Looking ahead: Raise taxes or cut spending
WOODSTOCK – Shenandoah County leaders would need to raise real estate taxes significantly to close a potential deficit in next year’s budget.
Or the Board of Supervisors could cut back the additional spending requests as proposed for fiscal 2017. The board also could do some of both.
County Administrator Mary T. Price presented a proposed budget of $71.15 million to the Board of Supervisors on Tuesday. The board will consider the proposed spending plan and how to make up the $5.4 million difference between what Price recommends and what the county can expect to receive in revenue next year. Increased spending requested in the areas of public safety and education make up the bulk of the deficit. The county also used $1.6 million from savings to cover recurring costs not funded in the proposed budget.
The county relies heavily on revenue generated by the real estate tax and the board sets the rate of that levy based on the budgetary needs. The board also sets the rate based on the overall value of real property.
The latest reassessment performed last year by Wampler Eanes Appraisal Group shows that all values dropped by 4.14 percent. Land values dropped by 11.11 percent while the value of improvements such as houses increased by only 2 percent, Finance Director Mandy Belyea explained Tuesday. However, Belyea eliminated the value of new construction last year – about $23 million – from the overall assessment figure that’s not attributable to the reassessment, to give a decrease in total value of 4.59 percent.
Preliminary estimates show that the county would need to increase the tax rate from 57 cents per $100 to 60 cents to make the levy “revenue neutral” given the reassessments dropped overall, according to information from Belyea. The county would actually lose approximately $1.3 million in revenue, half of which would affect the current budget, if the board does not increase the rate to 60 cents.
How an increase in the rate would affect taxpayers depends on the value of their property. For example, the owner of property valued at $203,900 in 2015 and $181,600 in 2016 would see their bill drop from $1,162 to $1,035 or $127 at the current rate. The bill would still drop by almost $72 if the county raises the rate to 60 cents. However, the owner of property valued at $260,500 in 2015 and $319,500 in 2016 would see the tax bill increase from $1,485 to $1,821 or $336 under the current rate and by $432 under a 60-cent rate.
A rate of 60 cents would help increase general revenue from local sources to $65.76 million – falling short of the $71.15 million needed to fund proposed requests.
Each penny on a 60-cent rate would bring $430,000. The county would need to increase the rate an additional 12.5 cents to 72.5 cents per $100 to generate the revenue needed to close the $5.4 million. The county also could increase the rates of other taxes to help close the deficit and not rely solely on real estate.
Should the county raise the real estate tax rate to 72.5 cents, some property owners could see their bills increase. The owner of property valued at $200,000 would pay a tax bill of $1,200 at a 60-cent rate. The bill would increase to $1,500 at a rate of 72.5 cents per $100. The owner of property valued at $300,000 would pay $1,800 at the 60-cent rate, $2,175 at 72.5 cents.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org