Commissioners OK tax hike
By JUDITH O. ETZEL

2/4/04

Special Thanks to The Derrick for Allowing this story to be Posted

THE SPENDING PLAN, WHICH WILL MEAN ABOUT A $45 INCREASE FOR THE AVERAGE PROPERTY OWNER, WAS APPROVED DESPITE OBJECTIONS FROM RESIDENTS IN ATTENDANCE.

In an effort to right a 2004 budget they insist was badly out of whack, Venango County commissioners Sue Smith, Gary Hutchison and Larry Horn unanimously approved a 20 percent property tax hike on Wednesday.

County residents will see their tax levy go from 5.12 mills to 6.12 mills - property owners pay 10 cents for every $100 of assessed valuation on their land and improvements - this year. County tax bills are issued at mid-year. The tax hike amounts to about $45 more per property owner.

In all, the 6.12 mill levy will bring in slightly more than $9 million in revenue to the county this year. It will be used to finance the county's general fund, now pegged at nearly $13.5 million.

The actual spending plan amounts to $42 million, but the bulk of it is for pass-through expenditures, such as social services that receive state, federal and other income.

"This is the last thing we wanted to do to our taxpayers, but we wouldn't be responsible if we didn't get this budget fixed," said Smith, the chairman of the commissioners.

The commissioners reopened the 2004 budget, adopted by the previous commissioners in late November, on Jan. 5 and had until Feb. 15 to make any adjustments. The law requires that any reconfiguration of a re-opened budget not result in more than a $1 million increase.

Prompting the budget review were a number of factors, including the inadequate funding of certain mandated services, such as county jail expenses; the unexpected elimination of a cash carryover from last year; a depleted operating reserve fund; and the alleged swindle of $1.5 million in county money and the resulting legal and other costs associated with trying to recovery the funds.

The additional revenue will not only redress funding inadequacies. The bulk of it, $900,000, will be plugged into an operating reserve fund, one the commissioners hope to use as a hedge in light of any unexpected expenses that occur this year.

Smith quickly responded to budget-related questions that have been raised by constituents. Taking out a loan to cover any shortfall, she said, was unreasonable.

"You can't take out a loan to pay expenses and then expect to be able to pay that loan at the same time. It's not viable," she said.

The reinstatement of a personal property tax, she said, is not feasible because the county "has no checks and balances here to enact and enforce that tax."

Withdrawing from the state's Clean and Green program, one that reduces land value and thus taxes for agricultural and other properties, is not an option because the law requires it be offered.

Hutchison said it is vital that the county have an operating reserve account, and the $900,000 earmarked for that account is "a prudent amount" and well below the state law limit of 10 percent of a budget.

There was no operating reserve account in the 2004 budget adopted in November. Such an account is necessary to deal with unexpected expenses, such as high-profile criminal cases that require additional county funds or unexpected expenses at a crowded county jail, the commissioners said.

The new budget package and tax hike were not approved without opposition from a half dozen people who attended Wednesday's meeting.

Rod Bedow, a Cherrytree Township businessman, suggested the commissioners should levy only an extra one-quarter mill, renegotiate county employees' wages to save another quarter mill, and then borrow via a tax anticipation note the remaining one-half mill. It could be done over a five-year period, he said.

"Once you tax us one more full mill, you'll never take it back," said Bedow.

Noting a limited time frame does not permit wage changes to "be dealt with in this budget," Hutchison said taking out a tax anticipation loan means "you are asking us to pass a budget with a deficit."

Responding to accusations that the commissioners may have ignored eliminating some services that are not mandated by law, Horn replied, "House arrest is not mandated, and we could eliminate it. If you take that away, they'll be over to the 'hotel' (the county jail) real fast, and we can't afford that. There is no fat in this budget."

Agreeing with Bedow's suggestion that employee wage and benefit packages may need examined, Smith said, "We're taking this very seriously. We met with all our department supervisors and put them on notice that everything needs to be watched."

County administrator Denise Jones said hiring practices have been changed, too.

"New hires won't be done automatically anymore to fill vacancies. We will review every vacancy very carefully," said Jones.

Former Oil City Mayor Malachy McMahon, a candidate last year for a county commissioner slot, commiserated with the commissioners' financial dilemma.

"First off, I feel sorry for you. These days, people tell me how fortunate it was that I lost," he quipped.

But McMahon also pressured the commissioners to do what he described as "keeping your word" and said they need to be held accountable.

"In my 16 years (as an Oil City council member and mayor), we always managed to get a balanced budget so I know it can be done. The easy way out has always been to raise taxes. Keep your word on what you campaigned on and don't raise taxes," said McMahon.

In a quick "this was not easy" retort, Smith said the budget morass was unexpected.

"There are a number of things none of us anticipated. The missing money. The items in the budget that needed immediately addressed. I mean, the jail would have never made it through the year. The (budgeted) money for it was unrealistic," said Smith.

McMahon also questioned the wisdom of spending $150,000 last year to create a Global Imaging System, or three-dimensional mapping plan, for the county and then scrapping an analyst's position in the re-opened 2004 budget.

"It is one of our most forward moving things to happen in this county and we need it to progress. Why would you not have a full-time analyst to take care of it once it's done?" asked McMahon.

Scuttling the position does not mean "we're putting this (GIS) in mothballs, up on a shelf," Jones said.

"We're trying to watch every penny and this is a chunk of change ($30,000). Don't get the idea we spent all this money and then are going to give it up. But you have to have priorities," she said, adding that a GIS project consultant will help and county staff members will be trained to work with the program.

Stan Grzasko of Oil City, also a candidate for commissioner last year, said he was "kind of outraged" that taxes would be raised. He encouraged the commissioners to ask residents to donate so much a month to the county to offset the need to raise taxes.

"I think Venango County people are givers, not takers, and I think you need to ask the people if they would donate their money. Forget the taxes," said Grzasko.

A key budget-related problem, said Tammy Varsek, finance director for the county, is the declining tax base. She explained that at least two previous county budgets have been balanced using savings from refinancing debt and cutting interest payments.

"But we do not have a growing economy. Something somewhere is going on with our tax base," said Varsek.