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Canton's post-mill budget will be about results

Last year was a tough one for Canton, but this year will pose serious budgetary concerns. File photo Last year was a tough one for Canton, but this year will pose serious budgetary concerns. File photo

The Town of Canton has been through some difficult budget discussions in the past, but this year’s effort, the first to reckon with the full impact of Pactiv Evergreen’s exit from the community after more than a century, looks to be the most trying. 

“Our circumstances have dictated a lot of these visioning sessions in previous years,” said Town Manager Nick Scheuer at a board retreat held on Jan. 5.

Even the location of the retreat, a glorified double-wide trailer plopped down at the town’s maintenance facility on Summer Street, is a testament to the twin tragedies that befell Canton over the course of an 18-month span.

In August 2021, as local governments still grappled with the disruptions of the Coronavirus Pandemic, a wall of water scoured its way down the tight mountain valleys that embrace the Pigeon River from its headwaters near the Blue Ridge Parkway.

Killing six and causing half a billion dollars in damages in the eastern part of Haywood County, the Green Pepper Flood of 2021 wiped out homes and downtown businesses and gutted Canton’s historic Armory, the stately Colonial Theatre, the police department, the fire department and town hall. Recovery from the flood became a full-time job for town administrators and its elected board, but just as they were starting to right the ship came another disaster — this one, human-caused.

At a budget retreat in February 2023, Scheuer revealed the substantial progress that had been made in repairing the $18 million in damage to town infrastructure. All FEMA projects had been obligated or were in the final stages of obligation. Project awards for the Armory, the Colonial Theatre, the fire department, police department and town hall had been issued. Sites for the new town hall and police department had been acquired. Renovation of the Champion Credit Union Aquatic Center had been completed.

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Finally, looking forward in the aftermath of the flood, Canton was forced to look back and confront its legacy of dependence on the paper mill when officials from Pactiv unceremoniously announced on March 6, 2023, that its 115-year run as the geographical and spiritual heart of Canton had come to an end.

The fiscal consequences of Pactiv’s decision were still largely unknown, but what was known was that they would be bad.

Scheuer and the board pumped the brakes on some town initiatives knowing full well that the anticipated budgetary impact of up to $3 million, against a general fund of roughly $8 million, wouldn’t truly hit until the next budget year, beginning July 1, 2024.

Over the years, Canton had lost a bit of its luster but for much of the past decade was amid a downtown revitalization that saw locally owned small businesses prosper and contribute to a suddenly vibrant Main Street. 

Pre-COVID, the governing board acted with an air of empowerment.

“… our board is focused on ensuring we level up on infrastructure to serve our citizens and businesses for years to come, that we develop scalable recreational offerings and that we have open conversations about economic development ideas and opportunities,” Alderwoman Kristina Proctor said in 2019.

The next year, town government dodged the brunt of the Pandemic, buoyed by skyrocketing sales tax revenues and a disconnect from the service-based economic sector that suffered most.

“We approached it very similar to the way we do every other fiscal year in terms of being ultra-conservative with our revenue numbers,” said then-Town Manager Jason Burrell on May 20, 2020.

In 2021, with some semblance of normalcy returning, the town reiterated its commitment to infrastructure and recreation but also recognized the growth taking place. A countywide property revaluation that year drastically increased values and prompted the town to change its tax rate for the first time since 2007 — down 4 cents.

The rate cut wasn’t quite revenue neutral, but was a pyrrhic victory in that when measured against inflation, the town’s tax rate was effectively declining, all those years.

The flood year was an interregnum of sorts, but in 2022, the town again charged forward, taking care of its employees, bolstering the first responder capabilities and keeping promises about infrastructure and recreation.

Post-mill, budget cuts and fee increases are on the table, but the overarching narrative of the town’s most recent budget retreat, voiced by Mayor Zeb Smathers, was that people still want to see progress.

“We have to be very, very careful with missteps,” Smathers said. “People gave us a lot of rope in 2023. In 2024, they’re going to demand results.”

