Error inflated city, county tax base
By Ginger Livingston
The Daily Reflector
Monday, August 20, 2018
An estimate of the property tax base that Greenville and Pitt County officials used to create their 2018-19 spending plans will drop by about $44.5 million and $88 million, respectively, because of an accounting error, officials said last week.
The error was discovered July 11, and a memo included in an agenda packet informed Pitt County commissioners about it on Aug. 6, officials said. It’s expected to have a minimal impact on city and county budgets, officials said.
Three newly constructed buildings owned by the county, the city and Vidant Health were misclassified as taxable properties because of a coding error, officials said. Adding the properties to the tax rolls incorrectly increased the tax base.
Removing them drops the city’s tax base from $6,740,617,099 to $6,696,034,535, a difference of about $44.5 million. The county’s tax base drops from $12,928,084,588 to $12,840,050,410, a difference of about $88 million.
With a tax rate of 52 cents per $100 of property value in the city, $44.5 million in value would generate about $231,400 in tax revenue for the city. With a tax rate of 69.6 cents per $100 value in the county, $88 million in property would generate about $612,480 in revenue.
“This has not happened in the five years I’ve been here — this has not happened,” said Chip Main, Pitt County interim tax assessor.
Of the more than 74,000 land parcels recorded in Pitt County’s tax books, more than 4,000 are tax exempt because they are either owned by local, state or federal governments or belong to churches and other nonprofit agencies.
The three buildings that were misclassified are the hospital’s Eddie and Jo Allison Smith Tower that is part of its cancer care center, the city’s G.K. Butterfield Transportation Center and a shell building the county built in Indigreen Corporate Park, County Manager Scott Elliott said.
Main said his office typically receives an application from property owners to classify land or structures as tax exempt. In this case, the error occurred because the three buildings were new structures on land that had already been recorded as tax exempt. However, the buildings had to receive a separate tax exemption, and that didn’t occur, Main said.
In an Aug. 6 letter to the Board of Commissioners, Brian Barnett, deputy county manager/chief financial officer, said a standard operating procedure has been enacted to handle future tax exempt properties. Staff also has undergone required training.
Elliott said it also appears part of the problem is because three members of the assessor’s staff retired in January, the same time as the county’s tax administrator.
“We’ve always been extremely careful to make sure that we look at these things and that’s what we are going to do, go the extra mile to make sure those type of situations don’t happen in the future,” Main said.
The finance officers for both governments say since the error was discovered on July 11, less than a month after the fiscal year began July 1, they don’t expect the mistake to harm their respective budgets.
“My first reaction is probably not to have a reaction,” said Michael Cowin, deputy city manager with the city of Greenville. “The letter the county sent out said they have addressed the situation so I don’t have an opinion.”
It’s likely the losses will be offset by tax revenue generated from new building and development and property discoveries — reviews routinely find home and business additions that owners fail to report to the county -— that occur during the year, Cowin said.
Also, property tax revenue makes up 40 percent of the city’s general fund revenue. Cowin said he typically underestimates how much sales tax the city receives during the year, meaning that source also will likely bring in higher than expected revenue.
The same holds true in the county, Elliott said.
“We are not expecting any hit to fund balance because of this, we still have a fund balance of 20 percent,” Elliott said.
The Pitt County Board of Commissioners are expected to appoint a new tax administrator which also should resolve future issues.
“It is anticipated the errors that occurred due to lack of staff will not occur again,” Elliott said.
Contact Ginger Livingston at firstname.lastname@example.org and 329-9570.