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Martinsville, Virginia 24115
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Reactions to study mixed
Towarnicki details taxes under reversion
Wednesday, November 20, 2013
By GINNY WRAY - Bulletin Staff Writer
The possibility that Martinsville’s tax burden could fall 42 percent if the city reverts to a town is accurate, but unrealistic, according to City Manager Leon Towarnicki.
The 42 percent decrease in the tax burden is based on town residents paying a total of 60 cents per $100 assessed value in real estate taxes to the county and town of Martinsville, Towarnicki said.
That 60-cent tax rate “is an unrealistic number,” he said. “It shows what it could be if council simply wanted to balance the budget with a true break even” between revenues and expenses.
A more realistic tax rate would be somewhere between the low 60-cent rate and the current $1.06 per $100 rate, he said. That would generate funds for capital and other projects the town wanted to pursue, he added.
Each penny in the tax rate generates about $66,000, Towarnicki said. If the town’s tax rate was raised by about 15 cents to 75 cents per $100 assessed value, it would generate about $1 million for projects, he added.
But 75 cents per $100 still would be considerably less than the city’s current tax rate of $1.06.
“The message is that it (the tax burden) could be decreased substantially,” Towarnicki said, and continue to fund town police, fire and other services as well as capital projects.
If reversion is approved, Martinsville town residents will pay both a county and town tax.
The reversion study presented by Towarnicki to Martinsville City Council on Monday projected that the town’s rate would be 7.4 percent of the city’s $1.06 tax rate, or about 8 cents per $100 of assessed value, he said.
If Henry County were to cover the entire $1.3 million operating loss it would incur due to the city’s reversion entirely from real estate taxes, its current 48.8-cent tax rate would rise to about 52 cents per $100 of assessed value, Towarnicki said.
That means town residents would pay total real estate taxes of 60 percent per $100 of assessed value, or 42 percent less than they currently pay, just for the town to break even, he said.
The report projects Henry County would experience a revenue increase of about $26 million and an expenditure increase of about $27.3 million, resulting in a $1.3 million operating loss if the city reverts.
Under reversion, the city’s schools and constitutional functions (commonwealth’s attorney, court clerk, treasurer, commissioner of revenue and sheriff’s offices) all would move to Henry County. The exception to that is two commissioner of revenue employees not now covered by the State Compensation Board, which pays much of the budgets for constitutional officers.
Those two would remain with the town to collect taxes, utility payments and other items, possibly as part of the town’s finance department, Towarnicki said.
“All the traditional urban services citizens are accustomed to,” such as garbage and bulk trash pickup and utility, police and fire services as well as administrative functions (engineering, planning, etc.), would remain with the town, he said.
The Henry County School Board is elected, so whether the town would have representation on the board — and have any say in the operation of the joint system — would depend on how the county’s magisterial districts were drawn, Towarnicki said.
“If it (reversion) goes through the process to the Commission on Local Government, I don’t think they (the county) can refuse the schools. It would be a condition of the city-to-county reversion,” he added.
The county does not have to approve the city’s reversion, even though it would be affected by it. It can contest it in court, but “once the process starts, the city or entity that desired reversion is in control of the situation,” Towarnicki said.
“Considering the way legislation is written, cities can’t grow through annexation. With limited growth, this is a method of cities not drying up (or) becoming financially unstable,” he added.
What Towarnicki called “the big message” is that city expenses have been growing but its revenue has not, and it has been using its fund balances to balance its budget for several years.
“ ... If we continue like that, you get to the point where revenue has to be increased or services decreased to balance the budget. Are citizens willing to pay more for potentially less service to maintain Martinsville as a city,” or should it revert to a town, move some functions to Henry County and have lower tax rates, he asked.