Lawmakers' choice: Libraries and health departments or the agencies that collect taxes for them

02/26/2014 08:23 AM

In one of the more challenging budget puzzles lawmakers will face this year, a provision in Gov. Steve Beshear’s proposal could force legislators to choose between libraries and health departments or county Public Valuation Administrators that collect the taxes to fund those institutions.

PVAs assess property values and send out property tax bills. Revenue from property taxes not only go back to the state coffers but to local school districts, library districts, public health departments and other special taxing districts.

Beshear’s budget, though, assumes county PVAs can bring in an extra $23 million by charging those libraries and public health departments and other special taxing districts more money to collect property taxes for them. Some of that money will come from reserve funds that those special taxing districts have built up.

The governor’s budget not only calculates that the $23 million can cover $8 million in personnel costs for the PVAs but also pumps the remaining $15 million back into the state’s bottom line to fund other programs, from child care stipends to teacher salaries.

The problem is that libraries and public health departments say they can’t afford to pay anything extra to the taxmen and women.

The effect would be “devastating” on top of other cuts, said Lisa Rice, director of the Warren County Libraries.

For public health departments, the proposed half-cent fee per dollar of tax collected on property taxes would mean $14.6 million for the 60 agencies across the state, said A. Scott Lockard, Clark County’s public health director. That more than wipes out the $14.1 million Beshear’s budget would give to the agencies to pay the increase in their employees’ retirement costs.

“I would be cutting at least two positions to pay this fee,” Lockard told the Senate budget committee on Tuesday. He asked rhetorically how he would choose between an environmental scientist who checks on problems like sewage leaks or a nurse who performs cancer screenings or the employees who inspect restaurants and grocery stores.

But the PVAs are in an equally tough spot. They’ve cut back their staffs as well. And they are responsible for collecting the money that helps pay for those same services of librarians and restaurant inspectors.

Joyce Parker, the PVA in Laurel County, said her office should have 11 employees. Instead, she’s operating with 7 1/2.

She said special districts should have to budget in the cost of sending out tax bills for collection that goes into their bottom lines.

If lawmakers agree to the way the governor distributes money without assessing the fee on special districts, that would cause PVAs to have to cut well into the bone. It’s just not possible, said Mack Bushart, executive director of the Kentucky Property Valuation Administrator’s Association.

Rice, of the Warren County libraries, noted that libraries already pay between 4 percent and 4.5 percent fees in tax collection to the county sheriffs.

The PVAs and special district leaders are sympathetic to each other as well as to legislators who have tough choices ahead. Lawmakers can eliminate the fee entirely, but would have to implement $15 million in cuts elsewhere in the budget.

They could approve an extra fee on property owners, as the librarians and PVAs discussed with lawmakers on Tuesday.

But even a $1 fee for each of the 2.2 million properties in Kentucky is only a fraction of what PVAs would need, Bushart said.

Senate Appropriations and Revenue Committee Chairman Bob Leeper, a Paducah independent, underscored the challenge he and other lawmakers face and offered few hints about how best to solve the puzzle.

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