budget to take care of the shortage.
There has been discussion about having groups, such as the Association of Counties and the S.C. Sheriffs Association, lobby collectively to increase revenue by tacking a victim services fee onto more offenses.
However, that’s unlikely to solve the problem this year.
The budgets for law enforcement ($10.6 million) and Midway Fire and Rescue ($3 million) remain balanced.
It’s still uncertain how much the county will receive in local government funds from the state, Hemingway said, but “the closer we get to the end of the [legislative] session, we feel a little more relieved.”
Two weeks ago, staff predicted a $160,000 reduction to the local government fund. No additional cuts are expected, Hemingway told council this week.
The budget also includes a transfer of about $600,000 from the capital improvement fund to law enforcement to cover operations and maintenance costs associated with law enforcement-related capital improvement projects in the budget.
Staff proposed converting the transfer to millage, raising law enforcement millage by 1.1 mills and decreasing millage for the capital improvement plan by the same amount. Hemingway said that would keep staff from having to adjust the transfer sum annually to account for inflation.
Council members said they prefer a monetary transfer, because that would allow them more oversight of how much money is being moved.
As part of the workshop, council also went into executive session to discuss changes in personnel. Two positions eliminated in last year’s budget were restored. One job at the Georgetown library and two part-time positions at the Andrews Library were added as a result of capital improvement projects, a maintenance position was added to the recreation department so it won’t have to contract for landscaping services, and three part-time bailiff jobs were created.
An administrative assistant position in public services was converted to two part-time positions, as was a recycling center attendant position.
Hemingway said staff used the budget process as another opportunity to review the capital improvement plan and make sure everything is in order. No problems were found.