The Baldwin County Board of Commissioners adopted a preliminary millage rate on Monday, primarily as a formality to comply with state guidelines. If ultimately approved for 2024, the millage rate could mean a significant tax increase for some property owners.
Assistant County Manager Dawn Hudson briefed commissioners during a called meeting on the timetable and requirements for setting the millage rate, explaining that Sept. 1 is the deadline for the county’s tax digest to be submitted to the State Department of Revenue. Prior to that, she said, public hearings are required, and a preliminary millage rate must be set and advertised before those hearings.
Hudson also pointed out this year’s county-wide property re-evaluation presents another challenge for commissioners. She explained the law requires the county to roll back its property tax rate by an amount equal to the reassessment values. Otherwise, she noted, it amounts to a tax increase.
“Our current tax millage rate is 10.02,” she reminded the board. Based on the reassessment numbers, “our millage rate rollback calculates at 8.51. If you’re going to set the millage rate at anything higher than what the rollback calculation is, that’s considered a property tax increase.”
The assistant county manager went on to show what the county would collect in tax revenue at different rates. At 8.51 mills, the county would receive an additional $419,000 over last year, which would not be considered a tax increase. Instead, that money would represent additions to the tax digest and improvements made to existing properties, she said.
Using the 10.02 rate, however, the gain would be $2.8 million, and that would constitute an increase in the tax rate because “that is a combination of additions to the digest and reassessment of existing properties,” Hudson explained.
She also said the county must publish a five-year history of its property tax rates, and that would include the proposed number for 2024.
“When you advertise that you’re going to set the millage rate at a certain rate, you can always set it at a lower value, but you cannot set it at a higher value without starting the process over.”
When Hudson asked if there were any questions, District 2 Commissioner Kendrick Butts opened the door to what turned into a discussion dealing with the policy of cash reserves.
“If we go with your recommendation of the 10.02, that extra $2.8 million, where would that money go?”
Hudson responded that it is not budgeted for the current year and that it would “hopefully go into fund balance” and be used to start the new fiscal year in January.
“Because we have additional revenue, we could start off with additional revenue, which could reduce the amount of TAN (tax anticipation notes) money that we have to borrow next year,” District 3 board member Sammy Hall then suggested.
Hudson pointed out the county paid $147,000 in interest on the TAN notes last year.
“You really need a cash reserve of $12-to-$15 million if you want to get through the year without borrowing cash,” Hudson said. “You’re looking at increasing what you have by $8 to $10 million.”
District 5 Commissioner Henry Craig commented this is not a new concern.
“I’ve always advocated that we address the TAN issue over the last 12 years. And, it remains a problem,” Craig said. “But I don’t know that fixing it by $2 million or $2.8 million in one year is the way to go.
“I personally won’t support that much,” he continued. “But I do support a calculated effort for a dollar amount each year, not a mill rate, but a dollar amount expressed as a mill rate. And, If we do that, we can’t spend it. And, that’s the real issue, not spending all the revenue we collect.”
In response, Butts advocated an aggressive approach, using the 10.02 rate to collect revenue to address the TAN issue.
“We can’t continue to operate the county the way we have, with no reserves, not enough money, no certainty of how much we are going to collect,” he said. “We owe it to the citizens to have a reserve if an emergency does come up.”
Hall then pointed out what he believed to be the task of the group that evening.
“Maybe I’m missing something,” he said, “but the issue tonight is not really whether or not we’re going to charge the taxpayers 10.02 mills or not. The question tonight is, what are we going to advertise for so that we can have the public hearings?”
The board can decide on the final number following the hearings and more discussion, Hall added. “It seems a no-brainer to me that we set it at the 10.02 and then we have the public hearings, and we make a decision a little further down the road.”
Conversation on various issues and points relating to the county’s finances – including comments from commissioners-elect Andrew Strickland and Scott Little – continued for another 20 minutes before Hall acted on his suggestion.
“After all the discussion,” he said, “it would be my motion that for the purpose of advertising and the purpose of public hearings, that we set it at 10.02, which is the current millage rate.”
While both Craig and Hall commented they were not necessarily saying they would support the 10.02 rate, the motion was approved unanimously, and the meeting adjourned.