Major property tax hike likely in the making
Published 4:57 pm Monday, March 13, 2023
BY JAN RUNIONS
Claiborne Finance Director Eric Pearson says a property tax hike will likely occur and it looks like it could be a significant one if his early figures prove true. The Budget Committee met for its first 2024 session on March 7 to begin the arduous pinching of pennies that could result in an increase of 44 cents per $100 in assessed value. Of course, this projection is very preliminary, and will likely change as the budget process moves along. Pearson did indicate that the county would need substantially more to operate next year than the $2.00 per $100 of assessed value set for the current year.
Inflation is likely the culprit. Pearson said to have adequately done business this year, the county would have needed a tax rate of $2.26 – or 26 cents more than what was received.
Currently, the ‘penny’ is valued at $65,878 – an increase over past years of $15,300 – which could prove the difference in whether a few cents can be shaved from the projected tax rate.
Claiborne County Tax Assessor Shane Breeding spoke during an interview about the early projections and what it might mean to county government and its residents. Breeding compared the taxes on a home valued at $100,000 using the new projection of $2.4453 with the current year’s $2.00 rate. This year, the homeowner would have paid $500 in property taxes. If the preliminary projection holds true, Breeding said the same property would be taxed $611.33 – an uptick of $111.33.
He explained the way the ‘penny’ works.
“You take the overall assessed value of the county – that includes residential, commercial and whatever because when it’s all dissected and assessed it’s an applicable assessment rate. Then, it’s all multiplied by the same tax rate. You determine the value of each cent. If you’re at $2, you have 200 pennies. Each penny is worth $65,878 currently. That will grow but you won’t see an increase like last year because that only comes around once every five years during the regular reassessment period,” said Breeding.
Once all new construction is added to the tax roll, it will add value to the total assessment of the county, effectively increasing the value of the penny. At that point, Breeding said the budget committee could then work the numbers and more than likely strip a few cents off the projected tax rate.
He touched on the state’s ability to set rates according to the estimated revenues that would be realized, insuring the stasis of those revenues from one year to the next.
“For instance, we gained roughly $15,000 for each penny this year. That’s where the state comes in and says ‘no; you’re only going to bring in what you brought in the previous year.’ So to do that, you got to go down to an equivalency rate that would capture that much revenue,” said Breeding.
He explained his very early projections on the value of next year’s penny.
“It will probably increase by a couple hundred dollars. Maybe a little more than that. I look for an increase depending on what revenues we lose – things like closing businesses. I think we will net a higher value per penny and that may help the budget committee to bring the tax rate down,” said Breeding.
Pearson said during the budget committee that there are only two sources of discretionary revenue – property taxes and the wheel tax. He added that, no matter how the budget might be handled this go-round, “we will still have a cash flow problem.”