Augusta County Board of Supervisors talks budget, taxes this week

Augusta CountyThe Augusta County Board of Supervisors is holding two public hearings for ordinance amendments and a vote on the FY 2021 budget and tax rate on Wednesday.

At the April 22 meeting, the Board of Supervisors extended the due date for first half real estate payments from June 5, 2020 to June 26, 2020 to give taxpayers an additional three weeks to pay.

Tax bills will be mailed after the BOS approves the tax rate and budget.  Real estate tax budgeted for collection in June 2020 (FY2020) totals $23 million.

Public Hearings

There will be two public hearings and remote participation is required due to the stay-at-home order still being in effect.

  • Consider an ordinance amendment which would temporarily set the penalty for failure to pay the first installment of real estate taxes for tax year 2020 due and payable on or before June 26, 2020, to 0 percent until Aug. 31, 2020.
  • Consider an ordinance amendment which would temporarily decrease interest on unpaid real estate taxes due and payable for tax year 2020 (only) from ten percent to 5 percent or less, until Aug. 31, 2020.

How the ordinance change would affect a taxpayer:

Penalty:  Penalty is currently charged at 10% and is applied the day after the due date for the tax. The typical tax bill is $1,234 annually and half (or $617) is due on June 26, 2020 (the second half is due on Dec. 5). On June 27, the penalty charged will be $61.70. The ordinance amendment will delay the penalty through August 31, 2020, giving the taxpayer the ability to pay their bill until August 31, 2020 without the additional charge of $61.70. If the bill is paid on or after September 1, then the penalty will again be $61.70. With an ordinance change, the taxpayer will have two additional months to pay their bill without penalty being applied.

Interest:  Interest accrues at 10% per annum, which equates to 0.83% per month. The typical tax bill is $1,234 annually, and half (or $617) is due on June 26, 2020.  On June 27, interest would begin to accrue. The ordinance amendment will reduce the interest from 10% to 5% or less through Aug. 31, 2020, giving the taxpayer the ability to pay their bill until Aug. 31, 2020 with less interest accrual.

10% interest on a $617 tax bill: 2 months interest = $10.28

5% interest on a $617 tax bill: 2 months interest = $5.14

0% interest on a $617 tax bill: 2 months interest = $0.00

If the bill is paid on or after Sept. 1, then the interest will be charged at 10% per annum. With an ordinance change, the taxpayer will have two additional months to pay their bill at a lesser interest rate.

How the ordinance change might affect the county:

Real estate tax budgeted for collection in June 2020 (FY2020) totals $23 million. About $8 million relies on individual payers (versus through mortgage escrow accounts).

The funds that may not be collected can cause severe financial issues for the county:

  • the budget will not be met,
  • minimum fund balance requirements will not be satisfied,
  • the audit will be negatively impacted,
  • cash flow to pay for county services will deteriorate.

The following is a conservative estimate of the revenue lost from penalty and interest:

FY20-$50,000 (penalty), $16,500 (interest)
FY21-$50,000 (penalty), $80,000 (interest)

*based on estimates from July 1 – Aug 31 for three fiscal years

Staff is recommending that the penalty be adjusted to 0% and interest to 5% for the first installment of real estate taxes due on June 26, 2020. This will allow a reprieve for taxpayers that need additional time to pay their first half real estate taxes and will responsibly support the cash flow needed to fund services provided by the County to the taxpayers.

Delinquent taxes, which usually average only 2-3% per tax year, may be slightly higher due to the downturn in the economy created by the effects of COVID-19. The treasurer’s office plans to work with taxpayers who experience a hardship in paying their taxes due to recent events in their lives.  

Budget and Tax Rate Votes

Tax Rates Proposed per $100/assessed value

Real Estate: $0.63

Personal Property
Vehicles $2.50
Other (1) Business, large trucks $2.00
and trailers, machinery & tools
Other (2) Campers, boats, $2.50
boat trailers, horse trailers, airplanes and trailers.

Budget – By state code, the budget is balanced and provides a spending plan for the next fiscal year. The spending plan includes funding for the core services of local government: public safety, education, cultural, community development and the administrative services to support them. The budget before the Board of Supervisors uses revised estimations for impacts of COVID-19; the projections for revenue losses and how to make up for them are outlined below.

For FY2020

Revenue Losses Due to COVID-19
All types of taxes              $1,001,500
(details of tax breakdowns can be seen on pg 3 of Budget Revised for COVID-19)

Reductions Proposed to Make up the Revenue Losses

Operating – a hiring freeze, utilizing savings related to part time positions and non-personnel expenditure reductions$559,500
Capital – Eliminate capital transfer in the revised FY20 budget$ 442,000
TOTAL Expenditure Reductions$1,001,500

For FY 2020-2021

Revenue Losses Due to COVID-19
Real Property $460,560
Personal Property $650,550
Sales $640,000
Business License $950,000
Lodging $155,750
Meals $637,500
Recreation Fees $353,600
Other $1,699,387
TOTAL $5,547,347 

Reductions Proposed to Make up the Revenue Losses

Personnel – hiring freeze, no pay increases, remove Fire-Rescue career development plan$ 1,091,274
Operating – reduce all department budgets by 5-10%, see other cuts under consideration pg 9 of Budget Revised for COVID-19$ 1,501,073
Capital: Recurring – cut Board of Supervisors infrastructure funding, cut Parks & Rec matching grant funding, reallocate funds earmarked for courthouse$ 1,055,000
Capital: One-time – reallocate one time capital funding from FY19 fund balance to cover projected shortfall$ 1,900,000
TOTAL Expenditure Reductions$ 5,547,347

 


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