Will the levy be dry?

Jul 25, 2010 — The Evening News and The Tribune

Braden Lammers

Jul. 24, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- CLARK COUNTY -- Before the Clark County Council begins its budget sessions for 2011, the fiscal body already knows it will be asking for more money. In order to operate the county on a $10.7 million budget this year, the council has planned on relying on the county's $3 million in surplus funds.

With the reserve funds expected to be depleted by the end of the year, the council will be looking to secure additional funding in the form of an excess levy appeal for 2011.

To help the council develop its budget for 2011 and file the appeal with the Department of Local Government Finance, it has hired a former DLGF employee, Dan Eggermann, consultant with Government Consulting Services Inc.

Eggermann was hired to make sure the county goes about filing the appeal in the correct way and submits the paperwork properly, said Auditor Keith Groth.

"We don't want to miss out," he said.

How and where to appeal

When an appeal is filed with the DLGF, it must meet a number of requirements. The first stipulation is that the county must show a need for the excess levy.

"A county is required to file a written petition with the DLGF stating that it cannot carry out the functions required by law and must supply a detailed statement outlining the need for an appeal," according to the DLGF's county budget manual.

There also is a timeline associated with filing an appeal, which limits a county to completing the appeals process during its budget session.

"Any county that determines that it cannot carry out its governmental functions for the ensuing calendar year under the levy limitations imposed by statute may on or before Oct. 19 of the year preceding the ensuing calendar year appeal to the DLGF for an increase in levy," according to the county budget manual.

In preparing the appeal, the county also must outline where it will be seeking the extra funding and it must be detailed.

"This should not consist of a general statement that expenses have increased. The fiscal body should specify which costs have increased or what services cannot be provided to taxpayers," according to the manual.

The allowances for seeking the additional funding include: annexation; consolidation or extension of services; a three-year growth factor that exceeds 1.02 percent of the state's growth factor; an emergency levy appeal for a natural disaster or another unanticipated emergency; a correction of advertising, mathematical or data error; and a property tax shortfall due to erroneous assessed valuation.

Eggermann said Clark County will seek the appeal through any avenue that applies, but it will most likely include pursuing it through a correction of advertising, mathematical or data error; a property tax shortfall due to erroneous assessed valuation; and an emergency levy appeal.

"Likely an argument can be made for those three, but has not yet been decided and won't be until all departments proposed budgets are compiled and reviewed," he said in an e-mail.

What amount the county will seek in each category is also something that has not been determined.

What are the chances?

Something else in question is the county's chances of receiving the full excess levy appeal it requests. If the county is relying on precedent, its chances of getting the full amount it requests are not ideal.

"Seldom does the DLGF approve the total requested appeal for any taxing unit," Eggermann said. "It is also possible that the appeal will be totally denied."

Since 2005, the DLGF has approved 61 excess levy appeals for county units, one request was withdrawn and 22 requests have been denied," said Mary Jane Michalak, DLGF director of communications.

Of those appeals that were approved, 27 were granted with modifications, she said. Full appeal amounts are not often approved because the DLGF is limited by state statute.

"The DLGF does not take what the county needs into consideration," she said. "The department is limited by what state statutes allow. Statute guides the department on determining what we can consider."

Limitations include the annual percentage of growth that can be added to the county's levy for a general fund budget. Last year, the percentage of growth allowed by the state was 3.9 percent and this year it is 2.9 percent, Michalak said.

"The county's budget cannot grow more than the percentage approved from year-to-year, unless a special exemption is made," she said. "We determine the new max levy."

One factor that may benefit the county's chances is that the DLGF does not consider issues listed in the State Board of Accounts audit reports when determining whether or not to approve an excess levy request. An audit of Clark County's finances released earlier this year found numerous problems.

"We do not look at SBOA audits," Michalak said.

County preparation

With the consideration of acquiring the full appeal amount largely out of the county council's hands, it is doing what it can to ensure it has the best chance possible.

"That's one of the reasons we're contracting with [Eggermann] is to help us through that process," said Councilwoman Barbara Hollis.

Part of the preparation in achieving excess levy funding was to hire Eggermann to help the council through the appeal process and also use his expertise to maximize the funding available for the 2011 budget. The first part of the process will be reviewing and approving budgets submitted by county offices and officials.

"I just think that we'll be really watching the numbers real closely," Hollis said.

One question that must be answered at the outset is how the council will fund the County's Building Authority budget, which is a major factor in seeking the excess levy.

"It [the building authority] has never been funded inside our maximum levy until this year," Hollis said.

Previously, the building authority's budget -- used for the Clark County Government Building -- was funded outside the general fund budget and equaled more than $600,000 for a 10-month period. The $600,000 budget does not include any money designated for the $2 million bond being issued by the county council. The dollar amount is also a figure following the 30 percent reduction made by the council during last year's budget sessions.

The council, with Eggermann's help, is looking to see whether or not the building authority's budget can be moved back outside of the general fund budget.

"If it cannot, the levy required to fund that portion of the general fund will be to the detriment of some other proposed budget expenditure [or expenditures]," Eggermann said.

Another consideration that may be weighed by the DLGF is what Clark County had already done to improve its financial situation.

"Historically, the [DLGF] in looking at appeals has looked at what the taxing unit has done for itself before it considers increasing any property tax levies," Eggermann said in a previous report.

In "helping itself," the county has imposed a new Local Option Income Tax and reinstituted a cumulative bridge tax. However, it did not pass a wheel tax in seeking ways to raise new revenues.

What influence the wheel tax being voted down will have on the excess levy appeal is unknown, but some funding concerns may have already improved slightly. Groth said that he believes the county's 2011 budget will likely come in around the $13 million figure.

Eggermann said it could be even better.

"I would expect it to be more than $13 million," he said.

Even with a higher budget amount -- the county originally based its figures on the $10.7 million budget it is operating on this year -- it does not necessarily mean the council will reduce its request.

"[It] depends on the direction of the county council as to the amount of levy needed to fund requested budgets," Eggermann said. "The council has to pass a resolution approving the amount of tax levy increase."

The county council has said it wants to have a budget hearing schedule in place by Aug. 9, it's next meeting date.

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