Taxation in Oconee County has been increasing at a rate nearly three times greater than inflation for the past five years.

The cost of consumer goods and services between 2004 and 2008 increased 16 percent. The rate of taxation in Oconee County during that same period rose by 47 percent.

Making matters worse for homeowners, the burden of taxation has been shifting away from business and onto them. In 1999, the top 10 businesses in Oconee accounted for 52 percent of all taxable value. By 2008, top business properties accounted for only 35 percent of the tax base.

Whether the current rates of taxation are too great has been the focus of some officials and more taxpayers for the better part of nearly four years. Duke Energy ignited the firestorm when it repaid the county and school district nearly $14 million in back taxes in January 2006. Reassessment the following tax year fueled the fires of tax protest.

Acting on a complaint from County Treasurer Greg Nowell, the State Department of Revenue ruled Oct. 20, 2008, that there was nothing illegal about the county’s level of taxation. They offered no opinion on whether or not it was appropriate.

However, protests that the county has been collecting too much tax have not abated. Nowell raised the specter of overtaxation again in September, asking council members by letter to look into the fact that the county has had as much as $43 million — a sum equal to this year’s budget — in county coffers.

Spending more

Over the same five-year period that taxes rose by 47 percent, Oconee County’s spending for general government activities — courts, public safety, health and welfare, streets and highways, culture, recreation and all county services — rose by 31 percent, going from nearly 30 million in 2004 to just over $39 million in 2008.

Additional taxes had to cover much of that increase since program revenues — fees for such services as building permits, court costs, municipal trash fees, etc. — only rose by 19 percent over the same period.

Both the Duke windfall payment and reassessment jump out during a routine perusal of annual tax collections.

Between 1999 and 2003, property taxes went from $18.9 million to $21.3 million. In 2004, the tax collection totaled $21.7 million, but the next year, the year of the Duke back tax payment, collections spiked 7.8 percent to $23.4 million. The next year, with reassessment, taxes ballooned by 24 percent to $29 million. By 2008, they had gone up $2.8 million more.

It is worth noting that during the same 2004-08 period, the county’s debt service dropped dramatically — from 13 to 8 percent — as a percentage of expenses. That meant more money was available to meet operating expenses.

Not spending it all

Not all taxes collected have been spent.

County auditors reported that in fiscal 2007, the county underspent its revenues by $9 million. In fiscal 2008, Oconee collected $6.2 million more than it spent.

The county has always carried a significant fund balance. In 1999, for instance, when the county operating expenses were only $23 million, the county had a general fund balance of $13.7 million, $10 million of which was unreserved. Over the past decade, that fund balance has fluctuated from a low of $10.2 million to a high of $14.6 before spiking in 2008 to $18.3 million, 74 percent higher than 2004.

County officials have said that, for bond rating purposes, it is recommended a county have a 120-day operating surplus. For general operating in Oconee County in 2008 that would have required a surplus of $12.8 million.

What about millage?

In recent years, prior to the current slate of council members, the council’s general instruction to its administrator has been to recommend a budget that requires no increase in millage.

Millage, however, is a relative non-factor when it comes to the amount of taxes collected. The county will collect more money from the same millage if the value of a mill increases. The value of a mill is a factor of assessment.

The actual value of property in Oconee County increased from $6 billion to $8.2 billon (36.6 percent) from 2004 to 2008. At the same time, the taxable value has increased from $342 million to $457 million (33.6 percent).

The percentages would have been the same were it not for state legislation that removed primary residences from school taxes in 2007. From 2005 to 2006, taxable values rose 15.7 percent. That rate dropped to 7 percent in 2007 and 4 percent in 2008 as a result of the state’s action.

Excluding a special 2.9 mill tax for emergency services, the county’s millage rate increased 2.3 mills, or six percent from 2004 to 2008, and actually declined by .2 of a mill from 2007 to 2008.

brett@dailyjm.com | (864) 973-6680