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The question is not 'if' there will be a tax increase in county, but whether it will be on property or wheel tax

With recent action by the county commission to raise the county wheel tax by an additional $10 and the consequential petition requesting that the issue be put on the ballot in November, there have been many questions asked about why the commission needed the extra funding in the first place. Unfortunately at the same time there have been several misconceptions arise that have given some officials cause for concern. For elected leaders such as County Mayor Larry Potter, making sure the citizens of the county understand the situation behind the increase has been a big priority.
“In general the county is actually in fair shape considering the losses we’ve had,” said Potter. “All families and businesses have had to deal with the same thing for the past few years and during this period of time we’ve just had to eat the losses. We simply can’t anymore.”  Several of the surrounding counties have been forced to take much more extensive measures to correct their shortfalls, including a 20 cent property tax increase in Sullivan County and a wheel tax proposal in Unicoi County.
Although the biggest loss for Johnson County has been in investment income, the mayor also noted that there have been significant increases in other areas as well. Investment income is basically the revenue that the county receives from interest. In 2007-2008 the county received $400,063 but thanks to declines in the job market, rates began to crash around the country. Dropping first to $295,346 in 2008-2009, the county has seen steady declines in the amount of investment income it receives annually. Last year the amount was down to just over $100,000, meaning that in four years the county ultimately lost $843,656.
A healthy fund balance has helped get through the slump but now even that is being strained. This year alone saw a $20,748 expenditure for elections, a $19,129 increase in costs for juvenile delinquent cases, an $11,505 increase in jury trial costs, new requirements for an additional full time bailiff in the sheriff’s department and a nearly $50,000 reduction of income from the state’s Hall Income tax.
Scrambling to catch up with these hard blows, the county government has been looking at any alternative to save money, especially considering that next year could be as bad or worse. Just to balance the budget this year officials cut one position in the tax assessor’s office to save more than $30,000, made efforts to cap employee insurances to save $42,363, denied raises, and pushed to keep employees at a 37.5 hour work week rather than the 40 hours that some departments have requested.
Unfortunately, even with these measures in place, and several more areas under consideration, the sheer number of shortfalls has left the commission with little choice but to discuss a potential tax increase. Initially when the issue first arose several months ago the idea was to increase the tax on property, but with a significant portion of the county renting or leasing their property, many officials felt that this would not be as fair as the wheel tax. “I don’t like taxes myself,” said Potter. “But as far as taxes go, with the wheel tax everybody pays. It’s not just the property owners that keep paying and paying.”
Currently the county is one of more than 50 counties to have the wheel tax in operation, put into place in 1983 by a private act from the state. That initial $20 fee was increased by another $10 in 2007 to help the county highway department battle reductions in federal aid. Added with the $24 fee that the state receives, it currently costs $54 to purchase or renew a tag. Considering places such as Crockett County where tags are $94, Johnson County is still relatively inexpensive, and with a property tax of $1.77 it is actually in the top ten least expensive of the state’s 95 counties.
However, the struggles that local governments face are largely the same as the population they serve, and as a result it is a very difficult decision to ask for additional revenue. Fortunately, some departments such as the school system did not ask for any additional money at all, but for other areas like the highway department there has been a struggle to get by.
Even with the extra $10 in 2007, the highway department operated this year on approximately the same amount as they did in the late 80s and early 90s, going from a total budget of $1,622,148 in 1994 to only $1,717,694 under the budget passed in July. Only 14% of this total amount actually comes from the county, provided essentially by $15 of the current $30 wheel tax along with $.02 of the gas tax. Unfortunately with more than a dozen bridges across the county in desperate need of repair, having received poor ratings from state bridge inspectors, the situation will likely only get worse.
For this reason the commission dedicated $2 of the proposed $10 increase to be set aside for a bridge fund, while the remaining $8 would go to offset budget shortfalls. A $10 increase amounts to around $170,000, and even with the new tax in effect the county is looking at taking more than $500,000 from the fund balance.
For the rest of the story, pick up a copy of this week's Tomahawk.