County racing toward its own fiscal cliff
Like the federal government, Cherokee County is facing its own fiscal cliff.
According to information presented at Thursday’s budget committee meeting, Cherokee County Council might consider a hefty 10 mill tax hike to replenish a depleted reserve fund.
If the tax hike is passed, the owner of a $100,000 home would pay $40 more a year in property taxes.
County officials note that other budget balancing measures are also under consideration such as using more of the local option sales tax revenue and cutting services.
Cherokee County Council Finance Committee Chairman Charles Mathis warned two months ago the county was on thin ice financially because of a thinning reserve fund.
Last year, rather than raise taxes, council opted to plug a shortfall by withdrawing $3 million from its local option sales tax proceeds.
In fiscal year 2011-2012, the county used money from the sale of its hospital to balance a shortfall. In 2009 and 2010, the county dipped into its fund balance to plug a budget hole.
The once plentiful reserve fund is drying up, county officials said.
In the proposed new fiscal year budget, expenditures are expected to outpace revenues by $2.6 million. The county plans to use at least $1 million of its local option sales tax to bridge a portion of the shortfall, leaving the county with a $1.5 million deficit.
In an effort to balance the budget, council could drain more of its dwindling savings, tap into more of its local option sales tax money or cut services.
County officials point to a sharp reduction in state government funding as the primary reason for the annual budget shortfall. In 2008, Cherokee County received $3,027,933 from the state. That figure is expected to drop to $1,605,973 this year.
In other words, state funding has been cut by nearly half over the past six years, forcing local governments to scramble to make up the lost revenue.