SCOTT CITY TAX RATE CONTINUES TO INCREASE; CITY MUST PAY OFF ITS DEBTS

SCOTT CITY -- Residents of Scott City who look for the town's property tax rate to decrease might have to wait until after the turn of the century before they realize any tax relief.

City officials estimate the property tax rate will continue to increase at least until the city's bond indebtedness is paid off in 2003.

The tax rate currently $1.26 per $100 of assessed valuation, of which 70 cents is earmarked for debt retirement has increased about 34 percent since 1989.

"The state auditor tells us what the tax rate needs to be to cover debt service," said Mayor Shirley Young. "It's out of our hands."

She said citizens should remember that from 1985 to 1988, the property tax rate stayed at about 51 cents because no debt service was assessed.

After a petition audit in 1984, the state auditor's office ordered the city to spend the reserve funds in its debt service account, which subsequently was depleted over the next four years. During the four years, citizens didn't pay into the account and the tax rate remained at about 51 cents per $100 of assessed valuation.

But the state auditor's office also said the reserve funds couldn't be used to pay interest on bonds the city acquired in 1983.

The $1.5 million, 20-year bond issue was used to fund construction of a new sewage lagoon, a water line that loops the city, and other water and sewer improvements. Another $200,000 was used for street repairs.

For the first time, the city this year began to make principal payments on the bond issue.

City Clerk Nona Walls said the 1991 principal payment was $15,000, and the interest payment was $155,240. The principal payment in 1992 will be $30,000, and the interest payment will be $139,040. The final payment on the debt in 2003 will be $268,275, Walls said.

The 1992 tax rate won't be set until August or September, the mayor said.

"We will get a form back from the state auditor's office telling us what the rate should be to cover making the payments," she said.

"There is one thing that can affect how much this rate goes up, and that is if there is a lot of growth. The increase will then be diluted. Other than that, we have to have a certain amount of dollars each year to pay for the debt."

Young said she doesn't think anything can be done to reverse the trend toward higher property taxes because sufficient taxes must be paid to pay the interest and principal on the bond debt.

"It will fall on the citizens because it has to be paid," she said.