2017-10-11 / News

Library board, other agencies say they can’t afford tax cut request


Local special government districts being pressured by the Letcher County Fiscal Court to reduce their tax rates to make room for a county tax increase say they can’t afford to give up anymore than they already have.

Special districts have the authority under state law to set ad valorem tax rates for property within their district. There are four special taxing districts in Letcher County — the Health District,

Library District, the Extension District and the Conservation District — in addition to the county school district and the Jenkins Independent School District.

County Judge/Executive Jim Ward last week announced that he is planning to ask those special districts to lower their tax rates “for a year or two” so the county can raise its tax rate to 19.7 cents per $100 assessed value, from it’s current 13.7 cent rate.

“I don’t know if they’ll do it, but that would let us keep people’s tax bill about the same,” Ward said.

The county can raise its tax rate with or without the special districts’ cooperation, but if special districts lower their taxes, it would lower the political cost to the fiscal court by making the overall tax bill stay approximately the same as last year.

Special districts’ response to Ward’s wish for lowering taxes is that they already have.

Taxing districts, fiscal courts, cities and school boards can choose to keep the same rate as the previous year, approve a “compensating rate,” which provides the same dollar amount as the previous year, or choose a “4-percent rate,” which brings in 4 percent more revenue than the previous year. At the 4-percent rate, boards must hold public hearings before setting the rate, but the board’s tax rate is not subject to recall. If they choose a rate above the 4-percent, voters can roll it back.

Because of declining mineral property values, local compensating tax rates would have been higher than last year’s rates by about 43.7 percent.

Only the soil conservation board chose the compensating rate, which in their case was 2.3 cents per $100 property value, and none of the districts chose the 4 percent rate. Ron Brunty, chairman of the conservation district board, said the district takes in only about $91,000 a year from the tax, which pays one employee and covers grants given to local farmers, and purchase of equipment that farmers who can’t afford to buy expensive equipment can rent from the district for a nominal price. He said he doesn’t think lowering their rate would help the county.

“I don’t think a half a cent is going to help the county much,” Brunty said.

On the other hand, he said it would be a huge cut for the district and would for the board to either layoff its only employee or stop helping farmers just when the farmers market is taking off and people are beginning to farm for income here.

The Board of Health, on which Ward sits, chose the same rate as last year. It had about $1.6 million in saving two years ago.

The library district board of directors also voted in September to keep the tax rate the same as last year, cutting its budget by $250,000. The extension board chose a slightly higher rate than last year, but less than the state recommendation, for a loss of $74,000.

“We’re already taking a $74,000 cut, and if we’d left it (the tax rate) alone, we would have lost $105,000,” said Shad Baker, county extension agent for agriculture.

The extension service and the library in particular have been targeted because of large reserves accounts, however officials of both districts said that money was saved for building repairs, which are now needed. Baker said the extension office on Stone Avenue needs a new roof, and the heat pumps are reaching the end of their estimated life.

The library district’s tax has been questioned several times over the past two years by District Two Magistrate Terry Adams, who plans to run against Ward in next year’s election. Adams voted no last year to certifying that the tax rates had been received from the conservation district, the library board, county schools, and Jenkins Independent Schools. The discussion began in November 2015 after Whitesburg attorney James D. Asher attended the fiscal court meeting and complained about tax rates at the special districts, saying the districts collectively had $3.5 million in surplus funds.

The library board at one time had about $1 million in its building fund, but board members say the time has come that the money has to be used.

The Harry M. Caudill Library in Whitesburg has extensive damage from water seeping through the foundation and basement walls, and from freezing and thawing. Spawling of the brick on the front of the building also has caused moisture problems, and the district recently hired a consultant to make recommendations on dealing with mold that must be removed because of health issues.

Mike Watts, a member of the library board of trustees, said at the board’s September meeting that the fiscal court has “created a mess” with its finances.

“We’ve not wasted money, but the fiscal court has wasted money,” Watts said. “They knew they had a lot of money, and they spent it.”

Board president Marlene Bielecki said she continues to support the decision made by the board not to cut its rate below last year’s in order to continue current services, cover the building repairs and the “ever increasing health insurance premiums for staff and escalating utility costs.”

“I believe our positive balance sheet reflects prudent management by past board members who volunteered to keep our libraries vibrant,” Bielecki said in a prepared statement. “I believe our financial status reflects many generous donations from families that value education, reading, and technology access and community fellowship for all citizens of Letcher County regardless of their financial status. Thanks to all these families including Mrs. Harry M. Caudill, who remains a very generous benefactor.”

Ward said the county has to take the higher rate, because “we can’t take another $300,000 lick. We just can’t.”

“We’ve had to adjust and adjust and layoff, and some of these other’s haven’t,” he said.

He said no one has shown him how cutting the tax rates would force the special districts to lay off employees. He had asked taxing district to provide him with bank statements and financials by yesterday (Tuesday)

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