Panel Holds Tax Rate, Targets Sales Tax Revenue | Local News

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The Cumberland County Commission’s budget committee gave preliminary approval Wednesday for a certified tax rate of $1.135 per $100 of assessed value.

The certified tax rate provides approximately $274,000 in new revenue for the county budget, but reflects the increase in property values ​​following the 2022 reassessment.

“You can see the increase in assessments,” county chief financial officer Nathan Brock told the budget committee. “This number is calculated by the state.”

The certified tax rate is 43.03 cents lower than last year’s tax rate of $1.5653 per $100 of assessed value.

Brock said the commission has the authority to exceed the certified tax rate.

“If you still intend to retain those personnel and those fixed assets, we need to fine-tune the pennies transferred to the general fund,” Brock said.

Overall, property values ​​in Cumberland County have risen from $1.6 billion last year to $2.26 billion this year, due to increased real estate and land markets.

The county also saw a high number of new homes built. Cumberland County E-911 reported 673 new addresses in the county from July 1, 2021 through May 30, 2022.

The county budget is calculated with a default rate of 5%. Every penny of the tax rate generates $215,184 in revenue.

Brock also reviewed sales tax revenue which exceeded budget expectations by 10.37%.

Final numbers have to wait for the July report, but Brock projects $13.6 million in sales tax revenue for the year — funding that goes to the school system. This is approximately $950,000 more than the planned amount of $12.6 million.

Looking ahead, Brock projected sales tax collections would remain robust, estimating another 10.37% increase in revenue, or $15 million.

He also considered two new retail developments slated to open in 2022: the opening of Buc-ee in June and the opening of Chick-Fil-A in August. Those businesses could add another $412,000 to county coffers, he said. The numbers were based on industry and corporate financial projections.

Such an increase in sales tax revenue presents the county with an opportunity to change the property tax allocation, Brock said. He suggested moving 14 cents on property tax from the school budget to the general county budget.

“How you fund the BEP funding requirement is your decision,” he said.

This would add just over $3 million to the county’s general fund revenue, bringing it to about $33 million.

That would leave 12.36 cents in the school budget, or about $2.65 million. That, combined with county sales tax revenue and other sources of school funding — including last year’s tax collections, mixed drink tax, and property tax collections from the clerk and from the teacher’s office – would help meet the county’s $18.9 million funding obligation for the school system. This figure is set by the state to match public education funding.

6th District Commissioner Joe Sherrill questioned whether Brock was being too conservative in his sales tax projections.

“I think it could be higher,” Sherrill said, pointing to spending on American Rescue Plan Act projects that will impact the next fiscal year. However, a large portion of those funds went to nonprofits or government organizations that don’t pay sales tax.

Sales tax increased slightly from 2016 to 2010, with annual growth of 2% to 6% in 2020. In fiscal year 2021, sales tax collections increased by 18.98%. That year included several stimulus payments due to the pandemic and a change in state law regarding the distribution of sales tax on internet purchases.

Several commissioners noted that there were signs of a slowing economy, with inflation at its highest level in 40 years. If the county defaulted on its sales tax forecast, it would have to make up any shortfall from its general budget balance.

Darrell Threet, 3rd District Commissioner, proposed moving 14 cents of the property tax rate from the school fund to the general fund and fixing the sales tax projections at the amount presented.

Sherrill remained optimistic the county would see an increase in sales tax collections over the coming year.

“I believe we’re going to have a higher sales tax next year, even if we go into a recession, because people want to be here,” he said.

He proposed transferring 15 cents of property tax funds from the school fund to the general fund budget and increasing sales tax projections by an additional $215,184.

“It looks like we’re winning more business than we’re losing,” Sherrill said.

Threet agreed to modify his motion to move 15 cents and adjust the sales tax, supported by Sherrill. The committee approved the move.

Moving 15 cents from the school budget to the general county budget would increase revenue by $3.2 million. County Mayor Allen Foster said ambulance service collections have also consistently exceeded revenue estimates by about $400,000. He recommended taking this into account in the budget.

This would give the county an estimated fund balance of $7.35 million to complete the next fiscal year.

The panel also discussed the use of the debt service fund balance to pay for capital projects in the coming year. The county has about $17.6 million in the debt service reserve fund, just under three years of debt repayment. Next year’s debt repayments will total $6.6 million.

The county could pay off about $1 million in variable rate debt next year, Brock noted. This would also have an impact on the pool of funds. The county’s debt service policy calls for setting aside two to three years of payments.

Foster said: “I recommend you take it all [from debt service]. There’s a lot in there and I prefer to keep cash in the general fund. It’s more fluid. »

The move could add an additional $3 million to the general fund balance, bringing the estimated closing fund balance to approximately $10.35 million.

Brock said the Department of Finance should review capital projects to determine which are eligible for debt service reserve funding. Some technology items are paid for with funds designated by offices that collect fees, such as the Deed Registry Office. Other elements have grants that will offset the cost, such as the purchase of new voting machines.

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