St. Clair County is spending $23.8 million more annually than it did a decade ago, and has operated in the red for the past three years.
The latest audit shows the county spent $8.1 million more than it received in property and sales taxes, federal and state grants, charges for services, and other taxes last year. The county spent about $109 million compared to receiving $100.8 million.
With $1.7 million in losses in 2011 and $5.3 million in losses in 2010, county audits show the last time the county posted an increase in assets was 2009.
St. Clair County Board Chairman Mark Kern said in a statement the county maintains an AA bond rating from Moody's and the latest "clean audit" was unanimously approved by County Board members during their last meeting.
"The recession had a significant impact on our net assets," Kern stated. "The state of Illinois has delayed and withheld money owed to us. Currently, the state owes the county well over $3 million. Interest rates also remain at near historic lows, and so the county has lost (for the time-being) an important source of revenue. As the county works on its 2014 budget, each item is being closely reviewed to contain costs."
Overall, the audit found the county's assets decreased by $8.2 million last year. However, auditors noted the county would have been in the black before subsidizing operations at MidAmerica St. Louis Airport in Mascoutah.
Kern said the county's continued support of the airport "helps secure the existence of Scott Air Force Base as an integral part of our community." The base is the top employer in the county and has an estimated economic impact of $3 billion annually.
"If the county were to discontinue operating the airport, we still would be responsible for interest, principal and depreciation costs tied to the airport," Kern said. "In addition, this would trigger a mandated repayment of the current market value of MidAmerica which would cost us hundreds of millions of dollars. The debt payments on that amount would be far greater than the current amount we invest in growing business at MidAmerica and work toward a break-even financial position."
The county's expenses jumped more than $23.8 million, nearly 28 percent, from 2003 to 2012. County officials spent about $109 million in 2012 compared to about $85 million in 2003. The U.S. Department of Labor estimates an inflation rate of about 24 percent in the St. Louis area from 2003 to 2012.
Kern said certain services are essential for residents in the county, which increased in population by more than 14,000 people in the past decade. He added the county has about 5 percent fewer employees than in 2003.
"Insurance (medical and liability), fuel, court, and public safety costs have increased beyond inflation rates," Kern said. The county also faces increased costs from aging facilities, unfunded federal and state mandates, and federal compliance issues from the American Disabilities Act and Equal Employment Opportunity Commission, Kern said.
Joe Behnken, a local tax advocate and former County Board member, said the issue is the county takes the wrong approach to forming a budget.
"The county's budget process starts with revenue. How much can we extract from taxpayers? Instead, the budget needs to start with expenses," Behnken said.
To pay for the increased expenses, the county is collecting $19.5 million more in taxes and fees from local residents compared to 10 years ago. For example, the county collects 45 percent more in property taxes -- from about $22.5 million to $32.6 million.
St. Clair County Board member Ed Cockrell, a Republican from New Athens, said the increased amount of property taxes partially spurred from an effort in 2007, 2008 and 2009 to add new construction to the county tax rolls.
"In excess of $100 million of value in property was not on the tax roll," Cockrell said. "It's sad for taxpayers the burden was not spread more evenly."
Behnken said another reason property tax revenue has increased is the "archaic, nonsensical way" property is assessed. In particular, the regular use of a multiplier boosting the value of all property in certain townships. Multipliers are based on a state formula intended to correct undervalued property.
"They even apply it on the exact same year as physical reassessment, which makes absolutely no sense at all," Behnken said.
The county's overall tax rate decreased about 3 percent last year in comparison to 2003, and was 10 percent lower than its highest point in the past decade in 2004. The owner of a $100,000 home in St. Clair County paid about $304 in property taxes last year to the county.
Kern said property taxes only comprise about 13.5 percent of the county's general fund, which provides a majority of state mandated services. For example, the fund pays for the sheriff, state's attorney, probation, elections, public defenders, assessor and animal control departments.
"In the last 10 years, the general fund's tax rate has been lowered by 30 percent," Kern said. "The 2013 tax rate was 11.25 cents or 55 percent less than the legal maximum. This has been accomplished even though the county's assessments have declined over the last two years. In short, the county has lowered the general fund tax levy for the past 25 straight years. In spite of these lowered tax rates, county services have been maintained."
MidAmerica airport, TIFs stress pocketbook
Behnken said two factors were boosting the amount of revenue needed by the county. The first is the county's support of MidAmerica St. Louis Airport in Mascoutah, which has never turned a profit since opening in 1998.
The second factor is tax increment financing (TIF) districts diverting property tax revenue away from county operations, Behnken said. Cities create the districts in an effort to spur development. Property taxes collected in the district are used to reimburse developers for costs related to construction.
"The county tax rate could be cut in half if these two discretionary uses were eliminated. ... The TIF fund gets all future increases in taxes from existing property and new property built after the district is created. Therefore, tax rates must be higher to compensate for the amount of taxes being siphoned off by the TIF fund," Behnken said.
Nearly $3.7 million in property tax revenue went to TIF funds instead of county coffers last year, according to county records. More than $402 million worth of property sits within TIF districts county-wide.
County Board member Frank Heiligenstein, a Democrat representing Freeburg, said TIF districts should be dissolved once the initial construction costs are paid at a development. He added politics can come into play with the continued giving of TIF funds following construction.
"The amount of TIF money diverted from the county this year would cover the losses at MidAmerica airport," Heiligenstein said.
Cockrell said the audit highlighted the county's priorities and the need to address the financially struggling airport.
"When looking at a 10-year span, what jumps out is MidAmerica receiving an unacceptable amount of subsidization each year," Cockrell said. "The only service in St. Clair County that receives a blank check is MidAmerica. ... Ultimately, accountability rests on the County Board."
County officials transferred about $5.6 million in funds to the Mascoutah-based airport in 2012. County funds have subsidized the airport more than $28.7 million in the past five years.
Kern said to attract commercial passenger or cargo carriers, the airport continues to keep costs as low as possible, however, there are fixed costs that must be paid as part of the agreements with the military and Federal Aviation Administration. For example, agreements include insurance, airfield maintenance, fire safety and security at the airport.
Other economic growth due to the airport can be seen in the area, Kern said, such as Boeing employing about 115 workers and North Bay Produce employing another 38 people. He added Allegiant Airlines is successfully operating flights twice a week to Sanford, Fla., near Orlando, Fla.
"MidAmerica airport will be losing money as long as it exists," Behnken said. "When there is no activity at the airport, it loses less money than when there is activity."
The funds diverted to the airport could have been used to provide additional services to residents or construct a building to replace the overcrowded St. Clair County Jail, Cockrell said.
"Everybody is entitled to their own opinion, but not facts," Cockrell said. "The facts of this audit is taxpayers in St. Clair County are still the only entity subsidizing the airport. At some point, you got to bring it to a head. You can't continue down that road. Until a public body (such as the County Board) takes that on, it's not going to change."
Contact reporter Daniel Kelley at email@example.com or 618-239-2501.