Police, library levy revenue fall slightly short this year

Sean C. Morgan

Local option levy revenues for the Sweet Home Police Department and Sweet Home Public Library will fall slightly shorter than anticipated in the city’s 2013-14 budget, city officials say.

The Police Department will be about $28,000 short, based on property tax figures released Oct. 15 by the Linn County assessor’s office, and the library will be $3,600 short.

The city had projected nearly $1.4 million in revenue from the police levy and nearly $177,000 from the library levy. The general fund, funded through the city’s permanent rate of approximately $1.41 per $1,000, will receive nearly $7,000 more than the budgeted $483,000.

“Compression” drove the losses as real market values decreased. Compression is property tax revenue that is not collected because it is above property tax limits.

Tax rates are applied to assessed values. Properties in Sweet Home are subject to combined property tax rates of $14.82 per $1,000 of valuation for general government. The resulting figure is then compared to real market values. Any of the tax higher than $10 per $1,000 when compared to real market values falls outside the property tax limit and may not be collected.

When the gap between assessed value, usually the lower value, and real market value on any particular property grows, compression is lower. The closer the two numbers are, the higher the compression effect. Local option levies, such as the police and library levies, are compressed before permanent rates, such as the levy feeding the general fund, or the Sweet Home Fire and Ambulance District’s tax levy.

The Police Department has $862,000 in compression on a $2.46 million levy. The library has $110,000 in compression on a $315,000 levy.

At 35 percent, compression is at its highest level in Sweet Home. Compression was at 16 percent 10 years ago and has been as low as 3 percent for the Police Department and 4 percent for the library.

Sweet Home real market values fell from $446.34 million to $440.49 million WHEN?. Sweet Home’s real market values peaked in fiscal year 2008-09 at $537.24 million. Ten years ago, 2003-04, real market value for Sweet Home properties was $321.83 million.

Assessed values increased this year to $383.8 million from $378.89 million. Assessed values are at their peak. Ten years ago, assessed value was $254.65 million.

“It’s (compression) increasing,” said City Manager Craig Martin. “Our hopes would be that as we continue to recover or rebound from the recession, our values would be coming up.”

In the long term, it means the city must continue to be conservative with its expenditures, Martin said, and build the reserves officials believe they will need based on projections through June 30, 2016, when the police and library levies expire.

If the city takes no action, the Police Department is projected to have a shortfall of $760,000 for fiscal year 2014-15, which begins on July 1. The shortfall for funding grows larger the following year, 2015-16.

City officials project a $16,000 shortfall at the library in 2015-16.

“These are arguably worst-case scenarios,” Martin said. Budget projections include many assumptions regarding spending, inflationary increases in costs and revenue.

In response, the city has been saving money where it can, leaving positions open, including one in the Municipal Court, Martin said. The city has chosen not to fill the community development director position, contracting with Carol Lewis, who retired from the position during the summer, for technical planning.

City officials will have a better idea what the actual shortfall will be as they develop the budget for 2014-15 in the spring, Martin said.