Faulty Fluvanna Revenue Projection

By.  Bryan Rothamel

PALMYRA — The Fluvanna Board of Supervisors were briefed on a reported accounting error in anticipated tax revenue streams for the fiscal year 2013 budget.

To compound the accounting error, the state also lowered assessments of public utility real property. Some of that money will be recouped in fiscal year 2014 because of the revenue-neutral tax rate of county reassessment.

It was stressed the error did not result in county residents being taxed incorrectly, just anticipated revenues being calculated incorrectly.

The county receives tax revenues from various property in the county. A basic breakdown includes real property and personal property. From that, there are machinery, mobile homes, public utilities real property and public utilities personal property along with real property (homes/land) and personal property (cars/RVs).

The FY13 budget included some figures in the wrong categories that lead to the supervisors building a budget from incorrect numbers. These numbers were reportedly given by the Commissioner of Revenue, Mel Sheridan.

kenney_200px“The Commissioner of Revenue sets the foundation. We go ahead and build a budget off that foundation. The Treasurer collects based off that budget. When there is a hiccup in the very beginning of that process, you can see how could very quickly trickle down,” said chairman Shaun Kenney (Columbia District).

The real property category for property privately owned in the county (not including public utilities) did not include tax relief for the elderly and veterans. This created an over-budgeted figured of $224,740.
The mobile homes and machinery were placed in the personal property category. This resulted in an over-budgeted figure of $117,641.

The category for mobile homes did not include the correct property values. The correction created $610 of additional non-budgeted revenues. The machinery category was also too low for property values. The correct figure was an additional $261 more than budgeted.
Also, the personal property tax of public utilities will have an increase in projected revenue. The additional amount is $41,091 to the budgeted revenues.

The state has reassessed public utility property. This is a figure the state does completely separate from the county’s reassessment schedule. The reassessment from the state subtracted $231,181 from projected revenues. This is taxed at the county’s tax rate, regardless of the county assessment schedule.  Currently, it will be taxed at $.5981 per $100 assessed. Once the county’s reassessment is complete, the revenue-neutral rate for the entire county will be $.8140 per $100 assessed. While county residents will not see much change in their personal tax contribution, public utilities assessment will not change.

Plainly, the state keeps assessments independent of the tax rate of the county. Even if the county reassess, the state assessment stays the same. Any increase in tax rate, even if neutral to private property, will cause the public utilities to pay more.

Including the public utility reassessment to the accounting errors, the FY13 budget incorrectly projected revenues by $531,600. That difference will have to be made up either by cutting spending or using the fund balance account.

The county has just refinanced the new high school bonds. It will result in a savings of $1.6 million for this current fiscal year, FY13.

“If you say anything could at a better time, I don’t know if that’s a good thing to say or not, but it is better to come now when we know we do have the money, extra funds,” said Mozell Booker (Fork Union District).

If the fund balance account is used for routine budget items, board policy is to replenish it the next year. Using the projected revenue neutral rate of $0.814 per $100 assessed and using the total budget deficit of $531,600, the FY14 budget will have to include two cents (on the $.814 rate) to make up the difference.

“Being two cents behind before getting into FY14’s budget. If those numbers are real, we are looking at the real number being 83 maybe 84 [cent real property tax rate]. That’s before we start looking at new programs and increasing the school budget. We are behind the 8-ball to start with,” said Bob Ullenbruch (Palmyra District).

The two-cent figure is one Ullenbruch brought up during the presentation as well. Projected revenue per penny is anticipated to be between $260,000 to $270,000 in the revenue-neutral tax rate.
“We need to be putting two cents for something else, not for that,” said Booker who last year wanted a higher tax rate than was adopted.

Supervisors have requested Sheridan present how the issue occurred and what is happening to correct it in the future. County administrator Steve Nichols said after the meeting he doesn’t think it will affect previous years budgets, noting they were all audited and balanced each year. Officials are looking at previous budgets.
He also said this is only a projected revenue issue, not a taxing issue. When asked by Kenney if county residents were incorrectly taxed, Nichols said no, that everyone was taxed correctly. Revenues were just budgeted incorrectly.

The next Board of Supervisors meeting is Feb. 9 at 2 p.m. Nichols will present his County Administrator proposed budget.


The Free Enterprise Forum’s coverage of Fluvanna County is provided by a grant from the Charlottesville Area Association of REALTORS® and by the support of readers like you.


Bryan Rothamel covers Fluvanna County for the Free Enterprise Forum.  He is the founder of the Fluco Blog.  Additional writings can be found at www.Flucoblog.com


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