Commissioners plan to reestablish cumulative capital property tax

The Brown County Commissioners are set to vote this week on the first step of a possible increase of less than $2 to property tax bills for the average property owner starting next year.

On April 7, the commissioners had a public hearing via Zoom about reestablishing the cumulative capital development fund to the maximum rate of 0.0333 on each $100 of assessed value for 2022.

Moving to the max would put about $56,000 more into the cumulative capital development fund, which pays for mostly county buildings and grounds upkeep, maintenance and IT services.

The current rate is 0.0294, which means the increase will be less than a penny, said Caitlin Cheek, a manager with the county’s financial adviser Baker Tilly.

Baker Tilly also looked at the impact this rate increase would have on residential taxpayers using the median home value here. A $192,000 home in Brown County would see an increase in taxes of about $1.85 a year, Cheek said.

Brown County also offers credits to property owners using local option income tax revenue. The property tax relief local income tax rate is 0.5 percent, Cheek said. “The actual increase in tax to taxpayers for their property taxes is 0.002 due to that credit,” she explained.

Commissioners President Jerry Pittman reiterated that this would be a small increase for property taxpayers.

“Nobody likes to increase taxes; however, this is a very, very small change,” he said.

“We’re not talking about much. This is not a new tax; we’re just re-establishing the rate.”

Resident Tim Clark expressed concern about property taxes continuing to increase and how it will affect residents living on a fixed income.

“A penny here or there and pretty soon it adds up,” he said.

The rate for the cumulative capital development fund has decreased each year and that’s why there is a reestablishment process, Cheek said. It was 0.0302 in 2020 and 0.0294 this year.

The cumulative capital development fund’s budget was approved at $527,838 this year. The biggest expenses in that fund are $100,000 for maintenance; $80,000 for IT services obligation; and $70,000 for computer equipment. The fund also pays the salaries of IT Director Ric Fox and IT Assistant Laura Minett.

Approving the reestablishment of this tax does mean the new rate will automatically take effect. The tax rate for that fund will be determined by the county council this summer during the budget process for 2022. “This is an ‘up to,’” Biddle said.

The cumulative capital development budget is also approved by the county council each year, meaning they will control how the additional revenue is spent.

“It’s not like we’re just coming up with new money so we can spend it and not tell anybody,” Biddle said.

The commissioners established this cumulative capital development fund, so they’re the ones who have to reestablish it, Biddle explained.

Baker Tilly had suggested putting it back to the maximum last August when the firm did an updated five-year financial plan for the county. Other recommendations focused on making cuts to budgets which Baker Tilly projected may be struggling due to possible drops in property and income tax revenue.

Baker Tilly also recommended raising local income and wheel tax rates to bring in more money. County leaders have not done either of those things.

For 2020, the county’s general fund was projected to bring in $7.7 million, per Baker Tilly’s calculations. However, expenses from that fund were projected to total $8.4 million.

“Some of those forecasts looked direr than what actually came to fruition because we were trying to be conservative at the time,” Cheek said on April 7.

The commissioners will have to vote at the April 21 meeting on the reestablishment of the CCD tax and allowing the county council to fund it at the maximum. A notice of adoption will then be sent to the newspaper by April 22. Once that adoption is published, it will begin a 30-day remonstrance period, according to a memo from the Department of Local Government Finance to the commissioners.

Fifty Brown County property taxpayers would have to sign an objection petition in order to file a remonstrance. If that effort was successful, the DLGF would conduct a hearing process.

One resident, who did not give her full name, questioned the commissioners about re-establishing the rate if it meant taxes were going to be raised. Instead, couldn’t they cut costs in the budget, like Baker Tilly had also recommended? She also asked if they were going to implement the other recommendations in the financial plan.

Resident Kevin Fleming also asked the commissioners if they intended to cut costs in the budget, per the recommendations.

“We certainly are going to look at them. I can’t tell you that we’re going to implement them until we have time to consider them,” Pittman said.

“It is not just us who does that consideration. County council is the one that sets those rates, not the commissioners,” Biddle added.

The woman was then muted on Zoom after cursing.

Biddle said that property tax rates are not rising in the county because of county government.

“The largest increase in property taxes this year is from the school. The school’s rate is double our rate. The school’s rate is 0.6308. The rate this year in 2021 is 0.6811,” she said.

The school district currently has an 8-cent referendum on every $100 of assessed property value.

Biddle said the county’s property tax rate has gone down the last four years, but that property tax bills can go up if homes or neighborhoods are assessed at higher values.

The ordinance reestablishing the cumulative capital development fund was approved on first reading unanimously. The commissioners will meet on April 21 via Zoom at 2 p.m. to take the next step.