Financial hits on a variety of fronts will force Clay County supervisors to raise taxes about 2.5 mills this fall, the first increase in 10 years.

The higher taxes, while never popular, will mean increases of between $25 and $30 a year on an average house in the county and will help county leaders avoid dipping further into the county’s rainy-day funds.

“We need to be building our reserves back, not spending them. This may seem bad, but something is going to come along and we are going to need that money for investments in jobs,” Supervisor Shelton Deanes said of the dilemma.

The increase comes as supervisors are putting the final touches on a county general fund spending plan that takes effect Oct. 1 and includes a 2 percent pay raise for county employees starting Jan. 1. It’s the first broad pay raise for county workers in many years.

The county’s fiscal year runs from Oct. 1, 2019 to Sept. 30, 2020.

The tentative budget includes approximately $6.9 million in general fund operating expenses, up from $6.6  million in the current budget year which ends Sept. 30.

The general fund budget benefits from lower election costs next year, but that is the only major bright spot.

On the flip side, it must cover $72,000 in higher pension fund contributions mandated by the state, an almost $25,000 increase in liability insurance, a $40,000 hike in employee health insurance premiums, $50,000 as the first of five installments to replace the county’s decade-old 911 dispatch equipment, another $40,000 in 911 operating expenses because the state won’t increase fees, a $143,000 annual ambulance contract and a $100,000 increase in mental health and medical expenses in lunacy court and the Clay County Jail.

“Some of these like the jail expenses and mental health are totally unpredictable. We have taken big hits this year that are out of our control. We have to budget for the worst and hope for the best, hope that this year was an extreme and the number of cases will return to a more normal level,” Chancery Court Clerk Amy Berry, who serves as the county’s finance officer, told supervisors in their budget hearing Tuesday.

The 2 percent employee pay raise, which supervisors still are trying to find ways to make larger and for a full year, will cost just more than $29,000, including Social Security and retirement matching.

The increase comes as supervisors are eligible for a 3 percent pay raise, their first in 16 years, Jan. 1, if they approve it for themselves. The increase amounts to about $1,360 a year for the supervisors. The Legislature approved the increase last spring.

Under the current plan, the county’s general operations property tax rate would increase from the current 50.14 mills to 52.58 mills. That includes a .25 mill increase to start building as reserve fund for the county’s economic development district, which is in charge of maintaining the rail spur that connects the Yokohama Tire complex with the main northbound rail system.

The agency has had to spend thousands of dollars in the last two years stabilizing the rail spur foundation because of drainage issues. Those costs have put a dent in the economic agency’s small reserve fund. To safeguard against future emergencies, supervisors agreed to put in the small millage increase, which will generate about $34,000 a year, as a safeguard against future emergencies.

The county’s contribution to financing the construction of the recently opened East Mississippi Community College ‘Communiversity’ high-tech skills training facility dropped slightly from .5 mills to .411 mills because of a small increase in the amount of money generated by each mill on the county’s tax rate.

That value rose from approximately $133,115 in the current-year budget calculations to $139,252. But the increase is not due to higher property values, which edged up only slightly this year. Instead, the higher value of a mill is more attributable to increased collection rates – from 92 to 95 percent – of county property taxes. A combination of technology and an improved economy, plus increased diligence by the tax assessor’s office, produced the higher collection rate.

Some counties have even gone as high as factoring in a 97 percent collection rate.

Even with the better value of a mill, the increased revenues can’t offset the increased expenses.

The rates for individual supervisors’ districts also are increasing as property values fluctuate. The overall millage rate for District 1 property owners will go from 50.74 to 53.49 mills. In District 2, the rate will go from 50.42 to 53.31. In District 3, the rate will go from 50.49 mills to 52.87, in District 4 from 50.83 to 53.06 and District 5 from 50.22 to 52.90.

On a $100,000 home claiming the homestead exemption, the increase in District 1 would amount to about $28 a year, in District 3 about $24 a year, in District 4 about $22 a year and District 5 about $27 a year. In District 2, which has some higher-valued homes because of the areas around Old Waverly, the increase on a $250,000 home would amount to about $70 a year. On a $500,000 home, it would amount to about $140 a year.

Overall, the proposed budget calls for $7,174,499 in property tax revenues, up from $6,034,571 in the current year.

By state law, local governments can’t increase property tax revenues by more than 10 percent of the previous year’s total revenues. In Clay County’s case, total revenues in the previous year were $12,475,541.

Ten percent of that is $1,247,554. The county’s property tax revenue projection, with the higher rates, is within that 10 percent margin.

If supervisors were to exceed that cap, a referendum would have to be held.

While finalizing the budget, supervisors also are planning another effort to try to convince state legislators to increase fees on cell phones to help finance E-911 operations. It’s a problem faced by local governments for more than a decade.

When first imposed, fees were placed on traditional land telephone lines and cell phones. When every house and business once had at least one land line, the fees — $2 per month per line – generated enough revenue to largely fund 911 services in cities and counties.

But the fee on cell phones is only $1 a month. As cell phones have replaced land lines, revenues generated by the fees have not kept pace. Furthermore, a percentage of the $1 goes into an account designated for cell phone providers, supposedly to help encourage investment in towers and other infrastructure. That account has millions of dollars going unused.

“We’ve got to convince the Legislature to increase the fee and to allow some of those millions of dollars to be used to help local governments keep up with technology,” Supervisor Luke Lummus lamented.

“It doesn’t make any sense for local taxpayers to have to shoulder all the costs when all these millions of dollars are just sitting there,” he continued.

The county is about to spend $250,000 upgrading its decade-old 911 call and dispatching equipment to improve service. Supervisors plan to spread that financing over five years.

At the same time, 911 operations will cost between $435,000 and $450,000 this year. The fees generated by land lines and cell phones will only cover about $200,000 of that cost, meaning the remaining about will have to come from the county’s general fund.

“That’s local taxpayers,” Supervisor Lynn Horton advised.

Likewise, the ambulance contract, which was forged in May after months of discussions, assures county residents of having at least two ambulances in the county at all times. North Mississippi Medical Center provided the service at no charge for 18 months after the county terminated the previous contract, which cost $260,000 a year, in September 2017.

“Ambulance service is something we have to have. We basically got in for free by the grace of God. That wasn’t going to continue. No matter who we signed a contract with, it was going to cost us money,” Deanes observed.

And despite some questions, the county’s soon-to-be-opened Justice Center is not a factor in the budget surge or tax increases.

The initial payment on the center already is set aside for this year and the first major payment of $312,000 is not due until the 2020-21 budget year.

Barring some significant unforeseen budget scenarios, the outlook for the next two or three years is more positive, Berry told the board. County property will be reappraised next year, likely bringing slightly higher values. That in turn will translate into some natural growth in revenues.

Peco Foods also will come on the tax roles for at least one year before the company’s new partial fry plant comes on line. Once the par-fry plant and distribution center both are on the books, the company will qualify for a fee-in-lieu tax agreement which will reduce its property tax burden, although the county and West Point still will receive revenues.

The company’s distribution center began operating in June. The 160,000-square-foot par-fry plant is expected to be operational in June 2020. The company eventually will employ more than 300 people at the location on West Church Hill Road just off Highway 45 Alternate.

“This is just one of those years where everything has come together. We can’t avoid it or ignore it. Some of these expenses may end up not being as high. I think this is the best combination of being conservative while still protecting county finances for future investments,” Berry said.

“No one likes it, but it’s a reality,” she added.