Either way, recent information shows Bradley County property taxpayers got a bargain of sorts on their 2013 tax bills.
That bargain will end this year.
County property taxes will not increase — over what they should have been last year.
During the process of preparing year-end figures, county officials discovered there was a decrease in tax collections, although the rate of 2103 payments had been comparable to 2012.
Digging into the situation, county officials discovered the formula to determine the certified tax rate for the county had some incorrect figures plugged in following the last reappraisal, causing the certified tax rate for 2013 to be 5 cents lower than it should have been.
The current tax rate is $1.8254 per $100 of assessed property. It should have been $1.8721 and that adjustment will take place beginning with the 2014 tax bills.
A new law passed this year by the General Assembly provides for a correction under such a circumstance as Bradley County finds itself.
It reads: “A levy of tax found to be based on an erroneous calculation may be revised prior to tax billing on certification of a revised calculation by the state board of equalization accepted by act or resolution of the governing body of the affected taxing authority without further notice. If the error is certified after tax billing, the revised rate will take effect as of the next general ad valorem levy by the governing body of the affected taxing authority.”
The county received a letter Wednesday from the state board of equalization permitting the correction, which is now subject to the rate approval by the County Commission.
The law also means the adjusted rate is not retroactive.
Bradley County Mayor D. Gary Davis said the error cost the county almost $1 million in revenue over the past budget year split almost evenly between the county government and the county school system.
“I want everyone to understand, the rate is not to get increased funding,” Davis said. “It is revenue-neutral according to what the rate should have been. It brings us to what is the appropriate level of revenues as correctly figured and affirmed by the state and what we should have been collecting over the past year.”
The state board of equalization describes the certified tax rate process on its website.
“Higher values during a reappraisal do not necessarily mean higher taxes,” the site says. “The law requires the counties and cities to re-examine property tax rates after a reappraisal to make sure higher taxable values do not automatically result in a tax increase.”
It also says if the property value increased as the result of the revaluation more than the average, the taxes may be somewhat higher, while if the value increased less than the average, the tax bill may actually be lower in a revaluation year compared to the year before.
The law requires local governments to conduct public hearings before adopting a property tax rate that generates more taxes overall in a reappraisal year than were billed the year before at the previous year’s lower values. If the new tax rate following a revaluation does not exceed the certified rate, the average tax bill may actually remain the same.
That all means even with the adjusted rate, property owners may or may not see any significant increase.
In real terms, a $200,000 property paid $25 less in 2013 than it would have under the correct levy.
The law also states that should a local government want to raise property tax rates above the certified tax rate, a public hearing must be held.
One will not be required for an adjustment such as Bradley County will experience.
Property Assessor Stanley Thompson said the error occurred because of several factors.
“When you calculate the certified tax rate, you try to get all the numbers from the previous year,” Thompson said. “In the process, we left out part of the properties which are categorized with a tax freeze and also the PILOT (payment in lieu of tax) program involving the Whirlpool plant.”
He said all of the other PILOT programs were included, but the Whirlpool numbers are done “a little bit differently then the others.”
Thompson said certified tax rates are only done every four years, “so it’s not something we do every week.”
“Also, tax freezes are difficult to keep up with and that threw us off somewhat,” he said. “You have to account for tax freezes in two parts of the formula, and we only accounted for it in one.”
Thompson said sometimes when a property is missed, he will tell the owner they “got by one year without paying the proper amount of tax and you’re making up for it now.”
“[The process] is complicated enough for us to understand and it’s difficult to relay that to people who do not deal with it on a daily basis,” Thompson said.
He added the Charleston or Cleveland city taxes do not face the same problem, because they do not have tax freezes.
Thompson’s reasons for the error coincide with a letter from Kelsie Jones, executive secretary of the state board of equalization. It was sent the same day the approved correction notice was sent to Bradley County.
“Senate Bill 2553 allows a new rate revision for ‘erroneous calculation of the tax neutral rate,” Jones wrote in a memorandum to county mayors and assessors.
“The clearest example is a math or recording error, but it might also apply to a procedural error, for example, failure to adjust for tax freeze properties or property exempted from the prior year roll,” the memo continued. “If the error is large enough to affect the tax neutral rate, the tax jurisdiction may request to recalculate and redetermine the rate.”
Nonetheless, the county’s property assessor offered no excuses.
“We should have caught it. Bottom line,” Thompson said.
The Commission’s finance committee met Thursday to review the mayor’s proposed budget and made only one significant change.
At the recommendation of Committee Chairman Ed Elkins, the Veterans Affairs director will receive a $2,000 salary raise in lieu of the 2 percent across the board raises recommended for county employees.
Committee members also heard a summary of the county school budget from Director of Schools Johnny McDaniel.
The full Commission will further discuss budget matters at a work session Monday at noon in the Commission meeting room at the courthouse.