DOBSON — County officials, like leaders around the world, worried last year how to plan for an annual budget in the early stages of a global pandemic.
Would the Surry County Board of Commissioners need to slice costs in anticipation of shortfalls in property and sales tax collections? Or would this turn out to be Chicken Little telling everyone the sky is falling?
So far, the impact of COVID-19 on the budget has been less than feared.
Last May County Manager Chris Knopf told the commissioners that all of the funding requests received from groups such as school districts and nonprofit groups pushed the starting point for the 2020-21 budget to $87.28 million, well above the $80.49 million in that 2019-20 budget at the time.
Knopf not only cut the preliminary requests down to the similar budget range, the county manager went further, going lower than the year before with a total of $78,866,000.
He told the board that by the time the pandemic reached Surry County, his staff members had already submitted their individual department budgets. He returned that paperwork and told them to expect a 10% reduction across the board.
In some cases this meant putting off a needed expense such a replacing an ambulance. Other times it meant not going through with a project or an expected hire.
In fact, the county dropped several worker positions. Sandy Snow, assistant county manager and head of human resources, said last June that a reduction in force affected 17 positions.
Don Mitchell, county facilities director, and Myron Waddell, assistant EMS director, both announced their retirements, but several others were laid off.
The reasoning given at the time was simple: sure, people likely would continue to pay their property taxes because no one wants a tax lien on the property. However, sheltering at home would greatly decrease the amount of money people spent on tourism to Mayberry and local vineyards. And, with many businesses still closed in June, officials assumed there would be less spent locally (where sales taxes collected would be shared with local governments).
The next six months proved to be eye-opening.
Not only have property taxes been paid as usual, but sales tax collections from July to November (the latest month for which the state has provided revenue shares with Surry) are actually up from the year before.
Local shopping
Knopf told commissioners that sales taxes are collected at the point of sale and sent to Raleigh. It is three months before the local share of those taxes are distributed.
So in June all he knew was that March 2020 was actually up 4.2% over March 2019 as people stockpiled supplies as they went into sheltering. It was also a common sight to see people at Lowe’s Home Improvement and other such stores buying supplies for renovations, do-it-yourself projects and home gardens.
Then April was down 2.4% from the year before, but still up $213,000 more than the month before — from about $1.52 million up to $1.73 million.
May and June were nearly identical, as those two months averaged $1.74 million. Then totals were even higher in July, August, while September was virtually the same as the year before.
Many companies, such as Amazon, started offering early Christmas specials in October instead of around Thanksgiving. That led to October jumping 27.4% in sales taxes, while November declined slightly by less than one percent.
Knopf said this boost locally is because of where people were doing their shopping in 2020.
In the early days of internet commerce, businesses didn’t collect sales tax on transactions; in fact, they might not even know in what state the customer lived.
These days when that tax is collected online, the location where the customer lives goes down as the point of sale.
“With citizens increasing their online purchasing from home, versus traveling out of the county for those same goods and services, this has offset some of the anticipated revenue losses heading into the shutdown of the economy this past spring,” Knopf said Friday, referring to how some residents used to travel to Winston-Salem or Greensboro for shopping days.
The extra online sales, he said, “…prevented the county from having to consider additional budget cuts in the current fiscal year.”
Based on the chart provided to the board, July through November saw an increase in sales tax revenue of more than $872,000.
This is welcomed news after Knopf planned his budget last year on an expected drop in sales tax of 12%.
In determining that figure the county manager said he had listened to estimates from several agencies such as the N.C. League of Municipalities.
• An unexpected boost to local revenues was the jump in liquor sales. With people spending more time at home, purchases have increased over the past year at all four ABC stores in the county.
In fact, Pilot Mountain didn’t even budget for any expected sales tax loss because the board could see that the increase in alcohol revenue made up the difference.
Property taxes
At the Feb. 1 meeting, Penny Harrison, county tax administrator, provided the county board with information on how property tax collections are going for this 2020-21 fiscal year.
Harrison said that she was looking for a motion from the board to direct her to advertise in The Mount Airy News about accounts that had not made their annual payments yet.
Sending out overdue notices has helped a lot, Harrison said, as “actually about 2,000 people paid in January.” With what is left unpaid the tax department annually advertises in the newspaper in the hopes of reaching taxpayers who may not have seen the statements sent to the residences.
Harrison said the department would give folks one last chance to catch up before advertising. The final notices have been sent out, letting people know to pay the balance before the end of the month.
“We’re going to have about 3,000 letters to go out this month. Hopefully a lot of people will pay,” she said. With what is left, the advertising will be done in mid-March.
Talking about unpaid taxes, she said, “As you can tell it has dropped tremendously in comparison to the years past. So our collection rate has increased a lot more this year. We’re hoping to have a really good year.”
“Obviously these numbers appear to be significantly better than some of the prior years going back to 2015-16 that you’re showing on your sheet here,” said Commissioner Eddie Harris. “I’m just curious as to what that may be attributed to.”
“We noticed that a lot of people came in with their stimulus check — that’s what they told us,” she answered.
“That was my hunch there,” said Harris.
The county has a tax rate of 58.2 cents per $100 of valued property created a tax levy of a little more than $32 million.
At the end of January 2020, the county had collected all but $1.55 million of that $32 million. As of Feb. 1, Harrison said the county was well ahead of that pace with just $1.28 million left.
At the August meeting, Harrison said the tax collections for the 2019-20 year finished in June at 98.61% collected. This continued a strong history of local collections.
In June 2019, the county said the property tax collections came to $31,671,219, or 98.83% of the total due.
“The folks of Surry County are hard working people who don’t complain, who pay their taxes and pay them properly,” said Commissioner Tucker upon hearing those figures.
The state allows the tax office to continue to pursue collections for up to 10 years. Harrison showed that in some later years, that collection rate gets up in the high 99% range.
Any unexpected tax revenue right now can only help the county as construction estimates have increased for a new county jail that has been under discussion the past three years.
