Cabarrus Cheap Seats

Over the next couple of days, I’m going to take the directly opposing statements made by both Commissioners Carruth and Privette and compare them against widely available facts. Today, I’m going to cover claims and counter-claims made regarding the amount of money brought in by property taxes:

Point - Bob Carruth:

Most of the county budget is tied up in three areas: Debt, which must be
paid first, mandated programs, which include most of our social service
spending, and critical governmental functions such as planning & zoning and
public safety. These categories, when I analyzed them using a 53 cent tax rate,
accounted for almost 50 cents of the total. The remaining 3 cents, or about $5
Million, was left to operate and maintain four parks, four libraries, a vibrant
county extension program, and provide services to our senior citizens, to
include veterans. Needless to say, it is in this latter category that we would
have had to reduce to balance the budget.

Counterpoint - Coy Privette:

In Carruth’s article (I.T. June 6th), he went on a tirade that 50 cents of the 53 cents would be needed for debt payment, mandated services, and critical governmental functions. He contended that would only leave 3 cents for other functions such as parks, veterans, aging, libraries, etc.He ought to know better. What he did not tell you that In this year’s budget, only 47.5% will come from property taxes (53 cents tax rate). The other 52.5% will come from sales taxes, cable franchise fees, intergovernmental revenues (state and federal grant moneys), permits and fees, investment income and other revenues for various activities. and revenues which will pay for the other services. The county has more money than you have been led to believe.

Fact:
The 2006 budget has 87.5% of the revenue coming from three places: property (AKA ad-valorem) taxes, sales taxes, and intergovernmental revenues (money from other government entities: cities, state, and federal). The largest portion of that is property taxes. That’s what we’ll look at first.

At the $0.63 per $100 tax rate, $88 million out of the $152 million will come from property (AKA ad-valorem) taxes. This includes real estatevehicleses, etc. Therefore, 57.8% of the budget comes from property taxes at a $0.63 rate.

Utilizing the magic of algebra, if the tax rate were $0.53 per $100, the amount would be (0.53/0.63)*$88 million or $74 million. $74 million would be about 49% for a $152 million budget. So, Coy wasn’t lying about one thing: $74 million dollars is 49% of $152 million (I know, he said 47.5% - count that to rounding). That’s if that $0.53 per $100 would yield a $152 million budget, but it won’t. Let’s see why.

First, the difference between Bob’s and Coy’s scenario is about $14 million dollars. However, the TOTAL budget is still $152 million for both cases. So, there are two scenarios. 1) Either Bob is not accounting for the $14 million or 2) Coy is creating $14 million from some undetermined source. Let’s take a look at sales taxes and “intergovernmental revenues”

Everyone is familiar with sales taxes. The rate is set and is pretty difficult to change and that process usually involves voter approval. So, it’s safe to use the number given in the FY 2006 budget - $29 million (which is a 13% increase from last year) for both Coy’s and Bob’s Scenario.

Intergovernmental revenues are simply monies that the state and federal government give to county agencies for them to fill out their duties. The major portion of this money goes to the “mandated” portion of the budget. Since these rates are set by law, it’s safe to use the intergovernmental revenue figure given in the budget for both scenarios - about $16 million dollars.

What’s left? Well, there are the permits, fees, sales, services, interest earned on bank balances, etc. The FY 2006 budget yields about $19 million - it’s safe to use these numbers for both scenarios. However, many of these fees are put into designated funds - about $5 million. So, there’s a net of $14 million of fees that can be used for anything we’d like to spend it on.

To find Coy’s missing $14 million, the county will have to either double the amount that they are getting in permits, fees, and the like or they will have to collect 50% more in sales taxes. I’ll leave it to you to determine the likelihoodod of either one of those scenarios coming about.

So, since I can’t find this mythical source of $14 million, let’s round these numbers up as we have them!

Bob’s Budget Revenue (millions): $147 (88 [property taxes] + 29 [sales taxes] + 16 [intergovernmental] + 14 [other] )

Coy’s Budget Revenue (millions): $133 (74 [property taxes] + 29 [sales taxes] + 16 [intergovernmental] + 14 [other])

Alright, now we’ve got some bills to pay.

Mandated - Fixed Expense (debt, social services, etc.): $42 million
Mandated - Discretionary Expense (Sheriff, schools, etc.): $79 million

So, let’s see what we have for “discretionary spending” like building maintenance, Parks and Recreation, Juvenile Crime Prevention, Economic Development, Animal Control, and Veterans Services left in each of our budgets.

Bob: $147 million - ($42 million + $79 million) = $26 million
Coy: $133 million - ($42 million + $79 million) = $12 million

Doing the math this way, Coy’s scenario does wind up with $12 million and not $5 million that one would get from $0.03 per $100 valuation. So, his “other revenue sources” do come through; but in a purely academic way. However, Coy’s budget would require a 54% decrease in funding for all discretionary programs. I’m sure the “good government” people among us think that sounds great; but what kind of cuts get you a 54% decrease? $14 million dollars worth.

Let’s find that $14 million. If you shut down all the county libraries, animal control, all of the parks, veterans services, all “discretionary social services” (Senior Centers, Juvenile Crime Prevention, and the like) - you’d save a little more than $7 million dollars. You’d still have to find $7 million more in cuts! So, if you shut down every computer used by any of the staff anywhere - that would get you another $2 million and change. You’d still need to find about $5 million in cuts.

You can understand why during the budget meetings that Commissioner Privette was preaching about “revenue-based” budgeting; but not putting it into practice with an alternate budget based on these numbers.

The bottom line is this. It was wholly irresponsible for Commissioner Privette to have made the statement that “the county has more money than you have been led to believe”. This statement simultaneously impugned the integrity of Commissioner Carruth and compeltely ignored the reality of the situation. By making that statment, Commissioner Privette was obfuscating the facts by hiding behind the vagaries of public finance while ignoring the realities of the situation, and failing the disclose the whole truth.