By Adam Armour/The Itawamba County Times
Like a prophesied doomsday, it seems a countywide tax increase may have arrived.
Although nothing is set in stone, Itawamba County tax payers may be looking down the barrel of a 24 percent tax increase for the 2011-2012 fiscal year. In practical, wallet-punching numbers, that’s an additional $200 or so in taxes on a $100,000 home.
This news shouldn’t come as a surprise: Members of Itawamba County’s Board of Supervisors have been predicting a tax increase for several years, but have yet to push one through. That may change this year, as the county’s assessed value looks to be much lower than anticipated, meaning that fewer tax dollars are available to fund county programs.
“The economy is still not doing well,” Itawamba County Tax Assessor Johnny Riley reported to the board last week, adding that the county is looking at a loss of more than $4.8 million to its assessed value.
“It’s not good,” he said. “But it is what it is.”
According to Riley, the main culprits are massive losses in both car tag and machinery and equipment inventory taxes. The former showed a loss of more than $873,000 in taxes collected, and the latter showed a net loss of more than $7 million in true value.
School mills also came in at less than expected. Riley added that his office is still calculating Homestead Exemption losses, which will also contribute.
Currently, preliminary numbers show the county’s assessed value at $120.237 million, down from $125.034 million in 2010.
Because the county’s assessed value is down, the value of a mill is down, too. If the current millage rate of 107.6 mills were to remain, the value per mill would be approximately $4,000 less than last year. In order to make up that difference, either services will have to be cut or taxes will have to be raised.
Compounding with the decrease in assessed value, the Itawamba County School District may be requesting a tax increase this year to compensate for losses in state funding.
The school board recently published a public notice announcing its intent to raise its ad valorem tax millage by more than $688,000. This additional money will help cover a cut of more than $285,000 to the ad valorem tax reduction funds the district usually receives from the state, plus additional shortfall loans the school district borrowed to cover tax losses last year.
In total, the school district intends to request $6.68 million in ad valorem taxes this year, up from $5.99 million in 2010. Coupled with the decreased value of a mill, the increase equals an additional 14 mills of taxes.
It should be noted that the published intent to raise ad valorem taxes is not finalized, and may still change by the time the budget is approved.
“This is just a proposed amount,” Itawamba County Administrator Gary Franks told the board, adding that the requested amount can still be lowered, or the county might still collect more taxes than anticipated.
Last year, the school board’s request for additional millage was, in a way, rejected by the board. In lieu of increasing taxes, the board took an optimistic approach and assumed ad valorem tax revenue would be higher than expected.
The gamble didn’t pay off.
“If you had put on the millage that was requested by the school last year, you would have had to raise taxes 5.8 mills,” Franks said. “But, being in an optimistic mode, we thought our assessed evaluation was going to go up. But it didn’t … Now, we’re having to catch up, is what it amounts to.”
Because ad valorem tax revenue was lower than anticipated, the school was short on its budget, resulting in the aforementioned shortfall loan, which now has to be paid off. Shortfall loans are used to cover gaps formed when ad valorem tax revenue doesn’t meet the school’s requested funds.
School districts are only allowed three concurrent shortfall notices, and the Itawamba County school district is currently utilizing all three loans to cover its expenses.
The county board is legally obligated to fund the needs of the local school system — within certain guidelines, of course.
Needless to say, members of the county board were less than pleased with the request for more money.
“I think our [revenue] is going to keep going down because we’re going to drive the people away from Itawamba County with our high taxes,” said Supervisor Charles Horn of the potential increase in taxes.
“If the economy goes down, the law should be that everybody goes down with it,” said board president Danny Holley, of the school board’s tax increase.
Franks said the situation isn’t really either board’s fault, and that it’s mirrored statewide.
“This problem happens in more counties than not,” Franks said, “I’m not saying that the school board is wrong for asking for this; I’m just saying you have no choice but to put this on.”
Franks told the board that there is precedence of legal ramifications for boards that did not provide their school districts with the requested monies.
“If the you don’t put this money on this year … from what I understand according to code sections and past history, a judge will tell you to put it on. You’ve got no choice,” he said.
Adam Armour can be reached at 862-3141, by e-mailing firstname.lastname@example.org or by visiting his blog at itawamba360.com.