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Wednesday, 11 June 2014 13:10

Budget dilemma forces time of reckoning for Waynesville

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fr waynesvillebudgetWaynesville leaders will face a tough choice in coming weeks: either raise the property tax rate by 3 cents or cut town services and amenities.

That’s the message Town Manager Marcy Onieal shared with Waynesville aldermen at a budget workshop last week.

“In no way do I want you all to feel like we have painted you in a corner,” Onieal told the board. “But we are at a point where we either have to have more money to do what we have been doing — or we have to have a very difficult conversation about what we are willing to do without.”

The town has until June 30 to pass a budget for the coming fiscal year. Onieal recognized the difficult choice town leaders face. All four aldermen and the mayor are up for election next year.

“I know it is politically difficult,” Onieal said of her tax-hike suggestion.

Waynesville leaders did a lot of listening and not much talking during the two-hour budget workshop last Friday. None of the aldermen indicated what their position might be on a tax increase.

A public hearing on the proposed budget was scheduled for Tuesday night (June 10) with a follow-up workshop next week.

 

Crunch time

Waynesville is facing a litany of losses to its bottom line: lower sales tax collections, county budget cuts for trash hauling, the loss of liquor store revenue, dwindling annual interest on investments, and the anticipated loss of business license fees — just to name a few. All told, nearly $1 million in annual revenue has been lost over a five-year period.

Onieal said it is impressive the town has made it this far on just small sacrifices.

“We have tried to maintain the same level of service, but we have done about all the absorbing we are able to do,” Onieal said. “Right now, we are sort of out of magic tricks.”

The town budget grows organically through construction, which adds to the town’s property tax base. But with development in the doldrums, this natural growth hasn’t been enough to offset the various losses the town has seen in other revenue streams and to keep up with inflation. 

Waynesville’s annual budget has grown by half-a-percent a year over the past five years, and that’s not enough growth to keep up with things like rising health insurance costs for employees or rising fuel costs, said Town Finance Director Eddie Caldwell.

Waynesville’s plight is not unique.

“A significant number of cities across North Carolina have had to raise property taxes either last year or this year,” Onieal said. “The fact is the state legislature has taken so many revenues away and we have lost revenues, we don’t have many other tools at our disposal.”

Here are some of the revenue hits the town has seen:

• $70,000 cut from the county for recreation. Since town taxpayers subsidize parks and recreation facilities used by county residents at-large, the county used to make an annual contribution for recreation, but quit doing so during the recession.

• $150,000 lost in liquor store profits. The town makes money off its ABC store, but the town built a new ABC store last year in hopes of increasing sales in the long-run and eventually saving on rent. But in the short-term, ABC profits are being used to pay off the construction loan instead of going into town coffers.

• $175,000 decline in annual interest income on investments. Dismal market rates mean the town makes almost nothing on its investments and savings compared to 2008.

• $120,000 in cuts to business license fees. The state has ended municipal business license fees, effective next year.

• $200,000 reduction in sales tax collections compared to 2008. A portion of the state sales tax is remitted to local governments. As consumer spending shrunk during the recession, that meant less sales tax coming back to the town.

• $80,000 cut from the county for trash hauling. Starting this year, the county will no longer cover the cost of transporting trash from a centralized drop-off point to the landfill. 

• $110,000 has been lost in phone franchise fees since 2009. A surcharge tacked on to customers’ phone bills is remitted to local governments. As the public increasingly jettisons their traditional landlines for cell phones, the amount collected has gone down.

While the town is out $1 million in various revenue streams compared to five years ago, the three cent increase on the tax rate would only bring in an extra $330,000.

Onieal said the town should see an improvement to its bottom line by 2017. Sales tax should creep up, economic activity should drive new construction and debt from past capital projects will be paid down.

“We are talking about a period of time that we have got to get over. The question is how do you want to get over it?” Onieal said. “We have reached a level of service in this community that people value. When you talk about cuts you are talking about cutting programs, cutting services.”

 

New spending

The budget includes some new spending that could be considered nonessential. Examples include:

• 1 percent cost-of-living raise for employees.

• $75,000 for a parks and recreation master plan.

• $25,000 grant toward construction of a second theater building for Haywood Arts Regional Theater.

• $25,000 grant to help Folkmoot USA international folk festival with a capital investment in its headquarters.

• $25,000 for Haywood Helps, the broad-based non-profit initiative to convert the former state prison into a homeless shelter and half-way rehab house.

 

Tax rate snapshot

Waynesville’s property tax rate is currently 40 cents per every $100 of property value. Under a proposed 3-cent property tax increase, town taxes on a $250,000 house would go from $1,000 a year to $1,075 a year. Here’s some other town property tax rates in greater WNC:

Canton: 58 cents

Maggie:39 cents

Sylva:30 cents

Franklin:25 cents

Bryson City:35 cents

Murphy:42 cents

Brevard:45 cents

Black Mountain:37 cents

Shelby:43 cents

Kings Mountain:40 cents

Rutherfordton:56 cents

Hickory:50 cents

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