Property tax increase raises questions
Sunday, September 23, 2012
Not since 1982 have Cape Girardeau County residents paid a property tax to support the operations of county government. This was a point of pride with former commissioners. Sure the county collected property taxes, they would say, but all of that revenue went to other jurisdictions such as schools, libraries and the like. County operations were funded by sales taxes.
In the last couple of years the sales tax revenue has been fairly flat. The recession, followed by a weak recovery, has put the pinch on consumers' collective spending power.
Overall, county government operations have been humming along for many years. The county government, in general, has touted its conservatism, holding expenses down while getting the job done. There have been some missteps along the way, but the county has assisted several private and public developments while maintaining healthy spreadsheets.
A quick decision by commissioners
Earlier this month, the county commission voted in favor of raising our property taxes from zero to .038 cents per $100 of assessed valuation. County officials have estimated this to cost from $10 to $30 for the average resident who pays property taxes on homes and vehicles. This will generate roughly $450,000, basically the current budgetary deficit.
This increase, and the alternatives to it, may have been closely examined within the halls of the county administration building, but the information presented to the public has been far from thorough. Nothing was discussed publicly until Aug. 30, when the commission set a public hearing for Sept. 13. On, Sept. 6, the commission proposed its plans. One week later, no one from the public attended the hearing -- held on a weekday morning -- and it was passed that day.
A new old tax for county residents
The levy has been around for decades, but was voluntarily rolled back after a 1979 sales tax approval. In 1979, county officials promised a 50 percent reduction in property tax. Just three years later, the county rolled it back to zero after the sales tax covered expenses.
To one generation of home and vehicle owners, this amounts to a new tax. Jay Purcell voted against the increase. Clint Tracy and Paul Koeper approved it.
State law allows jurisdictions that collect property tax to adjust their rates with a vote of the governing board, but the law puts ceilings in place. To be fair, other government bodies have raised property tax rates -- and utility rates for that matter -- in much the same manner as the county just did. But imposing a tax that has been dormant for 30 years during a weak economy, in our view, needs a little more scrutiny for justification.
The reason we were given for this tax increase is that sales tax revenue is flat; because the county can no longer collect local sales taxes on cars purchased outside of the state due to a court decision; that the state has cut certain funding and because the cost of doing business is higher than it used to be.
More scrutiny needed of county spending
We're told that the county is spending its money wisely, and that several positions, across multiple departments, have been eliminated through attrition. But how our county government is spending will come under closer scrutiny now that it is asking for more from our wallets.
The county officeholders -- past even more so than present -- are an easy target now that the county faces tougher revenue projections. An investigative report by the Southeast Missourian in 2011 showed that for a 14-year stretch county officeholders -- through a salary commission -- approved raises for their positions to the tune of 68 percent, double the rate of inflation during that time. The average officeholder -- not counting the sheriff and prosecuting attorney who make more, and the coroner who is part-time -- was making about $13,000 more than inflation in 2010 since 1997, when the county went to a first-class status and the officeholders' salaries were increased to the maximum adjustment allowed by law.
Had raises been given at the rate of inflation over that period of time, the county would be seeing a current savings of more than $130,000 annually, more than half the revenue anticipated to be lost by the local car sales tax. Last year, for the first time, the county officials limited their salaries to 1.5 percent, and gave other employees step increases plus the 1.5 percent. To be fair, the law somewhat limits the flexibility of what county offices can do with those salaries. A quick review of the budget doesn't suggest overall payroll is out of kilter; the investigative reporting in 2011 showed the county had a small overall payroll compared to most similar counties. This suggests the county is being run efficiently from a workforce standpoint. It stands to reason that our county employees are working hard. But it should be noted the county does not offer the same array of services that many other counties have.
More questions yet to be answered
Our view last year, and remains, was that the long-term sustainability of such officeholder increases were not fiscally prudent. But local officials seemed previously unwilling to address the issue for the long-term.
Now, based on this tax increase, it makes sense to pose more questions about the long-term viability of county operations. In a news release, Koeper stated that the rate could and should return to zero if the sales tax revenue bounces back. But what if it doesn't?
The public should know what long-term planning and discussions have taken place, or will take place, before another tax increase is imposed. We reported that the possibility of a four-day office week was considered, but the idea was declined because of the demand for services. Such issues were never broached in commission meetings for public discussion so we're left to wonder how seriously the matter was researched and debated.
Other questions we would like to see addressed:
* What does the county plan to do about its generous employer-funded pension program? Is that sustainable without having to cut services?
* Is there a hiring freeze in place?
* Do we really need offices in Cape Girardeau, with or without a new courthouse?
* What are the specific reasons for not dipping into reserves rather than raising taxes? Would a one-time withdrawal of $450,000 from a $5 million fund affect how the county could respond to an emergency situation?
* Was any economic study given to the effect of what a $10 to $30 tax -- multiplied by thousands -- would do to our flat sales tax revenue when it is collected during the holiday shopping season?
* What consideration, if any, has been given to seeking a use tax rather than property tax to replace lost revenue?
The county needs its leadership to explain very clearly a path for the future. We need to know that these matters are being explored thoroughly and we hope, going forward, that tax increases will be fully vetted and justified. The county commission, like other public entities, needs to have a public communications plan. Its constituents deserve no less, especially when they will be asked to pay more, in some cases hundreds more, in taxes.