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Posted: March 30, 2011 1:00 a.m.

County facing more cuts or taxes

Newton County commissioners are in for another tough budget cycle as they have to decide whether to cut the budget yet again or raise the millage rate, this time above the rollback rate, to account for declining tax revenues.

The county’s initial projections released Tuesday show that the county could collect around $43.7 million in revenue in fiscal year 2012, a decline of $2.6 million from the current year’s budget of $46.3 million.

The initial estimate predicts a 10 percent decline in the county tax digest, which contains the value of all land, buildings, equipment and motor vehicles in the county.

More than half of the county’s revenue comes from these ad valorem taxes, $25.8 million this budget year, and most of the decline in revenue would come from land and building devaluation.

Commissioners voted to raise the county’s millage rate to 10.91 last year, and Administrative Officer John Middleton said the millage rate would have to be raised to 12.12 to bring in the same amount of revenue.

At the same time, county constitutional officers and department heads have submitted their initial requests, which total $50.94 million, a $7 million gap from expected revenues. Middleton said he asked department heads to hold the line whenever possible, and for the most part they did.

The board is scheduled to hear from select department heads at its budget meeting at 6:30 p.m. April 11 at the Historic Courthouse.

Middleton said the county is a service provider and, as a result, personnel costs were its largest. Middleton said there are several unknown factors which could increase county expenses, including rising gas prices, increased health insurance claims and future state legislation.expenditure, accounting for around $28 million. Personnel requests increased by $500,000 for fiscal year 2012.

Commissioner Nancy Schulz asked if this meant department heads were asking the county to abandon its hiring freeze for new positions, and Middleton said the board could decide whether it wanted to have a hard freeze on all hiring or try to determine necessary positions.

The board is also trying to replenish its reserve account, or fund balance, to avoid losing its high Aa2 bond rating, which affects the interest rates the county receives on its loans. Moving more money to the reserve account, which pays for operations during times when the county is not receiving property tax revenue, would put further pressure on the county to either increase revenue or reduce costs. The reserve account sits at around 9 percent of the total budget, but should be closer to 15 percent, according to government accounting standards.

Counties that don't have enough reserve funds to cover the gap in property tax collections from July through September often have to take out tax anticipation notes, which is a form of debt the county would have to pay interest on. Newton County has not had to take out such notes in the past, Middleton said.

Middleton cautioned that cutting the budget even further would reduce the quality of service the county could provide, be that planning, road work or law enforcement.

The county is having budget meetings every Monday at 6:30 p.m. at the Historic Courthouse until May 23. Constitutional officers, including the clerk of courts, judges, the tax commissioner and the sheriff, will present their budgets next Monday.

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