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Cole County sees healthy reserves, property tax cut in 2014

Cole County sees healthy reserves, property tax cut in 2014

January 13th, 2014 in News

For the fifth year, Cole County government's budget is based on tax income that includes a property tax reduction.

"We've converted the county from being a property tax-based system, almost exclusively, to a much more-dominant sales tax system," Presiding Commissioner Marc Ellinger explained after last Wednesday's vote approving a more than $60 million county operating budget for 2014.

County taxpayers' bills last year were based on a tax levy that was nearly a penny less for each $100 of assessed property value in 2013 than in 2012.

"We're running an operational surplus," Presiding Commissioner Marc Ellinger explained after last Wednesday's budget approval, "and, as long as we're running a surplus, we've got to keep lowering taxes.

"Government should not be in the business of spending money just because it's got it."

Ellinger noted the county administration has "addressed all the major problems that we've been looking at for years," including ambulance service, courthouse repairs, law enforcement improvements and operations at the new jail.

"We're still running a surplus, so we need to start lowering taxes a little bit," Ellinger said, "and I anticipate that we will continue to have to adjust the tax rate, to make that work."

After approving the county government's 2014 operating budget, the three commissioners - Ellinger, Eastern District Commissioner Jeff Hoelscher and Western District Commissioner Kris Scheperle - sent a one-page memo to department directors and the county's other elected officials.

"At best, growth will be modest with no increase in sales tax revenue and the special revenue funds," the commissioners wrote. "The next year looks to present real challenges to the financial strength of Cole County, from uncertainty with state government to general economic issues."

With that kind of concern, Ellinger was asked, why not save some of the income from property tax receipts, rather than reducing the tax rate - which automatically lowers the income?

"We've done that for five years, now, and we have very, very large reserves built up," he explained.

"In the history since I've been up here (since 2007), we were running large operational deficits - over $1 million out of the general fund.

"We're now running large operational surpluses."

Commissioners created the surpluses by using some tax revenues to build up the reserves - a sort of savings account that can be used to pay bills when the expected tax revenues are sluggish.

Ellinger said the the county government also has built up its "rainy day fund" - an account to handle emergencies - to "a safe level. ... Then you have to starting making decisions about, "Are you collecting too much money?'

"And I think that's the reason we started lowering the property tax."

He noted, "Our infrastructure didn't get fixed for a lot of years because we didn't have the money to fix it.

"(Now) we have enough money to project out that we're not going to see problems in the future - but we're going to have to keep monitoring it."

Ellinger said the shift from reliance on property taxes to a greater use of sales tax revenues "has been really good for us - but it means there are the vagaries of the economy that does have some impact.

"We've seen our revenues go up every year, since the recession - but it's very modest revenue growth."

In their memo to the other county officials, the three commissioners wrote: "County government must be cautious to preserve our good financial standing while providing the necessary services to our residents."

Part of that caution this year was a decision to keep employees' salaries at last year's level - but to pay for all of the more than $450,000 increase in health care premiums.

Ellinger said that was the equivalent of a raise.

The memo said: "The Commission continues to believe that a fair and competitive compensation/benefit plan is critical to retaining the employees of Cole County."