County resident Sue Carter spoke to the court and presented them with an info sheet that showed that by setting the tax rate so low, the county is missing an opportunity to generate millions of dollars in additional tax revenue, which could help balance a budget that at this time, is not in balance.
A revised version of the info sheet shows that the county could collect an additional $7.15 million in revenue by setting the tax rate at the same rate as last year (29.43 cents) instead of lowering the rate to 18.7 cents.
The proposed budget that Commissioners Court approved for filing shows $16.22 million in spending, but only $13.82 million in revenue, thereby creating a budget deficit of $2.4 million.
This version of the budget has not yet been approved, but the court will consider approving it as well as the proposed tax rate at their Sept. 30 meeting.
“I think it is worth the time and trouble and effort that we might all have to go to,” Carter said, regarding the possibility of changing the proposed tax rate.
The info sheet that Carter presented shows that the county tax rate has steadily dropped over the past several years. The rate was 82.41 cents in 2007 and has steadily dropped to the rate of 29.43 cents in 2012.
“Almost 90 percent of these taxes are paid by industry and the oil companies,” Carter said. “What we need to do is have a reasonable tax rate and take advantage of the opportunities we have today and get prepared and ready for what might face us in the future.”
Carter that cutting the tax rate in half, as proposed, is not sustainable.
County Judge Barbara Shaw responded to Carter’s remarks.
“I think we can kind of ask Brenda because you guys asked me what was – if we decided to set the tax rate different or something did happen – what would happen,” Shaw said. “I talked to Brenda about that. I talked to Debbie Wheeler. I am going to explain that to y’all right now. It is not a decision making thing, it is just for information purposes so that you all will know what it is.”
“When Sue contacted me concerned about this, we could have put it back on the agenda to start over, but we have to use a paper of local circulation and if we used The Countywide, we would not have had enough time to be able to start over because The Countywide is only published once a week. In DeWitt County, they started over because they are published twice a week – with the same intent that Sue had. So we weren’t able to do that. And so that leaves us in a predicament, when it comes time to set the tax rate, if there is an intent to set it higher than the .1870 (rate). If there is an intent or thought to set that, then the first option would be an injunction?” Shaw asked Tax Assessor-Collector Brenda Janysek who was present at the hearing.
“Correct,” Janysek responded.
“We could have an injunction filed against Commissioners Court, and that would be by a district judge. Or, we could face a rollback election, or nothing could happen. Those are your three options.”
Shaw encouraged the commissioners to think about the issue and consider talking to the county attorney or the county tax assessor-collector for more detailed information.
“The Commissioners Court did vote to propose the rollback rate,” Janysek said. “So, that is what we have to propose – that or lower, because we don’t have time to go through everything again.”
Janysek said that if a higher rate had been proposed, members of the public may have brought their concerns forward in the public hearing.
“Our hands were tied,” Shaw said, regarding legal requirements concerning publishing the proposed tax rate. “We missed it by like two days, or something.”
Janysek pointed out that while the proposed tax rate has fallen, property values in Karnes County have roughly doubled in the past year, rising to $6.66 billion.
“So we are collecting a much lower rate, but on a much bigger base,” Janysek said.
Carter asked the court why they approved a rate in the first place that is so low that it creates a $2.4 million budget deficit.
“I would only suggest that if we are in that position this year, then it is going to be worse next year, and it is going to be harder, and harder, and harder to get back,” Carter said. “You want to bring in more money or at least as much as you are spending.”
“But we have run out of time, haven’t we?” Commissioner Shelby Dupnik said.
“Yes,” Janysek responded.
Carter said the risk of a injunction could be manageable, especially considering the potential $7.15 million in revenue at stake.
County Attorney Herb Hancock agreed that the injunction is manageable.
“It is difficult, but it is something we could deal with,” Hancock said.
Janysek expressed a concern about being able to send out tax statements.
“I realize all of that, but that is not an issue,” Hancock said. “The issue is whether or not we legally can deal with it. I know your tax statements are not going to go out, but if we are in a mess... and we are upside down on the budget, then we have go to do something.”
“Need to cut the budget,” Janysek said.
“That’s the only thing that is left,” Hancock responded. “Cut the budget or increase revenue.”
Carter said changing the tax rate is still an option.
County Auditor Lajuana Kasprzyk commented on what the county’s financial advisor, Robert Henderson, had recommended.
“Bob’s recommendation yesterday when we were talking to the rating agency at Standard and Poor’s was to go with the rollback rate because it is the higher of the effective over the rollback,” Kasprzyk said. “He does not encourage risking a rollback election.”
“I did not hear that,” County Judge Barbara Shaw said. “I don’t think we straight out asked Bob for a recommendation... I didn’t hear that.”
Shaw asked Kasprzyk if she was anticipating changes to the budget.
“I am anticipating a balanced budget,” Kasprzyk said.
Commissioner Tracey Schendel made a motion to set the date for adoption of the tax rate during the Sept. 30 meeting.
“That’s the only choice we have,” Commissioner James Rosales said.
Rosaled seconded the motion and all voted in favor.