March 29, 2014

With projected deficit, York County council mulls raising property taxes

Potential tax increase and cuts considered as $7.2 million deficit projected for York County

With a projected $7.2 million deficit for the upcoming budget the York County council may raise property taxes.

Council members met with county staff on Saturday in the first budget workshop to talk spending, millions in unfunded liabilities, and ways to curb a budget shortfall.

In previous years the retreat took place later in the budget process around May. Council members asked for an expedited schedule to give staff ample time to address their concerns.

The county staff projects a combination of increased spending and lost revenue will result in a $7.2 million deficit. To cover the expected gap, property taxes could be raised – resulting in a $26 increase on a $100,000 owner-occupied home or $8 on a $20,000 vehicle.

Council members have not yet said whether they will support another property tax increase after approving one last year. In June the council passed a 1.5 percent property tax increase, which translated to $6 on a $100,000 home and $2 on a $20,000 car.

Councilman Michael Johnson expressed concerns about raising taxes, asking staff to provide more information on potential spending cuts.

“There has to be a balance,” Johnson said of the county’s services and debts. He suggested staff and council reassess “non-essential” from “essential” services for potential spending reductions.

Councilman Chad Williams was concerned about the county’s continued use of reserve funds to cover costs – an issue also raised by Deputy Manager Anna Moore during the last budget season.

Reserve funds generally cover unanticipated costs due to emergencies, but also help the county negotiate better interest rates from creditors.

“They’re calling this the new normal,” he said of the county’s practice of dipping into its savings. “It’s not sustainable.”

The county workforce

The council will also have to consider whether to raise salaries for government employees to keep pace with inflation. Last year the council approved a 1 percent raise to cover increased living costs – short of the 2 percent inflation rate cited by the Consumer Price Index.

Also on the table are potential health care cuts for future retirees. The council will consider several scenarios including eliminating retiree health insurance for those with less than 20 years of county service, or capping monthly benefits.

The county government has about 1,000 full-time staff, making it the ninth largest employer countywide.

At the end of 2014, the county will face a $23 million unfunded liability in retiree health benefits. State regulations mandate that all counties proactively pay into a fund to cover health care costs for future retirees. To prevent that liability from increasing, council members are assessing reducing benefits.

Williams cautioned against cutbacks that could lessen the county’s ability to hold onto existing staff or hurt future hiring. “We’re starting to lose good people,” he said, adding that paying a “fair wage” would also reduce spending in the long term by not having to train new staff constantly.

The county’s various departments have submitted requests for 44 new hires that would cost an additional $3.2 million annually. Of the proposed hires, 15 are from the Sheriff’s Office.

Last year, 32 similar requests by county departments were made. The council approved eight new positions.

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