Sylva budgets for future uncertainty

Sylva budgets for future uncertainty File photo

The Town of Sylva will not see a tax increase for the coming budget cycle, but with work looming on N.C. 107, staff are preparing for falling revenues over the next two to four years. 

“I’ll caution you that this is an easier budget process than we generally have,” said Sylva Town Manager Paige Dowling. “Looking at what we have in front of us, we’re going to face harder budgets with more difficult decisions to make, so enjoy this one.” 

The proposed fiscal year 2024-25 budget is balanced with a rate of $0.45 cents per $100 of property valuation. One cent on Sylva’s tax rate will generate $50,500.63. The budget does include fee increases in the general fund.

“This budget was built to address current needs along with strategic planning which will put Sylva in a position for future growth and improvements,” said Dowling.

The town’s proposed general fund budget totals $5,969,219, an increase of only $1,730, or less than .003% from the 2023-24 budget.

“That is one of the closest that I have seen in 11 years of working for the town,” said Dowling.

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While general operating expenses have increased in all departments, the budget is relatively flat because the town is purchasing less capital equipment in the upcoming year. The proposed budget does include two new patrol vehicles, an equipment trailer and a tire machine for public works.

Not including grants and other proceeds, the general government budget totals $4,388,855, an increase of $45,716 from the 2023-24 general government budget.

The proposed budget maintains the town’s capital replacement schedule and post-employment benefits contributions are funded at the recommended level.

“The town board recognizes that employees are the organization’s strongest asset and are essential to providing high-quality services to our citizens,” said Dowling.

There is a 3% cost of living adjustment for all employees and a merit increase of up to 2% for full-time employees based on performance.

“This budget provides funding for our imperative needs, but other wish list items will need to be funded as funds become available,” Dowling told the board. “This budget’s been reduced to meet imperative needs and utilize our revenue in the most fiscally responsible manner. Reductions have been made in capital equipment and other expenditures wherever possible.”

Long-term priorities for the town that are being put on hold until funds become available include cross walks, hazard abatement, paving the parking lot next to the pool, expanding housing, trails at Black Rock Creek, landscaping and beautification, signage, town hall improvements and repairing the rock wall in Scotts Creek behind Town Hall.

The primary concern in creating this budget was the N.C. 107 project. Construction on the project is expected to start in July of 2025, with right-of-way acquisition and property transfers currently underway.

“These acquisitions will affect tax revenues for the town for several budget cycles,” said Dowling. “Budget shortfalls will be realized as the tax base is reduced going into the start of construction. The town should expect revenue losses over the next two to four years as the changes in tax values and revenue fluctuate as acquisition dates vary.”

The next property tax revaluation will be in 2025, and it will likely happen during the construction phase of N.C. 107. Therefore, staff estimate that the town will not realize the complete loss of property value until after the revaluation.

Sales tax revenue will also likely be negatively affected during the construction phase of the road project as a majority of the project area covers the commercial corridor.

“The degree of the impact on sales tax is unknown, therefore it is imperative for the town to budget conservatively for future budget cycles,” Dowling said.

The proposed budget appropriates $44,750 from the capital reserve fund, which has $1,067,015 available.

“Looking at our upcoming capital equipment needs, the town needs a healthy capital reserve fund to cover the next few budget cycles since we’re going to be operating with less revenue,” Dowling told the board.

Sylva’s current unassigned fund balance is at 68% and is estimated to be at 66% after the adoption of the proposed budget. This adheres to Sylva’s financial policy that the fund balance does not fall below 40%, but it does not meet the town’s target fund balance goal to maintain an unassigned fund balance of 73% of the general operating budget.

The budget will be up for public hearing at the May 30 Sylva Town Board meeting.

During this meeting, the board will also swear in its new commissioner, who will fill the seat vacated by Natalie Newman last month. Applications were given to board members during the May 9 meeting. Three people applied for the seat — John Brown, Luther Jones and Sarah Hirsch.

Applications will be voted on at the May 23 meeting.

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