1. Cherokee County Board of Commissioners 2012 OUTLOOK AND IMPACT ON MILLAGE RATE JUNE 22, 2011 | JANELLE FUNK

2. 2012 Outlook – Starting Shortfall In 2012 the County will not have $1.5M Blalock Land Sale The County will also not have the $2M option of reducing contributions to the defined benefit plan for General Fund In 2011 we budgeted $787k in General Fund Reserves (shortage of final inflows compared to outflows) In 2011 the Jail Fund is covering $600k of costs previously paid from General Fund (this required $470k of the fund’s reserves). The Sheriff Office has voiced concerns over continuing to use this fund as it is meant to cover unplanned jail emergencies. Several funds are using their reserves to make it through 2011 (Fire, V/W, E911, Animal Services, Senior Services) Starting 2012 with $5M shortfall in General Fund 2

3. 2012 Outlook – Decrease in Tax Digest Property Taxes are based on the property values in the Tax Digest In 2011 Property Taxes provide 67% of the General Fund Budget ($37.9M including collections of delinquent taxes) The 2011 Tax Digest dropped (for a third year in a row) Since the base dropped, if we applied by the same 2010 Millage Rate we will collect: – $2M less in 2011 for the General Fund – $0.9M less for the Fire Fund – $0.3M less for the Parks Bond 3

4. First Option – Rollup the Millage Rate? In order to collect the same amount of property taxes as we did in 2010, one option is to rollup the Millage Rate The calculation takes the lower property values and adjusts the rate to collect the same total Therefore, if a homeowner experiences the average 5.6% decline on their home value, they will not pay more in dollars, even though the rate has increased In 2010 the General M&O millage rate was 4.720 and assessed $36,144,221 in property taxes: – $7,657,673,935 x 4.720 = $36,144,221 If we rolled up the millage rate in 2011, the rate would be 4.999, and we would assess $36,144,221 in property taxes: – $7,229,767,167 x 4.99 = $36,144,221 4

5. Millage Rate Preview – Impact of Rollup 5 Average Home in Cherokee County – Impact of County Taxes Bottom Line: The Rollup is designed to collect exactly what the County collected last year. If a taxpayer’s home decreased 5.6% (avg Tax Digest), they will not pay more in 2011. The rate increases, but the base decreases, so the dollar amount stays the same.

6. Millage Rates – Full Rollup & Starting Shortfall 6 Average Home in Cherokee County – Impact of County Taxes Bottom Line: If the Millage Rate is increased to cover the full value of the shortfall – the impact on the average homeowner would be ~ $49.00. Shortfall $5M M&O, $0.4M Fire

7. Possible Offsets to the Shortfall 7 While these are possible offsets – many are uncertain/not defined for how to achieve. Using these uncertain items to determine the 2011 Millage Rate could be fiscally irresponsible.

8. Millage Rates – Full Rollup & Reduced Shortfall 8 Average Home in Cherokee County – Impact of County Taxes Bottom Line: If the BOC uses one-time items and other possible offsets - the impact on the average homeowner would be ~ $34.00. But it is uncertain if we can achieve the offsets. Shortfall $3.3M M&O, $0.4M Fire

9. “More Certain” Offsets for Net Shortfall 9 The decision was made to only include “more certain” items in the Shortfall Calculation to determine an appropriate Millage Rate to advertise for public hearing.

10. Millage Rates – Full Rollup & Known Net Shortfall 10 Average Home in Cherokee County – Impact of County Taxes Bottom Line: We will advertize a millage rate increase to cover the starting shortfall and new known items - the impact on the average homeowner would be ~ $48.00. Known Net Shortfall M&O $4.9M, $0.4M Fire

11. SUMMARY The following rates will be published in the Sunday, June 26 th edition of the Cherokee Tribune as the County’s “tentative 2011 rates.” – General Fund from 4.720 to 5.674 – Fire Fund from 2.950 to 3.195 – Parks Bond from 0.628 to 0.664 – Total Millage Rate from 8.298 to 9.533 These rates are subject to 3 public hearings: – July 5, July 19, and July 28 at 6pm in the Bluffs Board of Commissioners Auditorium The Board of Commissioners is committed to exploring options to set the 2011 rates lower than advertised The Final 2011 Millage Rates will be adopted by the BOC on July 28 11

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