After being presented with three different options to fund new jail construction, Clay County Council voted unanimously last night to increase CAGIT tax by .25 percent.
The county is under a federal court order to improve conditions at the jail and if the county fails to do so, the federal court could close the jail. Inmates would then have to be housed at other county jails, costing tax payers thousands of dollars. And if the federal government takes over new jail construction, it could cost triple the amount than if Clay County proceeds with the project.
Loren Matthes, principal for H.J. Umbaugh & Associates, a funding source for public projects, explained the county could raise property taxes, impose a CEDIT (County Economic Development Income Tax) or CAGIT (County Adjusted Gross Income Tax).
"Every individual will be impacted differently. If you raise property taxes, those people with large amounts of acreage will pay more. If you increase income tax, those people making more money will pay more. Now is an incredible time to issue bonds since the interest rate is so very low," she said.
Matthes said options could be combined, such as increasing CAGIT or imposing CEDIT with a property tax back up. Without a property tax back up, interest rates would be higher and a larger debt service reserve would be required.
For a jail costing $8.5 million, she explained there would be other costs on top of that such as bond issuance costs and interest during construction due to no payments being accepted until construction is complete. Thus, the total cost would increase to about $9.5 million.
Larry Moss, councilman, said he was not in favor of raising taxes but that he felt there was no other option but to do so and CAGIT is the most fair. Since interest rates are the lowest since the 1960s, he said now is the time to act.
Councilwoman Rita Rothrock agreed. She added she wanted to try to limit the increase to CAGIT only and leave property taxes alone.
"I've been involved with county government for 18 years and this is the first time I've voted to increase taxes, but it's our only alternative," Michael McCullough, councilman, said.
Beginning July 1, CAGIT will total 1.25 percent only until financing of the project is complete for a period of no longer than 30 years. New jail construction includes not only the facility itself, but demolition of existing structures on the property previously obtained, purchase of surrounding property and other related expenses.
"Property where the old IGA store exists was purchased several years ago in anticipation of a new jail. So we're fortunate not to have to purchase land for the site. Almost every other county has transportation issues, but we'd be directly across the street from the court house," Clay County Circuit Court Judge Ernest Yelton said.
NOTE THIS: If the jail costs $8.5 million, a person earning the Clay County average yearly income of $33,800 would pay $84.50 annually or $3.25 per paycheck, for the CAGIT increase. A single individual renting an apartment with no dependents earning $6.50 an hour would pay $26.55 annually or $1.02 per paycheck. A married couple earning $100,000 per year with two dependents would pay $226 annually or $8.69 per paycheck. A retired couple receiving $16,000 of Social Security, $8,000 pension and owning their home would pay $6.50 per year.