Employees, debt at forefront of Waynesville budget
There won’t be a tax increase, and there won’t be any borrowing from fund balance, but that doesn’t mean the Town of Waynesville’s proposed budget is flush with cash — with inflationary pressures outpacing revenue growth and substantial borrowing on the horizon, administrators are looking to keep the town’s financial house in good order.
“The 2023-24 proposed budget is influenced by significant increases in the cost of materials and supplies, a need to provide a cost-of-living increase to employees and a lack of significant revenue growth across all funds,” said Town Manager Rob Hites during his annual budget message, delivered to Council on May 9. “The proposal that is before you represents a ‘program of work’ that is experiencing both positive and negative impacts of a growing local economy, inflation and rapid changes in public employee compensation.”
Town estimates predict an increase of just over $100,000 in ad valorem tax revenue over last year, a $280,000 increase in sales tax revenue and almost $200,000 in investment income, all of which don’t quite offset nearly $1 million in appropriated fund balance.
Maintaining a strong fund balance — basically, the town’s savings account — will be critical as the town goes before the Local Government Commission to seek permission for a loan to fund a new multi-million-dollar fire station. That means no more dipping into the savings account to pay for unbudgeted projects, as is common in local government.
The Consumer Price Index shows an increase of 5% over the last 12 months, with the Employment Cost Index for state and local workers suggesting a 4.6% increase. After years of kicking the can down the road — Haywood County government has also struggled to remain competitive as well, until recently — Waynesville is about to complete a three-year pay adjustment and re-classification program to ensure it retains a trained workforce.
The town streets department and water department have experienced 25% turnover in the last year, due to superior private sector compensation. A proposed 2% cost of living increase for town employees, along with the continuance of the town’s strong benefits package, will help ameliorate that somewhat.
“This budget’s tight, but I think it’s about the best we could come up with,” said Mayor Gary Caldwell. “We’re trying to keep our employees, trying to do more for them, and do good for the citizens of Waynesville.”
A full 45% of this year’s budget focuses on employment and retention. According to Hites, it takes between six months and a year to properly train a new employee.
One new full-time position is proposed for the town’s maintenance garage, along with a full-time human resources director and a grant manager. The grant manager position was discussed during a February budget retreat, and is expected to bring the town more revenue than it costs to employ the manager.
A part-time position for the Waynesville Advisory Committee is also proposed. This position used to be funded by the old Downtown Waynesville Association, but as the town continues to redouble its efforts in the downtown core after the collapse of the DWA, the help is needed.
No changes are recommended to the downtown Municipal Service District’s tax of $.19 per $100 of assessed valuation that funds the WAC. As in years past, the tax is expected to raise about $106,000 for DAC operations.
Fortunately, health insurance costs that have skyrocketed in the past decade won’t get any higher, at least for now. The town’s medical loss ratio of 61.7% remains well under a threshold of 70% that could trigger further increases.
There’s no proposed increase in ad valorem tax rate of $.04392. Three years ago, a countywide reassessment of property values showed a spike in assessments, and that could happen again next year. But for now, flat revenue growth across the towns enterprise funds means rate and fee increases.
The end of the town’s commercial sanitation service, which had generated $275,000 in revenue each year, continues to leave a hole in the budget, so a $1 per month increase for residential customers and $1.03 per month increase for commercial customers is recommended.
Waynesville’s fire taxes will likely go up from $.06 to $.08 per $100 in valuation, especially as the town replaces two fire engines and plans to replace the obsolete Hazelwood fire station with a new facility. However, a recent upgrade by the state fire marshal of the Waynesville fire service’s rating means homeowners can expect to save money on insurance costs, offsetting the first fire district tax increase since 1979.
The town’s water fund budget will actually decrease almost 4.5% from the previous year, due to less capital improvement requests. However, the costs of chemicals and energy have increased to necessitate a 7% jump in water rates, effective in August.
The sewer fund requires a 10% increase, beginning in August, largely due to the construction of the town’s new sewer plant.
As one of few “electric cities” — municipalities that engage in the business of purchasing bulk power and reselling it to customers — in North Carolina, Waynesville is looking at a 13.7% increase in the electric department’s $11.4 million budget.
That translates to a 5% increase in electric rates across all classes, due to an increase in rates from the town’s supplier, Santee Cooper. The cost of wire and transformers, like almost everything else, has also increased.
Early in the coronavirus pandemic, the town also took a lenient stance on utility bills, pausing disconnections. But some folks moved away without paying their bills, and did not leave forwarding addresses, so the town will have to write off approximately $200,000 in electric charges.
If they move back, they won’t be able to establish service without paying the past due balance, however, thanks to Duke Energy’s near-monopoly in the state, those delinquents can’t be barred from establishing service elsewhere, which will hamper collections.
The town’s garage fund looks to increase by almost 28%, partially because of the entry-level employee proposed, and partly due to “large” increases in the price of gasoline and tires.
The elephant in the room — the impending shutdown of the century-old paper mill in Canton — won’t impact Waynesville as much as it will Canton, but a Pactiv Evergreen facility in Waynesville is expected to see substantial job cuts.
Caldwell said the town sells almost $100,000 in water to the facility each year, and that he’s trying to do everything he can to keep as many employees as possible working there.