County prepares for possible revenue shortfall

By Megan R. Harrell

   In the last five years Carter County has either lost or had significant decreases in the amount of revenue generated from commercial property taxes. With the 2002 budget just around the corner, county commissioners are faced with finding a way to restore these funds through cutbacks or through raises in personal property taxes.
   In 1997, Carter County lost tax revenue when North American shut its doors, then the following year in 1998 Sycamore Shoals was sold to Mountain States Health Alliance, a non profit, non taxable organization. Sycamore Shoals paid the county $132,449 in property taxes in 1998, the last year that it operated for profit.
   Although the County Trustee has an overall tax collection rate of 95 percent, some of the businesses that are leaving owe the county a considerable amount in property taxes. North American has until Feb. 28, 2002 to pay over $34,000, while Alcoa owes $148,128. "I do not want to make it sound like these businesses are in trouble, they owe us, but they do have until Feb. 28 to pay before they become delinquent," Randal Lewis, County Trustee, said.
   The county also may lose an additional $60,000 in sales tax this year because of businesses that relocated to a city address. The county calculated this potential loss this fall when addresses of local businesses that were coded wrong were correctly coded. These businesses will pay sales taxes to the city instead of the county next year.
   The tight budget has come from the state down. The county lost grants from the state this year and have had to come up with the money on their own. This year the state cut the county's litter grant by $7,000 and its tire grant was reduced by $22,000.
   County Executive, Truman Clark will not have the six month figures to set the 2002 budget until he goes to Nashville on Jan. 10. However, Clark and county commissioners do have ideas as to how they would like to see the revenue shortfall resolved.
   Even though things look bleak, Clark is optimistic about this year's budget. "Right now I would say that we are going to finish the year in the black," Clark said. "That means there will not be a lot of surplus left in the budget to do anything with. There will probably not be enough to do anything above where they are right now without a tax increase and I do not think the commissioner is leaning towards a tax increase, so I assume it could be another very lean year."
   At best the county hopes that it can operate in 2002 at the same level it did in 2001. If this is the case, there will be some projects that will have to wait for more lean years. The sheriff's department has requested new operating funds to make an addition to the county jail and the register of deeds office also needs renovation work done.
   "We do not have a great deal of building program needs in the county except for the additional jail space, and that would really take a big priority," Clark said.
   If the six-month figures show Carter County with a revenue shortfall, Clark stated he would sound the alarm at the County Commission meeting Jan. 14. If that alarm sounds, county operational cutbacks and raises in taxes may ensue.
   In 2001, the County Commission tried to sell voters on a wheel tax in order to generate much needed revenue. Unfortunately, the public did not bite and voted against the $20 tax per vehicle almost two to one.
   "There has been a move in the state to equalize the assessment against businesses, against utilities and against residential properties, which has transferred more of the burden to the residents."
   In 2001, the County Commission tried to sell voters on a wheel tax in order to generate much needed revenue. Unfortunately, the public did not bite and voted against the $20 tax per vehicle almost two to one. The county has had to rely on other sources of revenue from other places.
   The County Assessor's Office has kept generated revenue for the county through reappraisals which in turn affect the property tax rate. "Our office kicks in extra money for the county every year through reappraisals," John Holsclaw, Carter County Tax Assessor, said.
   The state mandates that the 31,490 parcels of property in Carter County are reappraised on a consistent basis. Carter County is currently on a five-year cycle with its last reappraisal in 2001 and its next in 2006.
   In 2001 the total value of all taxing entities in Carter County were reappraised at $419,394,236. A value which put the property tax rate at $2.15 per $100 of property value. The County Commission raised the certified tax rate by seven cents, to $2.22, in order to meet budget needs in 2001. The last time the Commission voted to raise the tax rate was in 1992 when they built the new Hampton school.
   The assessor must follow an assessment guideline manual published by the Statewide Reassessment Program. The same program issues the reappraisal grants to each county in Tennessee. Each year of the five-year cycle, county assessors perform field appraisals on 20 percent of the parcels of properties.
   The assessors are required to follow the guidelines set up by the Statewide Reassessment Program when determining property values and must have completed 100 percent of the parcel reappraisals before the five-year cycle has ended.
   Assessors look at a number of different factors when they determine values. Factors such as the type of road the parcel is located on, the square footage, topography, floor finish, structural frame, roofing, foundation stability, number of baths, electrical work, and age of home all play into the market value of each parcel. "The most important thing we look for is the market value of the property," Holsclaw said.
   In the past three years the total value of assessed entities in Carter County has climbed over $75 million. The increase in total property value means that property owners pay more in taxes and the county receives more revenue.
   The county commissioners do not want to raise property taxes and are looking at cutting utilities. "The commissioners are talking about making additional cuts with an operational budget, and you can't cut heat and lights but so much, and sewage and telephone are the same way," Clark said.
   With all of the 2002 figures still not calculated it is hard for county officials to select a route to take in order to keep revenue flowing in Carter County. One way or another, the county will have to recover the revenue it has lost because of state budget restraints, and loss of funds from commercial businesses leaving the area. "The amount of growth that we have had in the county has not been all that good when you count the net losses that we have had," Clark said.
   As it gets closer to budget time Clark stated that he will continually look at figures, and the longer it goes with figures continuing to fall, the more critical it will become. He has not yet noticed decreases to a great degree, but that does not mean that the figures will not begin to fall when he starts adding up the six-month figures.