Otoe County officials say a $62 million increase in taxable property will not solve the budget crisis that led commissioners in August to order the layoff of seven workers.

While taxable values increase due to adjustments in the market prices of property and the construction of new homes and businesses, the higher values this year do not impact a 3.5 percent lid placed on the growth of the county’s overall spending.

“We’ve had a tremendous increase in cost at the same time we’ve had minimal growth in new construction,” said Commissioner Dale Haverty, citing inflationary pressures on fuel, energy and construction materials.

The county’s proposed budget includes $19,000 more to fuel patrol vehicles and $24,000 more to run roads department engines. The county expects a 35 percent increase in heating fuel for the courthouse, $24,000 more for health insurance and added expenses after granting employees a 3 percent raise.

The county is also budgeting $23,000 more for commissioner pay, in anticipation that voters will approve increasing the number of commissioners to five.

Haverty said the county was better able to manage the spending lid last year because of $40 million in new construction.

Formulas the state uses to calculate the spending lid include new growth totals. When there was growth of $40 million, Otoe County could increase its spending, but this year’s growth of $19 million in not enough to impact the spending lid.

“There was not enough new growth to move the lid up to cover expenditures,” Haverty said.

Otoe County is proposing increasing its spending next year by nearly $1 million. The proposed budget for 08-09 includes an increase of nearly $600,000 in the general fund and $382,000 in the road fund.

Actual spending for the general fund was $3.9 million in 06-07 and $4.4 million in 07-08. For the road fund, actual spending rose from $2.8 million in 06-07 to $3.2 million the following year. Total spending in these two budget categories increased about $925,000 in one year.

Otoe County Clerk Janene Bennett said county expenditures have been near the maximum allowed by the spending lid for the past five years.

This year, commissioners received budget requests from department heads and elected office holders prior to seeing the property tax assessments.

When the assessments were plugged into lid formulas on Aug. 1, Haverty said he learned for the first time that the county was $600,000 short.

The county trimmed $300,000 from budget requests, and ultimately ordered the layoff of seven wage earners from the roads department to cut costs further.

“When you have to take extraordinary steps to come to a solution, it’s a crisis. It’s critical to those seven families,” Haverty said.

Otoe County has $1.3 million in its inheritance tax fund, but Haverty said the fund should not be used for operational expenses. He said it is not an acceptable solution because, when the reserve fund is gone, the operational expenses will still be too high.

The inheritance tax will be used to pay the wages and benefits of the seven workers beginning Sept. 1, but Haverty said it would be unacceptable to draw a year’s wages from the fund.

To protect the county from inflationary pressures in the future, Haverty said voters can approve a 2 percent lid increase in the Nov. 4 general election. He said the county can also encourage new growth and cut expenses.

Bennett said the county may avoid future layoffs if the state Legislature would allow for more room in the lid calculations. She said it would also help if costs for health insurance were arranged as interlocal agreements, which do not count against the spending lid.

The roads department had $300,000 in its budget last year for fuel, but spent $317,000. Haverty said the county commissioners had increased the budget in anticipation of rising costs and said the roads department was not over-budget. This year, $324,000 is being budgeted for fuel, despite the expected layoff of the bridge crew and four rock haulers.

Otoe County’s total taxable value exceeded the $1 billion mark for the first time in 2007 and the Otoe County Assessors Office has certified it at $1.3 billion this year.

Property values, which are used to figure property tax bills, were boosted by a reassessment of all property in Palmyra and Unadilla, as well as agricultural land.

The spending lid limits growth to 2.5 percent each year. The lid can increase an additional 1 percent by vote of the county board. New growth in the county may also be strong enough to increase the lid.

The county is asking voters for an additional 2 percent lid override for the 2009-10 budget.

This year’s budget levy is expected to fall from 45 cents per $100 in valuation to 35 cents.