The news could hardly be worse for the tax levying entities in Fayette County. Figures from the Fayette County Tax Assessor’s Office show a 10.39 percent decrease in the value of real property for the 2012 tax digest. That translates into a drop of nearly $500 million in property value — mostly the same property but worth a lot less.
That means fewer tax dollars can be collected at current tax rates.
Agricultural, residential, commercial and industrial properties make up the overwhelming majority of the total tax digest. Motor vehicles make up approximately 6 percent of the total digest with other incidentals such as timber harvests, mobile homes and heavy equipment barely making a dent in the total. And the problem, exacerbated by the ongoing local recession, is in the plummeting value of real property.
Agricultural and residential property decreased in value by 11.69 percent over last year, with Chief Appraiser Joel Benton saying the state requirement to include short sales, bank sales after foreclosures and auction sales in the calculations contributed significantly to the lower figures.
Figures for commercial and industrial properties released Monday showed a 9.53 percent decrease in value compared to last year. The four categories combined represent a 10.39 percent decrease in the real property portion of the tax digest for 2012.
And that translates into what is expected to be $492 million less in property value and a corresponding drop in taxes to be collected this year compared to 2011, according to Fayette Tax Commissioner George Wingo.
Wingo said the figures on motor vehicles will not be available for a few months but, even when calculated, they are not expected to deviate much from last year and, given the category’s small percentage in the tax digest, are not expected to have much affect on the overall digest.
A falling tax digest has a direct impact on local government budgets since the county and municipalities rely heavily on revenues from sources such as property taxes and sales taxes.
Also reliant on property taxes is the Fayette County School System, the entity that by a wide margin levies more taxes than the county or municipalities and receives more than half its operating revenues from local tax sources.
Case in point, the revenue side of the school system’s operations budget for the year ending on June 30 is $170.2 million. Of that amount $89.2 million, or 53 percent, comes from local sources. Property taxes alone account for $81.6 million of the local total.
So what are governmental entities to do in the face of falling property tax revenues? The county and municipalities can cut services or raise taxes or a combination of both. The Fayette County Board of Education is in a different situation altogether. Taxpayers are already assessed at the 20-mill legal limit. Only a successful referendum would allow the school board to raise the limit even higher.
