HOW WE SEE IT: Last Chance For Pay Raises

Posted: November 21, 2009 at 4:21 a.m.

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SPRINGDALE — We were surprised at first when the Washington County Quorum Court voted to provide pay raises for county employees. At the same time, the justices of the peace were dipping into reserve to balance the budget.

A closer look showed the county was planning to set aside some reserve next year. Now they will simply not set aside so much. That is where the 2 percent pay raises will come from.

Normally we would still encourage ourquorum court to be more conservative. Our closer look, however, made us confident that the county will have to be very conservative indeed in the foreseeable future. They will not have a lot of choice.

The federal census is coming up next year. It will give cities in Washington County a relatively greater share of the population. That means the county will get a smaller share of county sales tax revenue.

That is no secret. County Judge Marilyn Edwards has said that will be a crisis. Keeping consistency of leadership during this crisis is part of her announced rationale for her bid for re-election, she has said.

Washington County will go through a countywide reappraisal in 2010 also. This will have the opposite effect on property taxes than the one in Benton County, which went through reappraisal of values in 2009.

Benton County had its reappraisal while there was still a housing boom. Their property taxes, based on these high-dollar appraisals, went up. Washington County will have its appraisal taking place in the immediate aftermath of a historic crash.

We do not expect appraisals to go down as far - if at all - as some do, but the total value of appraised property certainly will not be as high as they could have been. The reason the appraisals will not go down much is because of a glitch in the law.

Increases in appraised value are capped at 5 percent a year on homes and 10 percent a year on everything else. Appraised values of existing buildings have not kept up with real market value during the boom years. After all the boom years, this has created quite a gap, or cushion, between appraised values and real value. Real value would have to fall a long, long way for appraised values to approach them.

What will really hurt the county’s budget will be the loss of economic growth - new property and improvements going on the tax rolls at their full, new, current value. A new house goes on the tax books before the 5-percent cap has a chance to kick in.

Washington County has some lean years ahead. Its property appraisals for the next three years will be set at the bottom of a slump. There may be 5 and 10 percent caps on growth, but we note there is no cap on how far taxes could fall. We will watch next year’s appraisal process with interest.

The county’s decision to keep a no-growth estimate for sales tax collections next year is wise.

There will be little interest income on county cash reserves too, thanks to the anemic loan situation and the flat interest rates that are likely to remain in place for a while.

Opinion, Pages 5 on 11/21/2009

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