Potash paid taxes early

Published 10:18 pm Wednesday, February 2, 2011

Staff Writer

Responding to a request from Beaufort County Manager Paul Spruill, PotashCorp of Aurora paid its property taxes earlier than normal last year.
The phosphate-mining company paid more than $4.27 million in property taxes on Nov. 15, 2010, tax records show.
Based on prior years’ histories, the corporation would normally have paid this bill around Dec. 12, Spruill said.
On Dec. 17, 2010, PotashCorp made another tax payment of $447,477.10, meeting its full obligation for the year.
“We were approached by the county and were pleased to help with the cash flow crunch by expediting our payment process,” Michelle Vaught, spokeswoman for PotashCorp, wrote in an e-mail to the Washington Daily News.
Last October, Spruill asked all county taxpayers to pay their tax bills as soon as possible.
Spruill said he made this plea because the county mailed out tax bills later than normal.
The later-than-normal mail-out came about because the revaluation of all real property in the county created a greater volume of work for the tax office, Spruill explained.
With bills going out behind schedule, the county anticipated a delay in the collection of about $25 million in anticipated property-tax revenue. That revenue is “absolutely necessary for us to operate our annual budget of, in round numbers, $50 million a year,” the county manager said.
While Spruill said the county was “by no means on the edge of bankruptcy,” its uncommon cash-flow problem led him to directly request the earlier-than-usual payment from PotashCorp, the largest taxpayer in the county.
“Within a week, (PotashCorp) responded to my request and sent us their tax payment,” he remarked.
Taxes are officially due Sept. 1, but tax bills don’t begin to accrue interest until Jan. 6, Spruill said.
In an average year, the county would mail out tax bills no later than Sept. 15, Spruill added in response to a question, noting that very few taxpayers pay these bills early.
The county is financially stable, Spruill asserted, pointing out it has a fund balance — or unspent money that shakes out of the budget at the end of the fiscal year — of approximately $9 million.
This represents about 18 percent of the money the county would spend in a given fiscal year, he said.
“I would prefer that we be 20 percent or better,” Spruill stated, indicating a 20-percent fund balance would give the county more of a cushion.
The N.C. Local Government Commission recommends that local governments maintain a minimum fund balance of 8 percent, he observed.
“Nine million dollars sounds like a large number, but the fund balance is not so large as to help us survive without property tax revenue of any kind from September until November,” Spruill said.
Beaufort County Commissioner Hood Richardson has been critical of the county’s budgeting practices in the past.
Richardson, a Republican, said the county planned to spend $2 million that didn’t come from tax revenues.
“It was the last of our true surplus, and they went ahead and spent it anyway, which was really bad in this economy,” he said. “We were spending money that we did not collect taxes for. That was surplus. So you were spending your savings. Why do you want to do that?”
Richardson was referring to money appropriated from the fund balance, according to Spruill.
“That had nothing to do with the cash-flow problem,” Spruill said. “He’s making an observation that’s correct (about the fund-balance appropriation).”
The county likely will have to raise taxes if the commissioners don’t cut spending in the next budget cycle, Richardson said.
“The county is financially sound,” said Commissioner Robert Cayton.
“It was financially sound then (last fall), it’s financially sound now,” added Cayton, a Democrat.
“There was not a shortfall in that there is insufficient revenue,” he said. “There was a time factor.”