Municipal, county and school finance directors are crunching the numbers this week to see what reductions in the value of local property mean for upcoming budgets.
The tax digest is the financial document upon which all property taxes are based. It is designed to represent 40 percent of the “fair market value” of land, buildings and vehicles, a number that has fallen in recent years as property values tumbled in the Great Recession.
Local governments got the preliminary 2012 digests last week. A final version could be available in August. Commercial property was reappraised this year and numerous appeals are anticipated.
Commercial values are up substantially, but they did not increase enough to offset another big reduction in the value of residential property. The result is a (preliminary) net decrease of 4.77 percent countywide, according to Jackson County finance director John Hulsey. That’s a reduction that’s causing major headaches.
Commerce City School System finance director Ann Stokey said preliminary numbers from the office of tax commissioner Don Elrod indicate that a mill of taxes will bring in $5,292 less this year than last. With a 17.75-mill levy — a rate unchanged in about a decade — that amounts to a shortfall of $94,000.
“That’s huge for us,” Stokey commented, “but it’s not as bad as we thought it would be.”
Couple that with ever changing “earnings sheets” spelling out how many state-funded positions the school system has earned, and it’s a finance manager’s nightmare.
School systems have struggled with funding cuts since 2008. In 2009, the Commerce School System received $9.27 million in state QBE (Quality Basic Education) funding. Since then, that number has fallen to $7.15 million for 2012 even as local costs have increased — and tax digests have fallen, reducing local revenue.
This year, the system’s costs for health insurance are being hiked. Stokey expects the system to pay an additional $80,000 to $90,000 to cover certified personnel and $14,000 more for non-certified personnel in the current school year.
Commerce Tax Hike To Be Higher?
For the city of Commerce, the five-percent reduction in its tax digest could mean that a property tax increase envisioned for 1.5 mills could be close to two mills.
“The commercial picked up, but it did not pick up the drop (in value) we saw in residential,” commented accounting manager James Wascher. “The figures are real preliminary.”
Wascher said the Commerce digest experienced a $13.3 million drop in residential value and a $2.4 million increase in commercial value.
“We could be looking at two mills instead of 1.5,” he said.
Jackson County’s Hulsey projects that if the board of commissioners holds the tax rate at its 2011 level, it will generate $944,383 less revenue than last year. But the county can absorb that, he hastened to add, because a refinancing of county bonds will save the county over $800,000, which will be realized next year.
“We are taking advantage of all the refunding opportunities we can,” Hulsey noted.
County School Revenue To Fall By $1.2 Million
The Jackson County Board of Education will take the largest hit from the falling digest — about $1.2 million, according to the preliminary numbers.
In response, the board has adopted an “absorption” plan (see separate story) to reduce staffing levels that officials hope will absorb $1 million of that lost revenue over the next school year.
“It is going to be an ongoing process,” said Jamie Hitzges, associate superintendent for finance. “We’re going to be looking at it every month.”
A sampling of businesses in Commerce verifies that most but not all commercial appraisals are up. Reaction to the new values varied.
David Sanders of Sanders Furniture Company indicated he will likely appeal a 30-percent increase in the value of a rock storage building with a falling-in roof, but he conceded that it “might have been under-appraised in the first place.”
The value of his main building declined slightly, he said.
Terry Minish reported a 15-percent increase in the value of the Jay’s Department Store building, but conceded that the new figure is “realistic.”
Don Shubert of Shubert & Company, CPA, had similar sentiments.
“It did increase (48.5 percent), but I had done some pretty significant improvements,” he said. “I felt like it was in line as far as the value is concerned.”
Shubert noted that the value of apartments he owns in Commerce “went down considerably.”
Chris Bulls reported no plans to challenge the new value of CMC Consulting, located in the former First Georgia Bank building on South Elm Street, which went down by more than $70,000.
On the other hand, Sammy Highsmith said he will definitely appeal the new value of Ivie Funeral Home’s South Elm Street facility.
“It more than doubled, from $400,000 to over $900,000,” said Highsmith.
It won’t be his first time to appeal the county’s appraisal. Three years ago, the county wanted to place the value at $700,000. Highsmith hired a consultant and was able to get the figure adjusted to around $400,000.
“It’s an expensive appellate process,” Highsmith complained.
If enough other businesses successfully appeal their appraisals, the result will be a further erosion of the tax digest. Property owners have a 45-day window to file an appeal, after which they make their case before the Board of Equalization and, if necessary, argue it in superior court.
Meanwhile, Hitzges, the Jackson County school finance officer, reported that the value of his home in West Jackson fell by $93,000.
