Macon manager proposes tax increase

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Macon manager proposes tax increase

For the first time in several years, Macon County Manager Derek Roland is proposing a small property tax increase moving into the 2019-20 budget year to support increased expenses and much-needed capital projects.

Tax rate

Macon County has been able to maintain its current property tax rate since 2015 when the tax rate increased from 28 cents per $100 of assessed value to 34.9 cents. The jump was attributed to the 2014 revaluation process — the first one done since 2007 just before the recession hit — in which the county lost about $2 million in property values.

The 2018 revaluation results didn’t look much better — total property value in Macon only grew from $7.9 billion to $8.04 billion — but county officials are calling this kind of stabilization in values the new normal coming out of the recession years.

“There’s not been much growth in the tax base since 2015 — that’s a 0.82 percent growth rate,” Roland said. “From 2015 to 2019 we have not experienced the large fluctuations in property values as we have in years past. Although the economy continues to improve, many commercial buildings remain vacant in and around the Franklin area, which according to Tax Administrator Richard Lightner has not seen growth in 15 years or more. In and around downtown Highlands however continues to remain a hotspot for growth and development according to Lightner.

While a revenue neutral tax rate would look more like 35.6 cents — and would generate another $400,669 in tax revenue for the county — Roland recommended a mileage rate of 36.9 cents, which would generate another $1.05 million in recurring annual revenue. Even with the small increase, Roland told commissioners the county still had one of the lowest tax rates in the region and throughout the state. The average property tax in the region is 46 cents while the state overage is 67 cents. Haywood County’s tax rate is 58.5 cents; Jackson County’s is 37 cents and Swain County’s has been 36 cents since 2013.

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Revenues

The total proposed budget for 2019-20 fiscal year is $52.8 million, a $1.8 million or 3.5 percent increase over the 2018-19 budget. Despite stagnant property value growth and the increasing costs of doing business, Roland said Macon is in great financial shape because of the county’s healthy fund balance. Now up to $22 million, the county’s fund balance has helped the county fund new infrastructure projects, increase funding for the school system and keep its health care fund solvent.

“At a projected $22.7 million, the general fund balance is going to continue to provide us with a high degree of financial security,” Roland said. “We saw this play out in practice. If you’ll go back to 2008 when the recession hit, the county kept right on trucking. Other counties were having to lay off and furlough employees. Macon County was building schools and that’s directly attributable to this fund balance.”

More than 10 years later, the need for infrastructure projects continues. Macon County is in the process of completing a Capital Improvement Plan that will outline and prioritize the $150 million worth of infrastructure projects the county needs for the next five to 10 years. It will cover everything from the needs within each county department, the Macon County School system and Southwestern Community College.

“As we move ahead, we’re getting to where the rubber’s gonna meet the road,” Roland said. “(Fund balance) gives us the ability to complete these projects with minimal impact on the operating budget.”

The healthy fund balance will also help the county get lower interest rates on loans to complete projects prioritized in the CIP. For the 2019-20 budget, Roland is proposing using about $2.3 million from fund balance — $1 million will go into the county’s health care insurance reserve fund; $300,000 will be appropriated to pay for the space needs analysis that accompanies the CIP; $750,000 will be used to increase funding for the school system’s operating costs and $250,000 will be used to purchase new telecommunications equipment for the fire departments. The new equipment will complete the telecommunications upgrade project, which began in 2017 at a cost of $1.25 million.

“Upon completion, all emergency services personnel and volunteers in Macon County can communicate freely across the high quality and more reliable Viper System,” Roland said. “A continued increase in sales tax revenue will also help Macon County cover growing expenses.” Roland said it looks like the county will finish the 2018-19 fiscal year with 4.5 percent more in sales tax revenue than it had budgeted, which comes out to about $8.3 million. He will continue to budget conservatively though by budgeting another 3 percent increase ($8.5 million) for the 2019-20 budget.

Expenses

Even though most revenues are up, so are the county’s expenses. Projected expenditures have increased by $1.8 million or 3.5 percent over 2018-19.

Macon County has experienced skyrocketing health care costs for the last several years but the county’s health care committee — made up of county employees — have been making annual adjustments trying to absorb the costs while still giving employees and their dependents adequate coverage. Roland said the county will see a 10.9 percent increase to its health insurance premiums.

He said Macon County will enter into the North Carolina Health Insurance Pool for the 2019-20 fiscal year. NCHIP is a risk pool specifically designed for mid-size to large government groups to better manage health insurance risk.

“It’s in its infancy. It started in 2017-18 and now has 6,000 members,” he said. “It’s taking our covered lives of about 600 and putting those with a pool of 6,000. We remain optimistic that the increased purchasing power brought about through the pool arrangement will limit the substantial increases in premiums that Macon County has experienced over the past two fiscal years.”

Joining the state risk pool and making some adjustments to employee and dependent coverage realized some savings, but the county will still have to absorb a $471,930 increase for its health plan for 2019-20.

Roland also recommended a 1.5 percent cost-of-living raise for county employees, which will cost the county $313,862. An increase of $251,835 has been budgeted in retirement as a result of rate increases to state retirement system contributions.

The public safety budget is estimated to be about $15.5 million — an increase of $1.5 million over last year’s budget. The increase will come in the form of capital needs like a new ambulance ($296,000); new vehicles for the county’s fleet ($568,545); equipping 54 vehicles in the Macon County Sheriff’s Department with in-car camera systems ($217,080) and outfitting the 11 fire departments with handheld subscriber units compatible with the newly installed 800 MHz VIPER Communications System ($250,000).

The increase also includes adding two emergency management telecommunicator positions to handle the increased 911 calls during peak hours, two new full-time paramedic positions in Franklin and four new sheriff’s office positions to cover courthouse security improvements being implemented.

The county’s general fund debt has decreased from $62,246,165 in 2011 to $29,815,610 in 2018 as the county continues to make regular principal and interest payments and by not taking on any new substantial debt. However, debt service payments will increase by $51,904 to $3,917,658 in the coming fiscal budget. This increase is due to the issuance of $2.9 million of debt on the South Macon Elementary School expansion project started in 2018.

For the complete proposed 2019-20 budget, visit http://maconnc.org/budget.html. The commissioners had their first budget workshop scheduled for Tuesday, May 21, after the press deadline.

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