County cautious on budget

With this year's budget, the county is going to play for the future by being conservative.

Although the Jay County Council is going to keep budgets tight for 2010, they're planning ahead for 2011 when the county could see a marked decline in tax revenues due to property tax caps.

The state legislature passed property tax caps in early 2008 and set those caps to reach their final level in 2010. The caps have been decreasing since the bills implementation, and will finally hit their bottom.

Property taxes will be capped so that owners will pay no more than a percentage of the property's gross assessed value - 1 percent for homes, 2 percent for agricultural land and 3 percent for businesses. That means, for example, a farmer with $100,000 of land will pay no more than $2,000 of property tax on it.

Jay County Auditor Nancy Culy said the caps could cause problems for the county's finances. While she thinks no properties have hit the caps - now at 1.5, 2.5 and 3.5 percent respectively - some areas in the county might max out during the next round of tax collection.

"All those halves fall off this next year," she said. "We won't see those numbers, how it's affected us, until all the nuts and bolts are put together for next year's taxes."

If several properties max out, the county could see thousands upon thousands of dollars of revenue lost. In preparation, the county is taking the safe approach by keeping this year's budgets as tight as it can and building up a cushion to absorb a potential major blow in 2011.

The danger is in not knowing what to expect.

"If we hit those taxes, if we don't watch our budget on this end and we hit those tax caps, then we have to go back to everyone's budgets and lower it," Culy said. "We're going with the conservative view and saying, 'OK, let's keep everything at the same level.' Then if we need to, if we don't have that problem with the tax caps and we have that money in the tax funds, we can do additional appropriations."

The county is looking at a proposed 2010 general fund budget of $6,670,629. At Wednesday's county council meeting, councilwoman Marilyn Coleman, who has been on top of the county's budget this season, said about $500,000 of that will need to be cut to get the budget back down around last year's final number of $6,196,028.

"Right now we've got to cut something," she said and presented the rest of the council with her approach to how to get there.

Coleman, in her initial trim, made several moves to drop the half-million, including eliminating all 400 accounts, which are used to buy new equipment, slicing office supplies and maintenance budgets by about 10 percent, slashing any salary increases and trimming back support to local groups - such as Arts Place and the John Jay Center for Learning in the commissioners' budget - about 10 percent to make the $500,000 mark.

"I thought, 'We've got to get somewhere,'" she said. "That way it hurts everyone a little bit. It's going to hurt everybody if we do it."

Coleman said it was just one way to look at the budget, but wanted to show the effect that cutting $500,000 could cause to the county's departments. The council will review the budget and work to figure where they can create the most savings while doing the least damage to operations.

Council president Gerald Kirby said the county has made severe cutbacks on equipment in the past such as in Coleman's example. The goal, he said, is to sacrifice things wherever possible in order to save people.

"The main thing that we're doing is try to avoid the personnel stuff, where we get into laying people off or cutting hours," he said. "That hurts, that hurts. This we can live with, and it's not unprecedented. We've done it before to cut the equipment back and then as the year progresses, if we've got some money, we could put it back in."

It's easier for the county to add money back in the form of additional appropriations if its there, Coleman said. And if it's not, the council won't have to dig as deep into its reserves or tell departments that the money promised isn't coming.

Not knowing for sure what the property tax effect might be, mixed with decreasing income tax revenue with higher unemployment and falling property values, the council isn't sure what to expect and is hunkering down in case of the worst.

"All of that drags our base down and we don't want employees being drug down so we take this approach," Kirby said. "I think it's conservative and I think it's fair. Everybody is treated the same. It's anticipating that it will be tighter next year."

"And I'm not at all looking forward to that," he said.[[In-content Ad]]