“We can afford it,” according to County Commissioner Rick Brewer, whose proposed $10 wheel tax cut comes up for a vote Monday.
Almost broke and facing a $2 million revenue deficit, two years ago the Hawkins County Commission approved a $40 wheel tax increase that generates right at $2 million annually.
That increased the cost of tagging a vehicle in Hawkins County to $96.
The county general fund ended the 2018-19 fiscal year on June 30 with an undesignated fund balance (savings) of $5.9 million, which had grown nearly $2 million from the previous year.
“We almost bank every bit of that $40 wheel tax increase,” Brewer told the Times News earlier this week.
Proposed $10 wheel tax cut
On Aug. 1, Brewer proposed a $5 wheel tax reduction to be reflected in the 2019-20 budget’s revenue, which was approved 4-3 by the Budget Committee.
But Brewer was unable to attend the Aug. 26 commission meeting due to illness, and although the 2019-20 budget was approved, the $5 proposal was withdrawn at his request.
On Monday, the commission will consider Brewer's new proposal to reduce the wheel tax by $10 beginning June 1, 2020.
That would set the total cost of tagging a vehicle in Hawkins County, including the state fee, at $86 annually.
It would also decrease revenue in the 2019-20 fiscal year — which ends June 30 — by about $48,000.
The projected loss of revenue for the entire 2020-21 fiscal year would be about $500,000.
Underestimated budget revenue
Traditionally, governmental offices overestimate expenses and underestimate revenue to create an economic safety net and/or some savings growth at the end of the fiscal year.
Brewer noted that in 2018-19 Hawkins County’s wheel tax revenue was underestimated $162,189; property tax revenue in 2018-19 was underestimated $324,995; and all county general fund revenue combined on the 2018-19 budget was underestimated $682,752.
“We're grossly underestimating our revenues,” Brewer said. “We're figuring like 91-92 percent on property tax collection, and it's coming in every year right at 97 percent.”
“Give them a little bit of a tax break”
“That's a good thing if we can underestimate it that much, but when we say that we can't afford to do it (reduce the wheel tax), you've got to look at the whole picture,” Brewer said. “When we're banking that much money — and I'm glad the county employees got their pay raise — but the only way the taxpayers ever get a raise is to give them a little bit of a tax break. Look at the people who live off of Social Security, and look at the raise they get. I've got a lot of people on fixed income in my district.”
Brewer acknowledged that $10 isn’t much to most people, but he said it will mean something to families that are struggling.
“Some people who are on a fixed income are drawing like $500-$600 a month. That month when they have to go buy their tags — that $96 — they have to decide whether they're going to buy medicine or buy tags; or by groceries or buy tags. Every penny that's coming in is being spent.”
Budget Committee members who voted against Brewer’s $5 wheel tax reduction proposal on Aug. 1 weren’t opposed to cutting the tax eventually.
Their concern was with the timing of Brewer’s proposal — creating a $250,000 revenue deficit in the 2019-20 budget after months of budget hearings and less than a month before the budget was to come up for a final vote.
During the Aug. 1 Budget Committee meeting, Chairman John Metz suggested waiting another year to make sure the county finances have stabilized before reducing revenue.
In response to Brewer's new $10 proposal, on Tuesday Metz said, “Looking forward to a spirited debate to find areas of common ground that will satisfy the sponsor’s objectives and avoid a budget deficit.”
“Tomorrow never comes”
Brewer said he wants to implement the $10 wheel tax reduction next June to minimize the impact on the current budget, while still ensuring that it occurs in this fiscal year.
He originally planned to propose implementing the $10 cut on Jan. 1 but was advised against that by Mayor Jim Lee.
“You've heard the old saying, put it off until tomorrow and tomorrow never comes,” Brewer said. “That's why we want to get it in effect in this budget. That's as close as we can compromise and get to wait until next year.”
Brewer voted against the $40 wheel tax increase in 2017.