Murphy – The 2020-21 fiscal year budget proposed by Cherokee County officials includes an increase in property taxes to offset loss of revenue due to the coronavirus pandemic.
County Manager Randy Wiggins submitted the proposed budget at the board of commissioners meeting on May 18. He expects a 25 percent decrease in sales tax revenue due to COVID-19, which calculates to a $1.7 million shortfall.
To offset the loss, Wiggins proposed a property tax rate of 50 cents per $100 valuation, which is 4 cents above the calculated revenue-neutral tax rate of 46 cents. To put this in perspective, a 4-cent tax rate increase on a property valued at $200,000 would equate to an extra $80 in property taxes each year.
The proposal did not sit well with at least two commissioners, who later expressed their intention to fight any tax increase. Commissioner C.B. McKinnon said he plans to vote against the property tax increase in favor of cutting expenses instead.
“When revenues are short, the government always [reaches into] your pocketbook instead of cutting expenses like you do when revenues are short,” McKinnon said at the Cherokee County Republican Party meeting Thursday evening. “[When revenues are short] you cut your expenses, you quit going out to eat and you quit entertainment, but the government never does that.”
Commissioner Dan Eichenbaum echoed those sentiments.
“We are going to be very creative about cutting everything that we possibly can,” Eichenbaum said. “Both times that I ran [for office], I promised not to raise taxes, and so did C.B. McKinnon. We may not prevail, I don’t know.”
To avoid a property tax increase, three commissioners must vote to maintain a revenue-neutral tax rate of 46 cents. McKinnon will try to convince fellow lawmakers that the county’s fund balance is healthy enough to weather the storm.
“I think we’re going to recover a good portion [of sales tax revenue] in the fourth quarter,” McKinnon said. “I’m optimistic that next year is going to be good. As soon as the election is over, the COVID-19 crisis will be over. I think we can cover revenue losses with our fund balance and get through this without a tax increase.”
It’s unclear whether Commissioners Roy Dickey and Gary “Hippie” Westmoreland will vote in favor of the increase proposed by Wiggins. Meanwhile, Commissioner Cal Stiles has indicated that he prefers to be more cautious, as opposed to assuming that revenues will return to normal soon.
“We only have two choices: we’ll need the tax increase, or we’ll need to severely curtail services,” Stiles told the Cherokee Scout last week. “I do not want to curtail police or emergency management services. I hope the citizens understand that we have no choice but to try and fill that gap from loss of revenue.
“At this point, no one knows what that shortfall will be. It could be less than 25 percent, or it could be more. As an individual, I don’t want to pay more taxes, but I don’t see any other way out of this. We would not have to do this if COVID-19 had not disrupted the economy.”
Commissioners must make their decision by July 1, when the new fiscal year budget is due to be finalized. Once the budget is established, they cannot change the tax rate mid-year.
If officials move forward with a property tax increase this year, they could opt to reduce the rate in the 2021-22 fiscal year budget. However, McKinnon doesn’t think a reduction in taxes will ever happen.
“Once that tax increase happens, it will never come off,” he said. “That’s why it’s so important to try not to do it now, so you don’t have to figure out how to reduce it later.”
Proposed tax hike debated
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