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2-cent tax hike to come?
Highland officials struggle to make ends meet
BY JAMES JACENICH • STAFF WRITER
MONTEREY - Thirty-eight cents on the $100 valuation property tax rate is one of the lowest rates in Virginia, but that doesn't matter to landowners who complain they have trouble paying that amount. Add to that the 2006 reassessment that doubled some property values in Highland, and people start seeing red, as in red ink.
The Highland County Board of Supervisors is well aware of opposition to a tax hike when they prepare a budget. For two of the members, Jerry Rexrode and Robin Sullenberger, it's something they've had to deal with for years. For board newcomer David Blanchard, it's a reality check that good government often means making the choice between the lesser of two evils.
Recent fiscal constraints from the state and federal levels have meant less money for local governments with no equivalent lessening of mandates to provide services. The $36,250 cut handed down by the state to Highland this week drives home the point that money is tight this year.
Tuesday, supervisors finalized their budget proposal, raising property taxes by 2 cents while cutting $102,000 from the proposed school budget. The budget is balanced by increasing taxes (bringing in $120,000 and drawing $114,748 from the general fund).
Each penny raise in the tax rate generates around $60,000 in revenue, county administrator Roberta Lambert said.
A 2-cent increase in the property tax rate amounts to $20 for every $100,000 in property. That equals a good lunch for two at Mountain Hideaway, plus tip - arguably affordable for most citizens, but certainly not all.
Large landowners will feel the greatest pinch as they see their taxes go up $100 on a $500,000 farm. With undeveloped acreage selling for about $5,000 an acre, a halfmillion dollar property is typically about 100 acres.
The total budgeted expenses for county operation are $2,086,529. That does not include the school budget of $4,545,178, social services at $291,186, comprehensive services for $217,564 and capital improvements of $120,000. The grand total for the county is $7,123,543 - up from $7,044,630 last year, an increase of $78,913 in spending, a little more than one percent.
Even with expenses up only about 1 percent, state funding is down.
Seven million dollars is a lot of money, but that's what it takes to pay for basic services here citizens have come to expect - law enforcement, public education and social services, to name a few. Not all of that money comes directly from county taxes. Budgeted revenue is a combination of federal, state and local fees.
The county anticipates bringing in enough money to cover expenses.
General fund transfers are proposed at $114,748 this year. Last year the county took $99,019 from its general fund. County treasurer Lois White says that's a reasonable amount to draw, and not at all unusual based on years past. Some years the county doesn't have to draw from the general fund; some years it does.
The general fund is what the county brings in every year in taxes, federal and state appropriations, fees and other sources, she explained. It equals cash on hand. The budget is what the county obligates to spend each year. Hopefully, money in exceeds the money out - as it usually does in Highland's case.
Revenue, per the proposed budget, is anticipated, not actual, and often changes slightly - enough to alter the final amount that comes in each year, sometimes leaving enough of a general fund surplus that can be applied to next year's budget, and still leave money to cover existing obligations and future contingencies. "You never want to spend all of your general fund," said White. You always leave enough to cover the unexpected.
Of the roughly $7 million the county takes in, $2,622,750 was in property taxes last year and $2,720,150 is anticipated for the coming year - an increase of $97,400 based on a 40-cent per $100 property value tax rate. That's roughly a 3.7 percent increase over the previous year. Spending, on the other hand increases a little more than 1 percent this year.
State and federal funding for local government has not kept up with the cost of doing business, leaving localities to make up the difference. The state cut the 2008-10 biennium aid to Highland by $36,250 this year, $35,875 next year. The cuts are by county government program and range from $13,758 for financial assistance and law enforcement to $19 for financial assistance for state tax services by local treasurers. Revenue from the state to finance constitutional officesamounted to $1,003,362, a $1,362 increase (.001 percent over last year).
The county has two options - raise taxes to make up for the loss in revenue or cut expenses. The board decided to pass the state cuts on to county departments, and decided to cut $102,000 from the school budget that was underfunded by the state this year.
School shares in budget
cuts
Monday, supervisors met with the school board and asked what effect a $102,000 cut in the school budget would have on school services. Superintendent Gary Blair said a cut of that size would mean not hiring a math teacher for middle school. Instead, he said, he might offer a teaching position to a math certified aide and eliminate the aide position.