The good news is, Pactiv Evergreen did pay its 2023 property tax bill, after making a request for a dramatic downward revision in the 185-acre parcel’s assessed value. That request was quickly torpedoed by the Haywood County Board of Equalization and Review in June.

The primary issue for the town remains wastewater treatment, handled by the mill for free since the 1960s. In around 14 months, Pactiv’s contractual obligation to operate the plant will expire, leaving the town to find its own way. Officials from across the county have been working on a solution, but don’t have one yet.

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The Pactiv Evergreen paper mill and its environs look much different today than when this photo was taken on March 9, 2023. Cory Vaillancourt photo

The wastewater treatment issue, thankfully, won’t have much of a budgetary impact on the town. Western North Carolina’s legislative delegation — Sens. Kevin Corbin (R-Macon) and Ralph Hise (R-Mitchell), along with Rep. Mark Pless (R-Haywood) — came through with a $38 million appropriation from the General Assembly for the project. Those funds are essentially reimbursable to the town, said Canton CFO Natalie Walker, so they won’t be deposited in the town’s investment accounts and won’t earn interest.

Another General Assembly appropriation, $4 million unrestricted, hasn’t arrived yet but will, and will earn interest. Walker said she wants to be as conservative as possible in utilizing the money to plug budget holes, hopefully over a period of years.

With that mindset, the board is now looking to craft a fiscally responsible annual budget for the coming year.

“We’re going to be facing budget cuts that we’re paying for, but I’m hoping we can give the people what they want and what they deserve,” said Alderman Ralph Hamlett.

That will involve strategic prioritization, pinching pennies and tweaking pricing to make up for the revenue shortfall caused by Pactiv Evergreen.

During the Jan. 5 retreat, which is the initial public stage in budget drafting process, town administrators and board members floated ideas on how, exactly, they might accomplish that.   An obvious initial reaction was to make further cuts to budget items that were reduced in the immediate wake of Pactiv’s announcement last year. The community promotions budget, used by the town to purchase small sponsorships or advertisements for local organizations, will likely be halved.

The town’s façade matching grant program, begun almost a decade ago under Burrell, had been budgeted at $50,000 but was likewise halved last year, and may be zeroed out altogether this year. Smathers said the town could always make a specific appropriation through budget amendment for the right business, but Hamlett expressed the hope that the program, seen as a boost to economic development, would be revisited in the future.

One area of the budget that won’t likely see cuts is public safety, which saw a 2% increase last year and took on increasing importance as the Pigeon River slipped its banks and roared through downtown.

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Canton’s municipal government is still operating out of a temporary town hall. Cory Vaillancourt photo

Many WNC municipal governments couldn’t keep up with the rate of pay increases over the past 20 years, leading to costly turnover of employees. Walker said Canton’s police need a minimum of an 8% raise to make the department competitive. The board agreed on a 1% or 2% raise initially, floated the idea of giving a partial raise this year before the next budget takes effect and vowed to remain flexible while continuing to prioritize employees.

“When we tighten the belt,” said Alderman Tim Shepard, “I want that to be the last notch we have to go to. That being said, the other thing I would like to see is not starting new things but buttoning up some of the projects we have ongoing.”

Those projects are many.

The Rhoda Street project will roll out in January, equipment for the all-abilities playground has been delivered but not installed and further improvements at the town’s vaunted Chestnut Mountain Park will take place throughout the year, but flood-damaged facilities — town hall, police, fire, Camp Hope, the Armory and the Colonial — are all still in varying stages of completion.

Scheuer wants the town to prioritize revenue-generating facilities. Since the flood, the Armory and Colonial have generated no revenue whatsoever.

“The sooner we can get those back online, the better,” he said.

