Sunday, June 26, 2022

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Sales tax revenues up, way up – giving windfall to county government

There’s no dearth of challenges confronting Alamance County’s government as its leaders take stock of their positions at the end of the current calendar year.

But for once, money worries aren’t among the county’s most pressing concerns – and that could make for some interesting choices as the county’s top brass draft their New Year’s resolutions for 2022.

Over the past 12 months, the county has seen its coffers fill up to the brim thanks to millions of dollars in federal pandemic relief as well as some unusually generous capital outlays in the state’s current annual budget.

These external allocations have been matched by the reassuringly strong state of the county’s usual revenue sources – particularly the sales and property taxes that make up the lion’s share of its annual intake.

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This picture of financial health has been a welcome development to Steve Carter, who currently serves as the vice chairman of Alamance County’s board of commissioners.

“The county as a total is doing fabulously,” Carter acknowledged in an interview this week.

“Our sales tax revenues are up an amazing amount, and it’s going to contribute to the fund balance this year.”

Commissioners Craig Turner and Steve Carter conferring during a recent county commissioners’ meeting.

Carter went on to predict that the county will add $3.5 to $6.5 million to its general fund balance, or primary savings account, just from the additional sales taxes that it has accumulated over and above what it had projected in the current year’s budget.

Carter’s observations about the county’s enviable financial position were more or less confirmed earlier this month when the board of commissioners held a 6 1/2-hour work session in order to dig deeper into some of the more pressing issues facing the county.

During the work session, Alamance County’s manager Bryan Hagood reminded the commissioners about the various sources of revenue they have at their disposal to tackle these issues. He noted that, in addition to the millions which the county has received in federal and state allocations, the commissioners will be able to draw on the county’s own financial reserves to pay for capital projects, increases in employee compensation, and any other priorities that weren’t included in this year’s annual budget. The county manager went on to stress that the county expects to plow a great deal of revenue into its savings thanks, in part, to the better-than-expected sales tax receipts that it has seen over the past year and a half.

The robust state of these sales tax returns will apparently be confirmed in the county’s next annual audit, which has yet to be presented to the commissioners due to some additional state-level reporting requirements. The county’s finance department has nevertheless given The Alamance News a sneak peek of what the audit is expected to reveal about the sales tax receipts for the financial cycle that ended on June 30, 2021.

According to the finance department, the county took in $37,955,154 in regular sales tax revenue during the past fiscal year – an increase of 25.9 percent over the $30.1 million or so that had appeared in that year’s annual budget.

Yet, this $7.8 million windfall still doesn’t capture the full extent of the past year’s sales tax receipts.

According to the county’s finance department, the state also passed along another $1,487,810 in funds from a separate pool of sales tax revenue that it normally sets aside to cover the county’s Medicaid expenses.

The state legislature had originally commandeered this special revenue stream years ago when it agreed to relieve counties of their ever-escalating Medicaid costs. Yet, as an added courtesy to county officials, the legislature also included a “hold harmless” provision in this so-called Medicaid swap, which promised to let counties keep any excess funds raised from this specialized sales tax.

The county’s finance department acknowledges that, in most years, this provision doesn’t have much of an impact on the county’s finances.

“The ‘Medicaid hold harmless’ sales tax funds were not budgeted because Alamance County doesn’t normally receive these funds,” the finance department went on to explain in response to an inquiry from The Alamance News. “[The past fiscal year] was the first time in years that Alamance County sales tax receipts significantly exceeded annual Medicaid expenses.”
The solid returns from the county’s levy on retail sales have apparently continued during the current financial cycle, which began on July 1.

According to a monthly financial report that Hagood shared with the commissioners in November, the county had received $3.33 million in its latest allocation of sales tax receipts from the state, which represented revenue from retail transactions that had occurred in August. The county manager noted that this figure amounted to an increase of 15.4 percent over the revenue which the county received for August of 2020. He added that the year-to-date total for the current financial cycle is $1,138,849 higher than the yield from the same period of the previous year.

Another potential boon for the county is the additional property tax revenue that’s expected to come in from the new growth and development which has occurred over the past year.
The county’s tax office won’t formally recognize these recent gains in the property tax base until it conducts its annual update in January. Even so, the county’s tax administrator has already roughed out a projection of next year’s tax base, which appears to have piqued the interest of at least some of the commissioners.

According to the tax office, the sum total of the county’s tax base had stood at about $15.6 billion as of November. Akins estimates that, in a year’s time, this figure should climb to over $16.1 billion – an increase of $500 million or about 3.3 percent in additional value.

Although Akins asserts that a 3.3 percent increase is a relatively “strong” rate of growth, he also acknowledges that it isn’t unheard of to see this sort of change in the tax base.

“Two to three percent is the usual range for year-to-year growth,” the tax administrator went on to explain in an interview with The Alamance News.

The true extent of the growth in the tax base won’t become evident until the tax office completes its annual update next month. Even so, there are hints of the prospective gains in the monthly financial report that Hagood shared with the commissioners in November.

According to the county manager’s report, the county collected nearly $66.2 million in property tax revenue through October of this year. This figure is tantamount to an increase of $1.75 million, or about 2.7 percent, over the $64.4 million raised during the same period of the previous year – and that’s notwithstanding a 1-cent property tax cut that the commissioners enacted this spring.

The county’s elected leaders apparently had inklings of their present cash-flush condition when they adopted the county’s current annual budget this past spring. At the time, the finance department’s auspicious revenue reports persuaded the board of commissioners to reduce the county’s property tax rate from 67 to 66 cents for every $100 of property value.

Although it remains to be seen what the commissioners will do when they hammer out the county’s next spending plan, some of them have already hinted that they’d like to trim another penny from the tax rate in the upcoming budget.

Carter, for one, insists that it’s too soon to tell what he and his colleagues will do when they vote on the county’s next budget.

 

“I’m more concerned that we use this money to benefit all of the taxpayers,” the commissioners’ vice chairman said when asked about the prospect of another tax cut in 2022.

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