Kent County economic boost rises
The amount of property-tax revenue Kent County has captured or abated each year by cities and townships is nearing the county’s self-imposed limit. At the same time, estimates show that the taxable value of all properties in the county should fall by a significant amount this year and revenue to the county from that source will also dip in 2010.
County Fiscal Services Director Robert White told the Finance Committee last week that $6.2 million of the county’s total property-tax and dedicated-millage revenue was captured or abated by municipalities in the county in 2008. That figure represents an 8 percent increase from 2007 when $5.7 million was diverted for economic development.
So for 2008, nearly 6.3 percent of the total tax roll in Kent County was captured and abated by a dozen downtown development authorities and roughly 15 other special tax financing authorities. Two years ago, county commissioners set 7 percent as the maximum amount of the tax roll they wanted to be collected by municipalities. Once that percentage is topped, the county will refuse to participate in any new captures or abatements.
“I think it’s maybe two or three years out before you hit 7 percent. You will hit 7 percent,” White told committee members.
This year, based on the 2008 tax roll calculation, there is $162 million in taxable value left before the 7 percent limit in the county’s Economic Development Policy is met. In 2008, $882 million of that value was exempted, which was up by 9 percent from 2007. Almost $560 million of the total value was captured by tax-increment financing authorities such as DDAs and SmartZones, for an increase of 24 percent from 2007.
Compounding the issue is the taxable value of all properties in the county is expected to fall this year by a projected $100 million. White told the committee the inflation multiplier, which was 4.4 percent last year for this year’s tax bills and is based on the Consumer Price Index, has been forecasted at just 1 percent for the 2010 bills.
A CPI at that minuscule level will mean a drop of $200 million in the total taxable value. New construction in the county is expected to add $100 million to that value. So the taxable value has been forecast for 2010 to be $100 million below 2009’s $21.8 billion and slightly below 2008’s $21.75 billion.
The projected increases in the inflation multiplier and in new construction are the lowest since at least 2004 and the taxable value for next year is forecast to come in at $21.72 billion.
Property-tax revenue for 2010 is projected to total $85.3 million, or three-tenths of a percent less than the current estimate of $85.6 million for 2009.
“I wouldn’t consider these as necessarily conservative estimates. I think the estimates are reasonable,” White told the committee.
White added that not all new construction would result in additional revenue for the county because a number of projects under construction have been awarded exemptions and abatements from property taxes.
“The taxable value gets added to the roll, but you won’t see any dollars from these,” he said.
Revenue from property taxes and a $15.5 million transfer from the corrections millage comprise 62 percent of the county’s general operating fund, which totals $166.7 million for this year.