Richland County residents are likely to see their property taxes rise again in the coming year, but not by enough to keep the county from having to dip into its savings to cover rising costs that are outpacing revenue growth.
The county faces a number of challenges that make the upcoming budget “one of the toughest I’ve seen in a long time – maybe ever,” county administrator Tony McDonald told County Council members recently.
McDonald’s recommended $163.1 million general operating budget for the coming year is an increase of $5.4 million, or about 3 percent, over the past year.
State law caps the amount the county can raise its property taxes each year. The tax on a $100,000 home would go up $4 in the coming year based on McDonald’s recommended budget and could go up another $3 if County Council decides to take advantage of unused tax increase opportunities from the past three years, when the county didn’t hit the cap.
If approved, the tax hike would be at least the third consecutive increase.
Both Richland 1 and Richland 2 school districts also are requesting the county raise taxes on commercial properties in their districts to balance their own budgets, which are separate from the county’s general fund.
Even with a tax hike, the county likely will have to draw around $1.5 million from its general fund reserves, or savings, to balance its budget.
The budget year begins July 1 and ends June 30, 2017.
Among the difficulties the county faces in balancing its $163 million budget in 2016-17:
▪ Department of Revenue-imposed transportation penny tax reimbursements
The Department of Revenue has told the county it must repay from the general fund some expenses that were paid by the transportation penny sales tax, including the cost of establishing the county’s Small Local Business Enterprise program. Going forward, county staff has said it could cost about $3 million annually from the general fund to pay some penny program expenses DOR has deemed inappropriate.
The county, though, is pushing back against DOR’s directives, saying it is willing to take legal action to determine whether DOR has the authority to make the demands it has.
▪ Rising health insurance costs for county employees
It would cost the county $4 million more than the past year to maintain the same health insurance coverage for its employees in the coming year. The rising costs are an ongoing trend not likely to reverse itself, McDonald said. The county is looking at various solutions to reduce its costs, which could include asking employees to pay costs that traditionally have been paid by the county.
“Something’s got to be done,” McDonald said. “We can’t continue to increase our health insurance costs annually $4 million one year, $5 million the next year and so on. It’s beginning to be overwhelming.”
On the other hand, if approved by County Council, county employees would see their first performance-based raises in several years.
▪ Continued underfunding by the state’s Local Government Fund
The county expects to receive roughly $6 million less than state law says it should get from the state’s Local Government Fund, which is intended to help offset the property tax burden of state services and functions – including courts, an elections office and veterans’ affairs – provided at the county level.
The shortfall will continue a trend that started in 2008, the last time the General Assembly fully funded the Local Government Fund, before the brunt of the recession hit the state. Between 2008 and 2015, Richland County received about $23.2 million less in allocations from the fund than required under state law’s formula.
▪ Continued flood impact costs
Some flood-damaged infrastructure, such as roads, will require long-term funding solutions by the county, McDonald said. Those costs and how they might be paid are still being considered by the county, but they do hang as a shadow above the current budget deliberations.
In addition, flood damage resulted in many properties losing value for tax-assessment purposes, which will mean less revenue collected by the county from those properties.
Reach Ellis at (803) 771-8307.
Richland County budget public hearing
When: 6 p.m. Thursday
Where: Richland County Administration Building, 2020 Hampton St., Columbia