Summit County Council urged to consider property tax increase
Reduction in new growth revenue threatening services
April 7, 2017
This year, the Summit County Council has been strongly urged to consider raising the current property tax rates to prevent significant cuts from being made to several county programs.
Last week, at the County Council's retreat, Summit County Finance Officer Matt Leavitt suggested the council start looking closely at the county's municipal and general rates.
"It's a subject that has been brought up just about every year for several years now and in the past, even during the recession, the county was getting enough new revenues from new growth and we could sustain government programs," Leavitt said. "But now growth has really slowed down significantly and that has impacted our ability to expand or even keep basic services."
New growth is the only way property tax revenues can grow outside of adjusting the rates through a Truth in Taxation hearing. According to Leavitt, there has been a 65 percent reduction in revenues from new growth over the last several years. He added, "That is a significant impact on county programs and services in the general fund," such as public safety and the Health Department.
"I know that might be surprising to a lot of people, but our information from building permits and construction values doesn't support anything that says we have had a lot of new growth," Leavitt said. "Instead what we are seeing is a lot of people commuting into the county."
Summit County held Truth in Taxation hearings in 2012 and 2013 to adjust the municipal fund, which Leavitt referred to as a "small blip." Leavitt said the increase to the municipal fund ensured completion of road projects and enhancement of law enforcement services.
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However, Leavitt said there are currently state-level mandates demanding increased services for different programs, but no resources are tied to them.
"It's a serious discussion this year and it has been a serious discussion for the last several years," Leavitt said. "When we are looking at how we are going to fund everything that is being requested or proposed, it has become a serious issue. We are at the point if we don't go through this process something significant is going to have to happen."
The current system for calculating property tax revenues for government agencies does not include anything to account for cost of living increases or inflation, Leavitt said. He added, "It is anticipated that government agencies go through a Truth in Taxation process every five to eight years."
"Because we have had so much growth in the past, we have been able to avoid that," Leavitt said. "But now that we haven't had the growth, we are revaluating that."
County Councilors have several options to consider when exploring how to maintain current service levels, including doing nothing, freezing current rates, lost purchasing power or increasing the property tax rates.
"The last option lies somewhere in between the rest of those and it is up to them to figure out what the right rate and how much new revenue we need in order to keep program and services going at the current levels," Leavitt said. "Without knowing how much the council wants to go for, it is hard to know what the impact will be on property owners."
If councilors decide to recover the loss of purchasing power of the current tax revenue, Leavitt said the average tax increase on a primary resident in the county would be about $65, but "that's on average taxable home value of about $350,000."
"If we are going to look at doing it, it will be sooner rather than later that we start to have more in-depth discussions," Leavitt said. "We have the lowest tax rate, especially for third-class counties of similar size, and people have been able to enjoy that level because of growth. But right now, new growth has not been where it has been in the past."
If County Councilors decide to consider raising the current rates, property owners will begin receiving information in July, along with their disclosure notices. A separate notice would be sent in October notifying them of the county's intention to increase tax rates and any hearings.
Summit County Manager Tom Fisher said "everyone thinks we have a healthy economy and the county is flush with revenue."
"The only thing we can do is adjust service levels or go to other places and not allow increases in salaries and have employees pay more for health care, for example," Fisher said. "Sales taxes are not a good source of revenue to pay for your basic government services.
"I think you will definitely hear more discussions in the future about our property tax revenue," Fisher said.
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