About 50 Carbon County taxpayers heard in court yesterday why a 5-mill realty tax increase is needed this year.
They also learned there could be a 20-mill occupational assessment tax next year, which would be an average of $100 per resident subject to the tax.
Dean D.W. DeLong, chairman of the commissioners, testified that in searching for new revenues to finance county government, the commissioners plan to enact in 1994 the occupational tax, which the county abandoned in 1988, as a means of lessening the tax burden on property owners.
DeLong disclosed the occupational tax in answering a question by President Judge John P. Lavelle about future plans the commissioners have to raise revenue, in order to avoid asking for another realty millage hike next year.
Lavelle and Associate Judge Richard Webb presided during the three-hour public hearing in Courtroom No. 1 of the courthouse in Jim Thorpe.
Lavelle said at the close of the hearing that a decision will be handed down as soon as possible.
The general fund rate is 25 mills, the legal limit by state law. The commissioners petitioned the county court for another 5 mills to balance the $8.4 million budget.
The county levies an additional 7.2 mills for the real estate tax to pay off $8 million in loans, for prison construction and other major capital improvement projects such as courthouse renovation. The 7.2 mills for debt service is separate from the 25-mill tax for the general fund.
Also at the hearing, DeLong said the commissioners plan to review tax-exempt properties, such as hospitals, to determine if some of those can be added to the tax rolls.
He said the commissioners can't raise realty tax rates, the 4-mill personal property tax or the $5 per capita tax and have few options to raise future revenue unless the state allows a county sales tax or a county wage tax.
He said the commissioners, in cutting future expenses, will have the opportunity to review and set salaries of tax collectors -- who will be elected to four-year terms this year.
DeLong said the occupational tax notices will be sent out later this year so tax collections can begin in 1994. The levy will be four-tiered, he said, with these classes: working, non-working retired and unemployed. Each job will be valued based on an updated list of occupations. The 20-mill tax rate will be applied to the job's rated value, DeLong explained.
The occupational tax would replace the current $5 per capita tax, which nets the county about $176,000 annually.
DeLong said projections are that the occupational tax would generate $3.8 million --38,000 taxpayers multiplied by an average bill of $100 -- and that would place the county in a position to reduce real estate taxes.
DeLong said after the hearing if the 5-mill increase is not granted, the county will have an unbalanced budget and will have to cut back services, shorten hours of operation or lay off employees.
During questioning by Roger Nanovic II, county solicitor, DeLong testified that many court-related expenses totaling more than $30,000 which had been requested by Lavelle and cut from the budget by the commissioners, have been reinstated.
Lavelle laid the ground rules for residents testifying, stating it is a given that no one, including the judges and the county commissioners wants a tax increase.
The purpose of the hearing, he said, was to have the commissioners explain why they need the additional 5 mills, so others can question them about their budget and whether proposed expenditures are reasonable and necessary.
Nine taxpayers followed DeLong to the witness stand and presented their views, mostly about the unfairness of the property assessment system, stating they don't mind paying taxes but object that some pay less than their fair share.
DeLong repeated earlier remarks that a countywide reassessment of the 44,000 realty parcels in Carbon would be the first since 1969 and would cost $2 million to $3 million.
DeLong said to raise revenues in the future the commissioners are also considering changing how the assessed value of a property is determined. Now, the county calculates assessed value by multiplying a property's fair market value by 40 percent. DeLong said the county may increase that 40 percent figure but did not say by how much.
In 1987 the general fund real estate tax stood at 17 mills. If the commissioners are granted the 5-mill tax hike, the real estate tax would be 37.2 mills -- more than doubling the tax in six years.
For every mill, property owners pay $1 for every $1,000 in assessment. In 1992, the tax rate was 32.2 mills, which meant property owners paid $32.20 for every $1,000 in assessment. At 37.2 mills, property owners would pay $37.20 for every $1,000 in assessed valuation.
The latest hike would mean about $15 a year more in realty taxes for the average household in the county, which has an assessed value of $3,000 for realty tax purposes, DeLong said.
Most of the morning testimony was taken up by the county's financial consultant, Jay Thatcher, who testified for more than an hour to explain the 1993 budget preparation process.
Thatcher said the county has finished each year since 1988 with a sizable excess of budgeted expenses over budgeted revenues, from $306,053 in 1988 ranging to more than $400,000 the next three years and finally at $824,875 at the end of 1992.
That year was the first full year of operation of the county's jobs and wages classification plan, termed the Russell Study, which added $614,825 in salaries and fringe benefits for county workers versus 1991.
In 1993 there will be a hiring and wage freeze based on the new spending plan, DeLong said.
The excess has been absorbed by cash balances on hand at year end and by a capital improvements account which was $1.2 million at its maximum.
The capital improvements account was established in the mid-1970s when the county sold its former nursing home, Laurytown, to the Pennsylvania Power & Light Co. for $685,000. The money was invested and the fund eventually grew to $1.2 million.
As money was transferred from capital funds to the general fund, the balance decreased.
Included in the 1993 budget is $432,000, representing such a transfer, Thatcher said, leaving a balance of $45,000 in the capital improvements fund plus a loan receivable of $210,000 from the county Telecommunications Commission.
A key change in the 1993 budget versus prior years, Thatcher said, is that more realty and other taxes can't be collected because of the recession.
A rate of 87.2 percent is being used as the collectible factor compared to 90 or 95 percent in prior years, he said.
Another was a loss of interest earnings from investments because of declining market rates in 1992.
There was a deficit of $2.6 million in the first budget draft.
This was reviewed, resulting in increased revenue projections and expense reductions until the deficit was cut to about$828,679 just before Dec. 10, when the commissioners adopted the 1993 budget in preliminary form.
Thatcher recommended they petition the courts for 5 mills more to hike revenues, DeLong said, but the board balked. The board is 2-1 Republican, with DeLong and Thomas C. Gerhard as the majority and John D. Mogilski, as minority commissioner.
A storm of opposition to proposed cuts to balance the budget brought the board into agreement with Thatcher. Mogilski opposed the 1993 budget adopted by the other commissioners, as well as their decision to petition the court for a 5-mill tax boost.Copyright © 2014, Los Angeles Times