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During flooding in 2021, thousands of green peppers stripped from fields upstream showed up in Canton, Clyde (pictured here) and as far as Tennessee. Cory Vaillancourt photo

Assistant Town Manager Lisa Stinnett, known around Canton as the “patron saint of Labor Day” for her heavy involvement in the town’s iconic celebration, offered up several ways the town could cut costs for and increase revenue from the town’s recreational offerings. The Labor Day festival, including concerts and a parade, was non-negotiable. Thought to be the oldest in the South, the festival is as much a part of Canton’s identity as the mill itself.

Hamlett called the upcoming fete “a mainstay” of Canton’s culture since 1906 and felt it would be a demonstration of resilience to continue offering the festival to residents and tourists.

“I would like to see it hold as much footing as it’s had in the past, within the budget constraints,” he said.

Of the five options presented by Stinnett, Mayor Pro Tem Gail Mull voiced support for keeping the two-day format because culling it to one day wouldn’t really save very much money. Typically, one day would be free, the other ticketed, although admission was charged for both days last year. It appears likely that there will be a price increase for both days this year.

Stinnett said that hometown favorites and internationally acclaimed bluegrass sensation Balsam Range had been holding dates for the fest. The board tentatively decided to use the other day for up-and-coming acts rather than another big-name headliner.

Labor Day, however, wasn’t the only place Stinnett looked to increase revenues and decrease costs.

The town is exploring the possibility of running its own prepackaged concessions at the CCU Aquatic Center. Food trucks are sometimes hard to attract because they don’t typically earn a lot of money, so charging for the privilege isn’t always feasible except on high-volume days.
That could happen at the International Paper Sports Complex as well, but getting the sports teams that use the facility to kick in a little more for the privilege, even something as simple as dragging the infield so the town doesn’t have to pay an employee do it, was also mentioned.  Stinnett said a meeting with the little league went well, and that the league offered to help in any way they could. The facility’s batting cages may also see price increases, and teams that had been allowed to use them for free may have to pony up this year.

“We can’t give from an empty cup,” Proctor said.

One thing Canton water customers can count on is another rate increase, although that shouldn’t come as a surprise and isn’t really related to Pactiv Evergreen’s departure. There was a significant rate increase last year; per state law, water and sewer funds must be self-sufficient, meaning they can’t be bailed out from the town’s general fund revenues or fund balance if revenue comes up short.

Bolstering the town’s aging-but-improving water infrastructure will require at least a 3% increase this year, probably the first of many.

The final item that could be included in this year’s budget isn’t new, nor was it popular last time it was tried. This year could be different.

There are currently 13 gravel roads within the town of Canton, and all the other roads consistently took a pounding from semi-truck traffic associated with the mill. In 2018, Smathers said that by far, the majority of calls he fielded as mayor were about potholes.

Now that mill-associated traffic has decreased, perhaps for good, it might be time to revisit a vehicle registration tax. State law allows for up to $30 per vehicle to be assessed, payable when renewing license plates. The first $5 can be used by the town for any purpose. The next $5 must be used for public transportation, if the town has such a system (it doesn’t). The rest must be used for roads.

Back in 2018, the town held a public hearing on the proposed tax, where residents made clear that they wanted better roads but didn’t want to pay for them. One man who said he owned six cars claimed he could somehow afford them but could not afford a $30 annual fee on each of them.

The proposed fee, which Burrell estimated at the time would raise approximately $60,000 a year, failed. But it did nudge Canton down the road of expending more of its Powell Bill funds. Passed in 1951, the Powell Bill allocates a small sum from the General Assembly to municipalities for road improvements each year, but it’s never enough given the amount of work to be done and the astronomical cost of paving.

A few years back, the town spent around $300,000 to pave about a mile and a half.

If the fee makes it into the budget this year, it’s likely all of it would be spent on improvements — in line with Smathers’ results-oriented strategy.

The Town of Canton will hold at least one more public discussion regarding its 2024-25 fiscal year budget, which must be passed by the board prior to July 1. Typically, municipalities across the state hold their final public hearings on annual budgets in May or June and pass the budgets shortly thereafter.

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