Raising taxes in a recession, Washington Board approves property tax rate hike

ABINGDON, Va. – The county property tax rate increase approved Tuesday will replace some of the money lost to state funding cuts – but it won’t come close to filling the hole in the budget.

In a 5-2 vote, the Washington County Board of Supervisors set the 2010 property tax rate at 58 cents per $100 valuation, an increase from the current rate of 56 cents.

The increase amounts to about $750,000 in additional revenue, County Administrator Mark Reeter estimated.

Based on the numbers provided earlier this year by Commissioner of Revenue David Henry, the annual property tax bill of the owner of $100,000 worth of real estate will increase by $20 – from $560 to $580 under the new rate.

This year, for the first time, part of each county taxpayer’s bill is due in May, with the balance due in November.

The tax increase approved Tuesday is based on a not-yet-finalized budget that replaces the funding cut to the county’s constitutional offices – sheriff, commissioner, treasurer, commonwealth’s attorney and clerk of court – and gives an extra $550,000 to a school system facing a $5.8 million budget shortfall, about $4 million of which came in direct cuts from the state.

Tom Graves, assistant superintendent of the school system, said the “550,000 helps out.” He also said the school board still will have to make significant spending cuts.

Several hours before the vote, school Superintendent Alan Lee distributed a letter through school system’s e-mail list outlining potential spending cuts to make up for the shortfall – including 55 jobs.

After Tuesday’s vote, Graves said the $550,000 could save 10 to 12 of those jobs, but that decision will be up to the school board at its Monday meeting.

A lot of things are on the table to balance the school budget, Graves said, including an across-the-board salary cut. He said a 2 percent cut would save $1 million.

Two of the county supervisors, Kenneth Reynolds and Nicole Price, voted against the 58 cent tax rate Tuesday.

Reynolds said he is more optimistic regarding the final figures expected from the state and believes the county could get by with a rate of 57 cents. Reynolds, who owns a significant amount of real estate in the county, said he was acting in the interest of the taxpayers.

Price declined to say what tax rate she would support, but she made a plea to the board to use some of the one-time revenue generated by the transition to twice-a-year tax collection to increase this year’s school funding.

She also said she objected to making up 100 percent of the cuts in other county offices but just a fraction of the school sstem’s need – and she felt like the issue hadn’t been sufficiently discussed among the board members.

Supervisor Tom Taylor, who supported the increase, said the cost to an average household will be less than the cost of a tank of gas.

“For the benefit we’ll get out of it, we can hold our heads up and face people that we’re being a good steward of their funds,” Taylor said.

Supervisor Odell Owens made a point to say none of this year’s tax revenue will help pay for the purchase of an office building for county use; for the first year or two the payments on that building will be made using money collected from rent.

While no one representing the school system appeared to be present at the meeting, two school PTA presidents were there, and decried the relatively small tax increase.

“Would I pay more taxes? Absolutely, if it meant better education,” said Joan Hawsey, president of the PTA at E.B. Stanley Middle School, noting that every other region of the country where she lived had much higher taxes.

“Do I think they should use some transitional revenue?” Hawsey said. “If this is not a crisis, what is?”

Reeter, whose recommendation the board followed in approving the 58 cent rate, said part of the issue is balancing the county’s needs against a principle: that counties can’t be expected to make up for drastic state funding cuts to public education.

Dulcie Mumpower, board chairwoman, said the county was placed in a tough spot by the state, forced to choose between two bad options: raising taxes in a recession or losing teachers.

“I don’t like tax increases, period,” Mumpower said. “None of the citizens like tax increases, but when you’re in a position, you’ve got to make a decision.”

She said if the county attempted to make up the entire school system budget hole left by the state, it would mean a tax increase of 20 cents rather than 2 cents. She said the board cut the budget to the bone but could not step away from the expectation that the county will provide services to its citizens.

She said the board would consider use of some transitional revenue to help save teachers’ jobs – but only after receiving hard numbers from the school system. But, she cautioned, “The more transitional money we use, the deeper we dig ourselves in a hole,” and the budget situation is likely to be the same next year.

Graves has said the school system’s budget hole could be worse next year, as more than $2 million in one-time spending cuts made this year could not be repeated next year. He said help from transitional revenue would be “awesome.”

In addition to the transitional revenue question, the board of supervisors has yet to set its tax rates for personal property and machinery and tools. Only the property tax rate is required to be set in March, because a portion of the tax is due in May.

Mark Seamon, director of finance, said the county is still waiting on funding figures from the state, but he’s hopeful that increases and decreases to his earlier estimates will balance out.

“We’re just waiting on numbers because we have no idea what the true numbers are going to be, but at this point it doesn’t look like it’s going to be anything drastic to the good,” he said. “What might be good in some areas is probably going to be offset by others.”

Also at Tuesday’s meeting, the board voted unanimously in favor of allowing the Washington County Service Authority to pursue a federal grant application to improve water service in the community of Mendota.

dmccown@bristolnews.com | (276) 791-0701