State Funding Cuts Mean Additional Taxes For County Residents

Washington County plans to decrease its operating expenditures and tax levy in 2012, but homeowners are still likely to see an increase in taxes due to state budget cuts.

“Even though we kept the levy flat and we reduced our spending, people will see an average of a $32 increase,” Deputy Administrator Molly O'Rourke said.

That $32 is the additional amount the owner of a $250,000 home that decreased 2.8 percent in value from last year would pay in property taxes to the county.

A big reason for the change, O’Rourke said, is the state’s elimination of the market value homestead credit program in 2012. Under the program, she said, homes valued at $414,000 or less received a tax cut that was partially refunded to the county by the state.

Now, the state will lower the taxable value of homes that used to receive the credit to prevent their owners from seeing a large tax increase.

But the state isn’t going to provide any of that funding to the county, so that forces the county to raise more of its money from local taxpayers.

O’Rourke said the new value exclusion system is like water shifting in a bathtub: the amount of water doesn’t change when a person gets in the tub, but the level rises and then returns to the original level when the body is a removed. Similarly, she said, the exclusion is shifting the tax burden.

Commissioners at Tuesday’s board meeting said the challenge will be communicating the state’s role in the property tax increase with the public.

While it was tough to see an increase, taxpayers can anticipate an increase of more than $32 because that’s just the county portion, Board Chair Gary Kriesel said.

O’Rourke also outlined other aspects of the proposed budget on Tuesday.

The recommended budget includes a significant reduction (63.2 percent) in capital expenditures—down to $23 million. The administrator pointed out that figure varies significantly from year to year.

Operating expenditures also decreased to $139.8 million, a 4.1 percent decrease. Per capita, the proposed operating cost for 2012 is $587—the lowest it has dipped since 2008 when it was $604.

The number of full-time equivalent (FTE) employees for 2012 is about 1.066, which has also reduced significantly for the county since 2008 when it was about 1,111 FTEs.

O’Rourke said some of the biggest budget concerns for 2012 are debt service funding, a changing library fund model, continual economic uncertainty and technology investment costs, which will eventually reduce personnel and election costs.

Revenue changes include a reduction of $5.2 million in intergovernmental revenues, $2.1 million in reduced county program aid, $2.1 reduced in market value credits, and $431,400 reduction in reduced fees for services.

Expenditure changes include reduced direct payments by $3.6 million, $511,300 in reduced wages and benefits, about $1 million in reduced facility costs and a debt service levy increase of $386,700.

“While state revenue has continued to decrease, state mandates have not decreased,” O’Rourke said.

The Washington County Board is scheduled to set the preliminary levy at its Sept. 13 meeting.