Sampson County will have to make more than half a million dollars in debt service payments after the state cut back its lottery funds distribution. However, the county’s finance officer said the shortfall should not result in a tax increase if made up in the next several years — which he said will likely be the case.

“We won’t have to make up those funds for a few years, because we were setting tax dollars aside for debt reserve funds,” said county finance officer David Clack. Every year, the county has a set amount it will pay according to its debt service model, which takes into account property tax allocation (tax base), half-cent sales tax and lottery money.

The lottery money stream will be much lighter for 2010-11.

The General Assembly used all of the $63 million in county lottery fund growth and county lottery funds for classroom teachers and college scholarships, reducing the county’s 40 percent set aside of net lottery receipts for school construction to 25.8 percent.

Based on higher lottery sales projections, the 40 percent growth would exceed $176.5 million, however the General Assembly reduced the county appropriation in school construction lottery funds to $113.7 million. The N.C. General Assembly allocated remaining lottery dollars on a per pupil basis to allow counties to spend on classroom teachers.

“A lot of counties use that to pay debt, which we do,” Clack noted of the lottery proceeds. “Of course, they’ve taken a substantial amount of that away this year.”

While some officials have expressed concern of a tax increase that would follow such a trickle-down effect seen in Sampson, Clack said that may not necessarily be the case. With the state in a budgetary bind, Clack said preemptive measures were taken locally.

“We thought they would change the formula as far as distribution,” the finance officer said.

He was right.

While the state formula for allocation of lottery proceeds had Sampson set to receive an original estimate of $1,728,000, Clack budgeted $1,437,000. The amount Sampson actually received for 2010-11 was around $923,000, putting it approximately $515,000 under what was anticipated.

“If lottery proceeds stay stable for the next year, then our share will be $1,728,000,” Clack said.

He said a steady debt service model will allow shortfalls to be made up in successive years. Having that steady model allowed Sampson not to have to scrounge for money in this year’s budget.

“When the state took away the $515,000, it didn’t immediately cost us money because we had money in reserve,” Clack noted. Those reserves allow the county to “keep a stable tax rate,” one that does not fluctuate based on lottery receipts, he said.

“As a result of this single decrease, we will not have to raise taxes to pay this off this year,” Clack remarked. “It won’t affect us until four or five years down the road, because the debt service is set up to keep the tax rate fairly even throughout the course of debt. We have enough funds to cover this debt this year and possibly the next three to four years. This single shortfall will not affect us for several years.”

He said, if the state comes through on a preliminary objectives to fully restore those funds in the future, the timeline could be shortened.

“If they will return lottery proceeds back to where they were,” said Clack, “we should make it up in less than two years.”