The key to balancing any budget is to have revenues match expenditures.
It may sound simple, but Rutherford County could have problems with this equation in the coming weeks.
On the revenue side, Finance Director Lisa Nolen said things are much worse than they look thanks to reappraisal appeals.
“When a person appeals their appraisal, it holds the rolls,” she explained, adding that impacts the estimates she works with. “Ultimately, that means we have less revenue than we expected.”
Right now she thinks the budget revenue estimates for fiscal year 2014 are $597,718 short because of appeals that have been settled but not paid out. And there are more appeals that are working their ways through the judicial process, which could take at most $783,951 out of the county’s budget.
Most of the nearly 750 appeals filed after the 2010 reappraisal have been resolved, including one of the biggest.
Filed by Embassy Suites Hotel and Conference Center in Murfreesboro in 2010, the hotel settled its appeal with the county earlier this year. The county had to refund $315,550 for 2010 and $118,334 for the 2011 tax year to Embassy Suites after losing the court battle, according to records from the Rutherford County Property Assessor’s Office.
Not only does that impact the county’s current bottom line, it also impacts future revenues.
In 2010, attorneys representing Embassy Suites filed a complaint with the Tennessee State Board of Equalization argued the Assessor’s Office unfairly appraised the site at $67 million, which resulted in the hotel paying higher property taxes. The judge agreed with Embassy Suites that the property was worth an estimated $36 million.
That means Embassy Suites will pay property taxes on about $30 million less than the initial appraisal until the next appraisal cycle.
This same scenario has played out on multiple properties across the county, impacting not only Rutherford County’s budget, but also Murfreesboro, Smyrna and La Vergne’s bottom lines.
On the bright side, sales tax revenues are up across the county with the light shining brightest in Eagleville, which saw an increase of 213.87 percent in sales tax revenue in March over the previous year. La Vergne has also seen a jump of 16.97 percent in sales tax revenue, Murfreesboro is up 4.03 percent, Smyrna is up 7.88 percent.
In fact sales tax across the county is up 7.47 percent this year over last, which puts more cash in the coffers of both Rutherford County and Murfreesboro City schools, as well as Rutherford County and local municipal governments.
Paying for public safety
The county can use all the funds it can get when staring down the barrel of new expenditures for the Rutherford County Sheriff’s Office and the Affordable Care Act.
Starting with the wish list for the Sheriff’s Office, the department needs everything from new cars to more deputies. And the one item that can’t be passed on this year is the plan to put a school resource officer in every Rutherford County school.
The plan was proposed following the December 2012 deadly shooting at Sandy Hook Elementary School in Newtown, Conn., and was approved in February.
Sheriff Robert Arnold estimated the proposed increase in officers would cost $1.2 million, in addition to the roughly $300,000 already needed for two full-time positions at the recently completed Stewarts Creek High School.
In total, Rutherford County officials would need to spend $1.5 million in start-up costs. Those funds would be allotted to pay for the additional salaries and benefits, as well as the required training fees and equipment for each officer.
That amount would then reduce to an estimated annual cost of $583,000.
As part of the endorsement, Mayor Ernest Burgess agreed to include any tax increase needed to pay for the officers as a separate line item in any proposed budget so that the full cost is known during the budget process.
Even though it would cost roughly 1 cent to fund after the first year, Burgess has said the remaining 2 cents of the tax increase is needed for other purposes – meaning the higher rate would be permanent.
On top of the new SROs, the Sheriff’s Office needs at least 40 additional full-time employees to efficiently manage daily operations and adequately oversee inmates at the Rutherford County Adult Detention Center, according to a jail staffing analysis conducted by officials with the County Technical Assistance Service, an arm of the University of Tennessee Institute for Public Service.
Based on current salary levels, the Sheriff’s Office would need more than $1.25 million annually to pay for the recommended 44 full-time positions.
For both plans, the Sheriff’s Office would need an additional $2.75 million.
Paying for health insurance
Starting in 2014, self-insured employers – like Rutherford County – with more than 50 employees will have to pay a reinsurance fee. The fee will continue through 2016.
According to the Department of Health and Human Services, the reinsurance fee is designed “to help protect insurers against risk selection and market uncertainty,” which will “give insurers payment stability as insurance market reforms begin.”
The fee is intended to “stabilize the insurance market and make coverage more available and affordable,” according to a press release on healthcare.gov.
The money generated will be used to regulate premiums in the health insurance exchanges for high risk individuals to get insurance coverage.
The fee will cost the county $63 per covered life, which includes employees and whoever is also on the insurance plan.
The county employs more than 5,700. When all the spouses and dependents are added in, it provides insurance to more than 12,000 people.
At $63 a head, Rutherford County will owe more than $756,000 in 2014 alone. Added up over three years, the county will pay more than $2.3 million in reinsurance fees.
For just public safety and health care, the county needs to find an additional $5.05 million in revenue – whether by tax increases or spending reductions – and that doesn’t even count the annual growth in Rutherford County Schools.
Nolen will have a complete proposed budget completed by May 9 to present to the Budget Committee.
Between May 9 and June 28, the Budget Committee will meet with county department heads to fine tune the final numbers.
The Budget Committee will hold a public hearing on the proposed budget at the Rutherford County Courthouse at 7 p.m. June 17.
And finally County Commission will vote on Rutherford County’s fiscal year 2014 budget at 9 a.m. June 28.