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County sets tax rate
Special interest groups, one resident, address board during public hearing

By C. Ruth Ebrahim

The new Caroline County real estate tax rate of 48 cent per $100 means an increase in taxes paid by county residents.

With the new rate in place, the board of supervisors plans to vote on next year's budget by the end of June. Officials have said that the lack of an adopted state budget may make it difficult to make a decision, especially regarding the school's request for $11.4 million from the county.

"I'm really disappointed with what has come out of Richmond," said Caroline Board of Supervisors Chair Floyd Thomas. "This is the second year in three that they have neglected to come up with a budget, which puts counties in a precarious position."

The Caroline County Board of Supervisors adopted the 48-cent per $100 real estate tax rate following a public hearing on April 18. The new rate goes into effect on July 1.

No individuals spoke during the public hearing held on the $32 million budget proposed by county administration. Several representatives of special interest groups addressed their budget requests from Caroline.

Only one resident addressed the tax rate during the public hearing on the proposed increase.

Richard Hartley, of Bowling Green, said having to pay additional real estate taxes would "wipe out" his income.

"Our house assessment more than doubled, and even at 42 cents, [taxes] will be more than last year," he said. "I think you need to have a heart and consider your citizens who have been living here for awhile."

Caroline County's recent real estate reassessment saw an average property value increase of 90 percent and an even larger increase in property values in Lake Caroline and Lake Land'or.

The record high reassessment means that a real estate tax rate of 42-cent per $100 would have equalized the county's revenue.

That means that the amount of revenue the county generated based on a 79-cent per $100 tax rate in 2005-2006 would be essentially the same as the revenue generated on a 42-cent tax rate in 2006-2007, due to the jump in taxable property.

An average homeowner in Caroline County would own a home that assessed at $135,000 in 2002, which was the last time Caroline conducted a reassessment. Last year, that homeowner would have paid $1,066.50 in taxes based on the 79-cent tax rate.

The same homeowner likely saw a real estate property value increase of 90 percent during the recent reassessment, which would make their home valued at $257,000.

At the equalized tax rate of 42 cents per $100, the homeowner would pay $1,079.40 in taxes, which is slightly higher than the taxes paid using the 2005-2006 rate.

This year, at a tax rate of 48 cents, that homeowner would pay $1,233.60 in taxes.

The difference between the old assessed house value taxed on the 2005 tax rate and the new assessed value taxed on the recently approved tax rate is $167.10, which is a 15.7 percent increase in taxes paid.

The new adopted tax rate generates over $13.8 million in real estate tax revenue, according to Finance Director John Sieg. The tax rate of 48 cent per $100 also provides a $4.8 million general fund balance. Caroline County Administrator Percy Ashcraft's proposed budget is 10.3 percent larger than the budget adopted last year. He based the budget on a recommended 52-cent per $100 tax rate.

That recommended tax rate would have generated over $21 million in revenue and provided a general fund balance of $6.4 million.

In order to meet budget needs, and attempt to fund an additional $900,000 in budget requests from county departments, the board adopted a tax rate six cents higher than the equalized rate.

Additional requests from county departments include: an additional tax examiner in the commissioner of the revenue's office, three additional deputies in the Caroline Sheriff's Office over the two recommended by the county administrator, and six additional positions in fire and rescue over the five recommended by the county administrator.

The board of supervisors has also discussed giving an additional $300,000 to county schools to fund needs within special education. County administration recommended giving the schools $10.2 million, but the schools requested an additional $1.2 million.

Not including the school request, the additional department budget requests equal over $900,000.

After the public hearing, Finance Director John Sieg told the board of supervisors that every penny knocked off the tax rate would reduce the general fund balance by $300,000.

Under Ashcraft's recommended budget, the fund balance was estimated to be $6.4 million, or 20 percent of the operating budget.

Sieg said that good government practice suggests maintaining an unencumbered balance between 15 and 20 percent of the operating budget. With the adopted tax rate, the county now has about a 15 percent reserve in the budget.

While discussing the tax rate, county officials explained the necessity of an unencumbered balance.

Chair Floyd Thomas said the balance is used to guarantee that the county has adequate cash flow, especially during the months directly prior to tax collection.

"If we were a regular household, we'd have bills to pay today and it's the day before pay day," he said.

Having decided on a tax rate of 48 cents per $100, the board must now decide how to divide the rest of the pie. Thomas said that there are several items that department heads have requested that the board has not agreed to fund.

"We're still evaluating all of the department requests," he said. "What we think we've done is strike a delicate balance between what percent we'll keep in the unencumbered balance and the need to fund county services."