According to this short item on DigTriad Forsyth County is facing an $8 million budget shortage, mainly from lower than expected sales tax revenue. The same item states that Mecklenburg County is looking at a $90 million deficit and Wake County a $23 million deficit, but no word on Guilford County.
I looked on the county site and found a
PDF with some budget projections. (Please keep in mind that it appears the county's documents that I'm referring to were prepared last year, which means before the economic carnage of Fall 08 and early 09). If you look at the sales tax line you see it moving in a downward direction from $71.4 million in FY08, to $65.7 million FY09 and $54.7 million projected for FY10. FY11 looks even worse with a projection for $52.1 million. So if I'm reading that right Forsyth County expects its sales tax revenue to fall almost $20 million, or about 27% between now and 2011. In a
separate PDF that contains a description of the assumptions the county used to come up with the numbers they note that some of the sales tax decline has to do with Winston-Salem's annexation of certain county property and a sales tax/Medicaid swap with the state. I'm imagining that these numbers are going to head down with the economy.
The budget projections also show Forsyth County's property tax revenue at $208.3 million for FY08, $221 million for FY09, $238.8 million for FY10 and $250.5 million in FY11. That means the county expects property tax revenue to climb $42.2 million or 20% between now and 2011. With property values going through the floor and almost nothing new being built I wonder how they are predicting such an increase in property tax revenue. Can we say rate increase?
If you look just below revenue you see that they have two lines for property tax rates. One is labeled "Property Tax Rate Without CIP" and shows the following rates: FY08 – 69.6, FY09 – 72.2, FY10 – 70.4, and FY11 – 72. Below that line is "Additional Cents to Fund CIP" which shows the following: FY08 – 0, FY09 – 0.1, FY10 – 2.3, FY11 – 3.4. So if you add them together the property tax rates are:
- FY08 – 69.6
- FY09 – 72.3
- FY10 – 72.7
- FY11 – 75.4
Now these are projections so I'd expect that they'll change over time depending on how real estate performs in the future. For instance if property value continues to plummet you might see a rate in 2010 that is 76 rather than 72.7 so that the county can meet its funding needs. In fact their assumptions provide a paragraph for how they come up with the property tax rate:
Current Year Property Taxes – Tax revenue on real and personal property. The amount
required each year is determined by taking the difference between projected expenditures, less
the total of all other revenues and appropriated fund balance. The tax rate is then determined by taking this amount, and dividing it by the amount per penny the tax base supports.
In other words, if they need the money their coming to us to get it.
Of course the other half of the budget is expenditures and they will likely cut those to try and avoid higher taxes. You can see the projections for expenditures in the same report, and they are broken down into broad categories like "social services" and "education". Obviously there's a lot to debate on where to cut and how much, and honestly that's a whole separate piece that needs to be explored, but for the purposes of this piece let's just say that even with the cuts I think we can all expect a rather hefty property tax increase over the next couple of years.
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