Editor’s note: The article “City joins rail case, OKs budget” in Wednesday’s newspaper contained a reporter’s error regarding the millage rate, and this article was written, in part, to correct that error and clarify the situation.
Some Covington homeowners will be getting a break on their city property taxes.
The Covington City Council reached an informal consensus during a budget work session earlier this year to lower the city’s millage rate in 2014.
The city’s 2014 tax digest – the value of all land, buildings, mobile homes, vehicles and industrial equipment – hasn’t been finalized yet, so the size of the tax rate reduction hasn’t yet been determined, said City Manager Leigh Anne Knight.
However, in the $126.4 million budget approved this past week for the 2014-15 budget year, the city projected reducing the current 8.208 millage rate by half a mil (0.5), which would be 7.708.
For a home valued at $150,000 that experienced no change in value from 2013, the millage rate reduction would reduce city taxes by $30 ($492.48 reduced to $462.48). Some homeowners may not experience a savings if their property values increased in 2014.
Based on that half a mil reduction, the city is projecting to collect $4.089 million in property taxes. The city always under budgets tax collections, Knight said, just in case tax payments were not to come in as expected.
For example, in the 2012-13 budget year, the city budgeted to collect $4.1 million in property tax revenue, but actual collections were $4.51 million.
Knight said the Newton County Tax Assessor’s Office, the county department that determines property values, told her the city was not expected to see an overall decline in its digest, but Knight said she wasn’t told the city would see an increase either.
Council members said they wanted to give back to homeowners as the economic recovery has been slow.
“I believe that it’s time to give some back to the property owners in the city for we have all suffered through the past several years,” Councilman Chris Smith said in an email. “As you may remember I recommended this last year but it didn’t work out. This year the council talked about it, and it’s what we really wanted to see done.”
Last year, Smith raised the idea of a half a mil tax break, but the council ultimately voted to invest the money, which would have been around $244,000, into the police department.
Councilwoman Janet Goodman said she wasn’t sure the small savings would make a difference to citizens, but she said the council wanted to do what it could.
“We just wanted to try to give the citizens something to hold on to to let them know we do have our citizens at heart. We do know things are low,” Goodman said.
Property tax revenue only accounts for 3.2 percent of the city’s budget.
The vast majority of the city’s projected $126.96 million in revenue comes from its electric system, $50.19 million ($42.36 million in expenses), and its natural gas system, $15.91 million ($11.98 million in expenses). The city has kept is property tax rates low for years and used revenue from its electric and gas operations to fund some other areas of the city.
The $11.76 million the city projects to collect in electric and gas revenues above expenses in the 2014-15 budget year is used to cover other costs, such as public safety, roads and internal city departments.