Forsyth expects big budget gap

Lower home values in the slow economy have Forsyth County commissioners worried about an expected $20.2 million gap between spending and revenue that could require raising the property tax rate by 10 percent in 2013-14 or making deep budget cuts.

County tax assessor John Burgiss said Thursday that if the current trend in real estate sales continues, the tax value of property in the county could drop from $33.9 billion to about $31.6 billion when the next revaluation is complete in 2013 — a drop of about 7 percent.

With other revenues expected to be flat, the result is that county commissioners could have to raise the tax rate by 7 cents for the 2013-14 fiscal year to close the gap — or else drastically reduce spending.

The current tax rate is 67.4 cents per $100 valuation.

The figures came out during the county's annual work session Thursday.

Although 2014 is two years away, County Manager Dudley Watts told commissioners that the board needs to start thinking now about what to do when the new revaluation numbers are in.

"A reduction in value is going to happen," Watts said when board members asked if better projections might come this spring. "Ain't nothing going to happen between now and March that will make this better."

Even for the 2012-13 fiscal year, which comes before revaluation and starts July 1, the county is projecting a $7.6 million shortfall in revenue compared with expenditures. That would take a 2.28-cent tax increase to close.

Commissioners debated the role they should play in providing nonmandated services.

For instance, the county provides jail cells for juvenile offenders and is budgeting $800,000 in county money for the effort in the 2011-12 fiscal year.

Commissioners Dave Plyler and Bill Whiteheart asked if the county should consider asking the state to do more: Plyler, because he's concerned about the growing need for juvenile mental health services, and Whiteheart because he's concerned about paying for services the county is not required to provide.

Richard Linville, the board chairman, said youth detention services had been examined in the past, and it turned out it was economical to provide them. Also, Linville said, it was good for families to be near their incarcerated children.

Commissioner Walter Marshall said that if the county just wanted to provide the services the state mandates, "we could cut our budget in half."

"We are doing a pretty good job and don't need to be going backward," Marshall said, noting that it would be possible to cut out recreation, teacher supplements and other nonmandated services, if cutting were the only goal.

Under the current tax rate, the owner of a $150,000 house pays $1,011 in county property tax.

To keep property tax collections "revenue-neutral" after revaluation in 2013 — meaning the county takes in no more and no less revenue from property taxes — the tax rate would increase to 71.08 cents and the taxpayer would have a county tax bill of $1,066.20.

However, because other county revenues are projected to be flat, it would take a total tax increase of 6.54 cents in 2013-14 to meet expenditures without budget cuts. That would put the hypothetical homeowner's county tax bill at $1,109.10 — an increase of almost 10 percent.

Although there was a brief discussion, as in the past, of consolidating law enforcement duties of the county sheriff's office with those of the Winston-Salem police, the idea didn't gain any traction as a cost-saver. That's because Winston-Salem provides more patrol officers per capita than the county does, so the county would have to spend more to catch up.

And while the county pays only 3 percent of its budget for social services, Joe Raymond, the departmental director, told commissioners that needs continue to grow and aren't offset by technology advances in the application process.

Revaluation usually increases the tax base and allows the board to drop the tax rate and stay revenue-neutral.

Linville said he has never seen a revaluation like the one that is coming next year.

"Valuations have been going up, but now they are going down," Linville said.