By Adam Armour/The Itawamba County Times
The Itawamba County Board of Supervisors has approved a budget for the 2011-2012 fiscal year and it’s safe to say no one, them included, will be happy about it.
Following a two-hour public meeting specifically scheduled to discuss the county’s budget, supervisors voted their approval of a general fund millage rate of 51.60 mills, a school millage rate of 121.30 mills and a county budget brimming with cuts in most departments.
Millage allotted to the county’s general fund covers the cost of general county operations, including employee salaries, road and bridge work and law enforcement. School millage covers the operating expenses of the county school district, as well as a small allotment of mills for Itawamba Community College and the adult education program.
The value of a mill is currently set at $107,482.
While the general fund millage rate remains static from last year’s, the school millage rate shows an increase of 13.7 mills from the 2010-2011 fiscal year. This represents a $688,000 increase requested by the Itawamba County School District to help cover major cuts in funds from the state level, as well as money borrowed to cover deep losses in tax revenue.
Although there are numerous factors to consider, most residents will likely see a sizable increase in their property taxes due to this millage hike. According to County Administrator Gary Franks, the owner of a $100,000 house without a bit of extra property can expect to pay an additional $140 each year based on the increase.
Most of the additional millage will be used to cover the county school district’s maintenance fund, which is used for most operations, salaries, etc. Last year, the school district received 38.7 mills for its maintenance fund, which was increased to 48.90 mills this year. The maximum the school district could ever receive from the county is 55 mills.
In total, the local school district will receive 61.7 mills, which also includes millage to cover previous years when the district did not receive its requested funds and borrowed money to cover the shortfalls.
The school district’s finances came under a bit of scrutiny from the county board, with several board members openly questioning the necessity of the increase in a tight budget year. Franks said information provided by the school district via an official letter— which shows the school district doesn’t have enough money on hand to meet the 7 percent cash reserve mandated by the state — shows the increase is legally justified.
In that same letter, representatives with the school district suggested that if the county board were not to increase the millage as requested by the school board, then litigation would be pursued.
“In my opinion, I don’t think you guys have any other choice but to put the increase on or else be held personably liable,” Franks said.
Under state law, the school board can legally ask for an annual increase in its tax revenue of up to 4 percent. Should that money not be provided due to any circumstance — county officials not budgeting an increase or ad valorem taxes not being as much as anticipated — the school district can borrow that money. In Itawamba County’s case, all of the preceding scenarios have taken place in the last few years, finally necessitating a tax increase.
While the school district’s allotted millage will increase, the board voted to keep the county’s rate the same as last year’s, although to do so required a little financial finagling.
Because the county’s assessed value dropped approximately $4.8 million from last year to this, the board finds itself with less money with which to work. Rather than raise taxes or significantly cut services in order to cover this loss in revenue, the board voted to borrow approximately $295,000 from the approximately $1.2 million it keeps on-hand to fund operations from the end of the fiscal year in October through December.
Board President Danny Holley likened the idea to borrowing money from a savings account in order to compensate for a pay cut.
“So, what does that do? That means we have less in the county’s general fund reserve, which could cause problems next year at this time if the economy doesn’t pick up,” he said. “If people aren’t buying car tags next year, that means the board will be sitting here either raising taxes or cutting services.”
According to Franks, the move would allow the board to forego increasing the general fund’s millage rate — as long as none of the county’s departments overspends its budget — but would put the county in a bad spot next year if the economy didn’t improve.
“Our comfort zone — that warm, fuzzy feeling that we want — comes from having $1.2 million on hand,” Franks said, adding that it takes at least $800,000 to run the county from Oct. 1 through December. “In other words, if you don’t have at least that much in the bank, you’ve got nothing to pay your bills.”
He said borrowing nearly $300,000 from that cash on-hand would leave little money for emergencies.
“We will have no wiggle room,” he said. “If we have a problem that costs us $200,000, we will have to borrow the money. It’s bad management to tax the people and put the money in the bank, but it’s also bad management not to take care of business.”
Although prior to voting, the board briefly considered increasing the general fund’s millage rate, in the end supervisors voted unanimously to keep it the same in anticipation of a more profitable next year.
Adam Armour can be reached at 862-3141, by e-mailing firstname.lastname@example.org or by visiting his blog at itawamba360.com.