Hurricane Katrina

Hancock's budget gap not so big

HANCOCK COUNTY - For now, the county budget resembles a giant circus elephant balancing nervously on a tiny red ball. The slightest movement could send it tumbling.

But Hancock Tax Collector Jimmie Ladner says it's too early for talk of a fiscal meltdown. Next year could be a different story.

The most recent projections, released this week, show the county facing a $2 million gap this year, far less than predicted.

Tax collections had funded about half of the county's $35 million annual budget. After Katrina damaged or destroyed more than 64 percent of the county's domiciles, leaders believed severe financial struggles meant the day of reckoning was soon.

Bookkeepers ran cash-flow analysis and others offered belt-tightening suggestions to avoid a crisis and stave off widespread layoffs. Some county officials began spreading the glum image of a county on the brink of insolvency.

"I don't want people to think we were trying to be fear-mongerers," Ladner said. "I just think talk of fiscal collapse, right now, is way too premature."

A big reason for the less-gloomy forecast is new vehicle registrations. Usually, the county collects about $200,000 a month from vehicle registrations, but since the storm, monthly collections have averaged more than $370,000.

"So many cars were destroyed in Hancock County," Ladner said. "People are replacing those cars with newer cars that carry a higher value."

Last year, the county collected nearly $13 million from all five classes of tax collections. This year, it will collect about $11.5 million.

Another reason collections seem to be higher than predicted is the commitment from local businesses. Ladner said the business community responded well, many of them paying 2005 taxes in full regardless of storm damage.

What's more, the assessment in January was not a detailed evaluation. It was done using aerial views and drive-by surveys, but in a county where department heads were forced to share vehicles and work from tents for months, any assessment at all would have been considered a success.

"When we were doing this our office had one vehicle," Ladner said. "And, we based those collections on worse-case scenarios."

Although this week's more solid estimates are about half as dismal as first thought, Hancock is far from out of the woods. The county could still face at least a $12 million gap in 2007.

"We have held the line on everything from pencils to hiring new employees," Ladner said. "But the shortfall will be substantial next year."

Unlike other Coast counties that taxed properties based on all of 2005 regardless of Katrina's destruction, Hancock County taxed owners of destroyed properties for just two-thirds of the year. This year, owners of those properties will pay taxes only on the land.

Another factor is Hancock's population of residents over the age of 65 - more than 15 percent - who don't pay property tax on the first $75,000 of assessed valuation.

Ladner said many of those homes were damaged and the values have dropped below $75,000, meaning those property owners will pay hardly any taxes this year.

The view through the financial crystal ball will remain murky until sometime this summer, when the county completes its new valuations. Meantime, county leaders will be pinching pennies.

"We have some hard times ahead, but this county has always been financially solid," Ladner said. "We'll take the steps needed to make sure we remain that way."