The dispute between the Bladen County Commissioners and School Board regarding school funding could impair cash flow for the county for the upcoming year.

The suit filed by the School Board has to date held up the mailing of tax bills. The reason is because a definite tax rate cannot be established until a settlement of the dispute is resolved.

Though the county could elect to send out a bill before the suit is settled, it would have to send an amended bill later if the commissioners had to increase the tax rate needed to support the funding settlement.

The budget passed by the commissioners on June 29 calls for the tax rate to remain unchanged from last year-86 cents per $100 valuation. However, if the resolution of the dispute results in a significant increase in school funding, the commissioners would likely have to amend the tax rate to accommodate the increase.

As a result, the county has elected, at least for the moment, to wait to send out tax bills.

County Manager Greg Martin said in a Friday interview that if the school funding issue is not soon resolved, he will have to seek directions from the commissioners regarding when to send out county tax bills.

The county normally sends out tax bills around the end of July or the first few days of August, according to Director of Revenue Marguerite Coble. In order to do so, the tax office must begin to prepare for sending out the bills about two weeks earlier-or about July 15.

Coble said that her office is on hold or in limbo until she gets the go-ahead to send out the bills.

Coble said the longer tax bills are delayed, the more it is likely to impact short-term cash flow for the county.

She said the county usually collects around 40 percent or more of ad valorem taxes in the month of August.

Prior to last year when taxpayers got a two percent discount for payment prior to September 1, approximately 43 percent of ad valorem tax revenues were collected in the month of August.

Last year, however, the commissioners decreased the discount rate to one percent, and ad valorem early tax collections were a bit lower.

Total ad valorem tax collections, including fire district taxes and fees, for last year were $15,021,776.12. Of that amount, 38 percent of the levy-or $5,846,758.68-was collected in the month of August. Collections in the following months through December were significantly lower. For example, collections in September were about nine percent, and collections from the end of August through December were about 31 percent of the levy.

Without the discount taxpayers receive for paying prior to September 1, early collections are likely to be significantly lower, creating as much as a $5 million lag in cash flow for the county.

Coble said she did not believe that late collections-collections after January 5-were likely to increase; however, fewer people would likely pay their taxes prior to December.

"Without the discount, most of those who now pay in August are likely to wait until December to pay their taxes," said Coble.

She pointed out that financial institutions usually pay tax bills on properties they have financed in time for the property owner to receive the discount. However, there would be no incentive to pay earlier if the discount were not available.

"The state requires us to report our discount rate by April," Martin said. "The tax due date is in early September; therefore, it is my understanding that an early payment discount cannot extend beyond this date."

"We're already about two weeks late getting our bills ready to send out," Coble explained. "The longer we wait to begin processing the bills, the less time there will be for taxpayers to pay before the discount period expires.

"If a final decision on the tax rate cannot be made until after mid-August and the county does not elect to go ahead and send out tax bills based on the rate now in effect, we may not be able to send out tax bills in time for taxpayers to receive a discount," she added.

Martin said that if a decision on school funding is not made soon, he plans to seek direction from the commissioners regarding when to send out tax bills.

Even if bills are delayed until too late for taxpayers to receive discounts, it is unlikely to have a dramatic long-term impact on county finances. It could, however, affect cash flow in the short term.

Martin said that early cash definitely helps the county with consistency in revenue.

However, if cash flow is delayed, he doesn't anticipate a critical situation because some of the county's larger debt service payments are due in the spring and tax payment should be on track by then.

"It certainly would be beneficial for us to get the bills out on time for our taxpayers to benefit from the discount," said Martin.

Coble said that the dispute will not impact tax bills for the municipalities and that her office is working to get those bills out.

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