SNOW HILL – Budget cuts should come before a reduction in the discount afforded to early property tax payers, the Worcester County Commissioners decided this week.
An attempt to recoup about half a million dollars for the tight Worcester County budget next fiscal year by reducing the discount for early payment of property taxes to half a percent will wait until other budget trimming measures are considered.
“I just think it’s a back-door tax increase,” said Commissioner Louise Gulyas. “We said we’re not going to raise taxes. This is a tax increase any way you look at it.”
Commissioner Bobby Cowger said the reduction is a good idea proposed at a bad time. “Cutting that is like raising taxes,” Cowger said.
Commissioner Judy Boggs liked the proposal, particularly in light of home values declining throughout the county.
“I think it’s a prudent way to go,” said Boggs. “They’ll be paying less because they have lower assessments.”
County Treasurer Harold Higgins proposed cutting the early payment discount from one percent to half a percent in order to recoup between $400,000 and $500,000 of the $900,000 the county loses annually.
“That’s pretty significant,” said Boggs.
The 1 percent amounts to about a $20 reduction in property tax for the average homeowner, with a benchmark tax bill of $2,000.
Higgins said the reduction in the discount made sense considering falling property values. The impact on the average homeowner would be small.
“Your net taxes would go up with that but we’ve seen some declines in assessments,” said Higgins, which would offset the lesser reduction.
“It’s a good deal to get a 1 percent discount. It’s a good deal to get a half percent discount,” said Higgins.
In the current rate environment, the 1 percent discount seems a little high, Higgins said.
“We probably get between 60 to 70 percent of our collections come through during the discount period,” said Higgins.
Mortgage companies in particular use this period to pay those taxes. Property owners who escrow their taxes with a bank are required by law to pay during the discount period.
“If we don’t offer a discount, they would probably postpone that payment ‘til September,” said Higgins.
The proposed change in the early payment discount from 1 percent to one half of a percent would be subject to a public hearing if the commissioners see fit to move ahead with the change.
“It’s going to be a tight year again. We’re looking at probably a $12 million reduction in projected revenue and a half million dollars here and there can help,” Higgins said.
Boggs think people would be reasonable if the county went for decreasing the discount.
“Everybody understands the county is in dire straits, too,” said Boggs.
“We’ll have to find the cuts somewhere else,” said Gulyas.
Cowger said he had a problem with raising taxes before the County Commissioners have made budget cuts.
Further debate over the suggested cut in the early property tax payment discount will be postponed until budget discussions in the spring, the commissioners agreed unanimously.
Higgins agreed that taking more time over the discount would be a good idea, letting his office gather more information and generate more accurate budget numbers.