Editorial: Please explain tax increases

Taxes are not evil. Government uses the money to provide many services that are needed and likely could not be provided as efficiently by the private sector. But in a prosperous community, you would like to think that the growth in the economy would supply the additional revenue needed to fund government rather than a continual increase in tax rates.

But this year it looks like it will come from a tax rate increase. It is too early to state a final total, but it looks like a $200,000 home will have taxes increased by about $125 for the year.

This comes at a time when there has been good economic growth in the community, and local budgets should be in a position to capitalize on it. In 2017, both property values and sales tax collections are growing significantly. Both the city and county collect property taxes and sales taxes, although the county doesn’t get near the benefit of increased sales tax collections. If taxes can’t go down this year, it is hard to see in what year they will.

Let’s look at the city in particular. The city crafted one recommended budget in May that called for a 1.25 mill property tax increase. But it then had to quickly revise that budget in June because it got good news from the county. Due to rising home values, the city was going to get an extra $1.4 million in property tax revenues. Despite that unexpected amount of tax revenues, the city has taken no steps to reduce its mill levy.

City officials have explained that the mill levy increase is to fund the city’s bond and interest fund, which pays for streets, infrastructure and other capital improvement projects. City leaders have said the city already is behind on many infrastructure issues. Fair enough.

However, the bond and interest fund is just one portion of the city’s budget. It has a property tax rate of just under 10 mills. The much larger part of the city budget is its general operating fund. It has a property tax rate of just under 20 mills.

As previously noted, the city is scheduled to receive $1.4 million in property tax revenues in 2018 that the city leaders weren’t expecting when they put this budget together. About $950,000 of that amount goes to the city’s general operating fund. In addition, sales tax revenues are growing faster than budgeted, which means the general fund is projected to receive about $600,000 in additional sales tax proceeds. As it stands now, the city plans to spend that approximately $1.5 million in money.

The city, though, could consider using some of those new funds to provide a reduction in the general fund mill levy. City officials would not have to touch the bond and interest fund. Needed capital improvement projects wouldn’t be impacted, and taxpayers would be hit with something less than a 1.25 mill levy increase.

Of course, the city could argue that the general fund has needs that can benefit from the additional funding. That is likely true, but the city needs to do more to explain how it is going to spend that money in the general fund. It appears currently that a sizable portion of the new money will be used to build up the balances in some reserve funds.

County commissioners also could stand to offer some greater explanation, although they have detailed that much of their proposed tax increase will fund increased mental health services, judicial matters and new sheriff’s deputies. The county, though, could offer explanation on another matter: Since 2007, the county’s mill levy has increased by 14 mills, greater than the city and the school district’s increases combined. How sustainable is that trend?

More explanation is needed before the city and the county finalize their budgets in August. Tax increases are not necessarily bad, but when they aren’t fully explained to taxpayers, they are always detrimental.

Editor’s note: A previous version of this editorial incorrectly reported the amount of new property tax revenue the city is expected to receive in 2018. It is $1.4 million, not $1.8 million as previously reported.