Last week the Brown County Commissioners voted to approve the first step of a possible increase of less than $6 to property tax bills for the average property.
At their April 6 meeting the commissioners held a public hearing about reestablishing the cumulative capital development fund to the maximum rate of 0.0333 on each $100 of assessed value for 2023. The rate for 2022 is it is 0.0280. Increasing the rate to the maximum will result in a rate increase of 0.0053, according to Caitlin Cheek, a manager with the county’s financial adviser Baker Tilly.
Cheek attended the public hearing earlier this month to explain the impact this reestablishment will have on property taxes next year.
Using the median home value in Brown County, which Cheek estimated to be about $200,000, the rate increase of 0.0053 would result in a $5.41 annual increase to the average property owner here.
She told the commissioners that the cumulative capital development fund is outside of the county’s maximum levy, so the amount generated from that fund is done so by the rate the commissioners set.
“The cumulative capital development rate is your rate-driven fund. It is a fund outside of your maximum levy so the amount you can raise that is usable under that Code is dictated just by the rate you established it at,” she explained.
Per Baker Tilly estimates, the additional revenue brought into that fund under the reestablishment would be about $84,000 assuming that there is not additional growth in assessed value next year, Cheek said.
“In recent years it has gone up every year. Hopefully it will come in even a little bit higher for that for pay 2023,” she said of the revenue.
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 in 2021.
“Each year as you go through the budget process, there is a calculation that is done and that rate is decreased. It is a ratio of the increase in your AV (assessed value) over the past three years, so that rate through that process each year you will see it decrease as your AV continues to grow,” Cheek said.
“You can see how it notches down each year as you go through that calculation and you see the AV in Brown County increasing. That rate on its own through that process goes down. … All the communities in the state have to go through this reestablishment process to get it back to that maximum if that is what you so choose to do.”
The commissioners voted at the April 20 meeting to approve the ordinance reestablishing the CCD tax and allowing the county council to fund it at the maximum. A notice of adoption was then sent to the newspaper to be published this week as a legal advertisement. Now that the adoption has been published a 30-day remonstrance period has started, according to the Department of Local Government Finance.
Twenty five Brown County property taxpayers would have to sign an objection petition in order to file a remonstrance. This is a recent change at the state level. Previously 50 taxpayers had to sign an objection petition. If that effort is successful, the DLGF would conduct a hearing process.
The cumulative capital development fund’s budget was approved at $527,838 in 2021. For 2022 the budget was approved at $717,367.
The biggest expenses in that fund are $125,000 for maintenance; $137,500 for IT services obligation; $100,000 for buildings; $60,000 for grounds upkeep 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 not 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 2023.
The cumulative capital development budget is also approved by the county council each year, meaning they will control how the additional revenue is spent. The commissioners established this cumulative capital development fund, so they’re the ones who have to reestablish it.
This is the second time in a year the commissioners have started the process of reestablishing this rate. Last year, a notice was sent to the Brown County Democrat to run following the unanimous approval of a second reading of the ordinance to reestablish the cumulative capital fund rate, which would have started a 30-day remonstrance period. But due to an oversight, that advertisement did not run in that issue.
At the April 6 public hearing, Commissioner President Jerry Pittman reiterated that the commissioners were not establishing a “new tax.”
“This is not a new tax. It is actually not really an increase to where it was before it started this bumping down. It is taking it back up to where it was. You will pay a little more next year than you do this year. But it is not a new tax,” he said.
No one from the public shared comments about the reestablishment of CCD during the public hearing on April 6.