What is a fiscal year?
• Fiscal year is a term used to denote a government’s or business’s annual budget cycle.
• Most local governments in our region operate under a fiscal/budget year that runs from July 1 of one year through June 30 of the following year.
• Fiscal years often are referred to by the year in which they end (that would make the current county budget fiscal year 2020, sometimes shortened to FY20), but are more formally noted using both years in which they take place: fiscal year 2019-2020, for example.
• The driving force behind a governmental budget is projected revenues. A major one is property taxes — in this case, Sullivan County property taxes, which are paid by all property owners countywide.
• That includes businesses and homeowners inside the cities of Kingsport, Bristol, Bluff City and Johnson City. Property tax revenues billed in one year support county spending during the fiscal/budget year that ends the next year. 2019 property taxes are projected as revenue in the current 2019-2020 county budget.
• Another major source of local tax revenue comes from sales tax collections. Those come in monthly throughout the fiscal/budget year.
Property tax projections
• Property tax projections are based on the countywide assessment. That figure is updated each year to reflect growth. The current budget was developed based on the 2019 figures provided by the Sullivan County Property Assessor’s Office.
• The gross 2019 estimate valued property countywide at nearly $3.93 billion.
• But more than $80.6 million worth of that is tied up by properties granted tax increment financing (TIF). The owners still pay their tax bills, but the revenue is dedicated to paying back development and infrastructure costs.
• That left the assessment, for county revenue purposes, at nearly $3.85 billion. A billion, by the way, is a thousand million.
What that generates
• Sullivan County uses a conservative estimate when it comes to who will pay their taxes on time (or during the fiscal year). The county’s budget has for years been based on a projected collection rate of 96%.
• Based on that estimate, the county’s current budget projected the nearly $3.85 billion 2019 assessment (available for revenue) would generate $369,384 for every penny of the tax rate.
• Sullivan County’s tax rate this fiscal/budget year is $2.55 per $100 of assessed value. Residential properties are assessed at 25% of their value, while commercial properties are assessed at 40%.
• At the 96% collection rate, Sullivan County’s current budget estimated county property taxes would generate more than $94.9 million.
Coming up in Civics 101
• Which sections of the county pay how much of that $94.9 million.
• How was it spent?
• How much revenue comes from sales taxes?
• Which sections of the county generate the most in sales taxes?
Source: Sullivan County Department of Accounts and Budgets