"We looked at your budget," Highland supervisors' chairman Jerry Rexrode told Blair. "It's a sizeable increase. If we cut anyplace, it's categories. Can we afford it?"
The county's portion of increase is $244,000.
"That's a four cent tax increase," said Rexrode.
Supervisor Robin Sullenberger added, "It is a sizeable increase. We are not adverse to going to Richmond again … One of the challenges of that is, it took us quite a long time for those officials to understand our dilemma … we are getting real close to where the numbers can't go any lower … We don't want you to compromise the quality of our education.
"Worst case scenario," Sullenberger asked, "what are you going to be forced to compromise if we take anything?"
"It's a continuous process," said Blair, "not one big cut. We can cut our health insurance by $20,000, (the) $10,000 storage building, (and) $10,000 for facilities/ maintenance … the big one would be $62,000 to collapse the middle school teaching position, for a $102,000 total … These would not be critical cuts that would harm children's education."
But to cut further, Blair said, "would mean I'd have to cut teaching positions"
"Maintenance and capital improvement programs we have tried to put back at the end of the year," said Sullenberger. "Are we where we need to be?"
"I don't have enough information to answer," said Blair. "As far as I know, things are OK."
"We've cut fuel costs as much as we can cut it," Rexrode added. "One thing we need to look at, we have facilities money available. We've been putting aside money. We need to look at (building) insulation and try to cut fuel costs as much as possible.
Rexrode estimated the county would lose about $745,000 in state education aid by 2012, based on the projections for decling numbers of students.
Referring to getting legislation to change Highland's education funding from the state, Sullenberger said, "We positioned ourselves as being unique and different, (but) other districts are trying to do the same thing. That's going to cause us some issues over time. If we get thrown into pools that include other areas, it diminishes our chances of getting something specific to Highland."
"The state is always going to put unfunded mandates on us," added Blanchard. He said the school board and supervisors would have to work together to get as much as they can out of Richmond.
"We are aware of situations," said school board chairman Kirk Billingsley. "We know the county will not be able to afford $20,000 a student (as projected in years to come). We are looking at options and will continue to look at options."
"Economically, our school system is attracting families," said Rexrode. "If we get one or two families moved here because of schools, I'm glad to see that."
"The school system is one of our greatest costs and one of our greatest assets," Blanchard added.
"I want time to (cut the school budget) in a timely manner rather than in a knee-jerk reaction," said Blair.
Rexrode said, "We need a plan if we are going to lose two teachers this year and two teachers next year. Home schooling hurts us. I wish we could bring those students in here. It's a difficultdecision we have to make. We have to ask taxpayers to pay for this." He said taking students to Augusta or Bath is impossible due to weather, distance and the mountains. "We've looked at a whole lot of things," he continued. "Let's look at what we've got. It's not my intention to kill you this year."
Rexrode said other school districts in the country earn enough money from wind energy utilities to pay for schools.
Parent Karla Obaugh said perhaps there would be a grant from James Madison University for wind turbines that would help with financing. A small wind turbine for the school, similar to one approved for Blue Grass valley resident Keith Carson, might provide enough electricity to offset the rising cost of electricity at the campus, she said.
"I'd like to reiterate, we need to winterize the school. We need to insulate as much as possible," said Rexrode.
Karen Brown said she is a new county resident and parent, and she likes what she has in Highland. "I've been very happy with the education my two elementary school aged daughters are getting here," she said.
"I think there are a lot of changes that can be made in the middle and high schools," said Obaugh. She suggested that bigger classes in middle and high school would lessen the need for teachers.
"You are back to equity issues for children," said Blair. "As you whittle down your teaching staff, how do you offer (classes) for children?"
Public hearing April 21
The county budget has two major parts - the school budget and other county operations. The cut to the school budget will probably mean at least one cut in personnel this year,. So far, personnel cuts are not part of the picture for county offices,but services could be threatened as resources diminish.
Lambert said she didn't know how department heads would react to the budget until they've had a chance to go over the numbers handed down by the supervisors Tuesday. "It's not easy to maintain or improve the level of services citizens have come to expect and deserve," said Lambert. "But that is our goal."
The next step is a public hearing on the proposed county budget at 7:30 p.m. Monday, April 21 at the Highland Modular Conference Center in Monterey.
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