No tax increase for Macon
File photo
Macon County will be able to cover all its upcoming capital projects in the 2024-2025 fiscal year budget without a property tax increase, allowing it to maintain the lowest tax rate in North Carolina.
“The most significant year of capital expenditures in the history of Macon County can be accomplished with no increase to the ad-valorem tax rate, without maxing out the county’s debt capacity and our fund balance will not fall below $25 million,” County Manager Derek Roland said in a presentation to the board May 21.
Macon County has a current fund balance of $48.7 million, which earned the county about $3.1 million in interest over the last year, and a debt capacity to support $70,100,000 of the $133,650,000 in education-related capital projects through the Capital Reserve Fund in the coming fiscal year.
A large portion of those capital project expenditures will go toward the new Franklin High School project. The county received a $62 million Needs Based Capital Grant that will also help pay for the new school.
Other items in the capital improvement plan include the need for a new East Franklin Elementary School, renovation and expansion at Cartoogechaye Elementary School, Nantahala wastewater unit and renovations and expansion at the Highlands School.
Roland reiterated to the board during the budget workshop that this financial position has been a long time in the making. After the property revaluation in 2015, Macon County saw a 19% decline in the ad-valorem property tax base leading to a tax rate of $0.349 per $100 of assessed value. At that time the fund balance was approximately $16 million, and the county had about $44 million in outstanding debt.
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From fiscal year 2020-2021 to fiscal year 2022-2023, Macon County’s fund balance grew by $13.8 million, as compared to $2.8 million from 2017-2018 to 2019-2020. The county has about $22 million of outstanding tax-supported debt, which is low relative to the size of the county. Most of that debt is tied to the Macon Middle School project, and the county is scheduled to pay a significant amount of that over the next five years.
“A new Franklin High School was far more of a dream than a reality, and the Capital Improvement Plan did not yet exist,” said Roland of that 2015 budget process. “A decade of annual budgets approved by this board and implemented by this organization, while all have been unique and accompanied by their own set of challenges, are similar in that each one has been grounded in fiscal responsibility.”
Fiscal Year 2024-2025 general fund revenues are estimated at $63,704,651, a decrease of less than $50,000 from the current fiscal year. The proposed tax rate of $0.27 per $100 of assessed property value will result in more than half of revenues, about $35 million in total. Each penny on the tax rate generates just under $1.3 million.
An estimated 22% of revenues will come from sales tax in the 2024-25 budget, or about $14.1 million. The sharp increase in sales tax that occurred in pandemic and post-pandemic years seems to be leveling off and Macon County is not planning for an increase in these funds over prior year revenues.
Macon County currently has an AA2 credit rating from Moody’s and an AA credit rating from Standard and Poor’s.
“You are in very good shape here on your credit rating,” Mitch Brigulio, financial advisor for the county, told commissioners earlier this year. “You have access to the market to borrow money, should you choose to do so, at attractive rates.”
Expenditures in the 2024-2025 budget will decrease by just under $50,000, despite an increase in annual inflation of 3.4% for the 12 months ending in April 2024.
Salaries and benefits account for about $33 million, or 52% of 2024-2025 operating expenditures. The funding is representative of 374 full-time positions, 106 part-time positions, 29 seasonal part-time positions and 13 vacancies, which lie in public safety and health and human services departments.
There are two new positions in the proposed 2024-2025 budget, both of which are environmental health specialists created as a long-term solution to the backlog problem of well and septic permits at Macon County Environmental Health.
The proposed budget recommends a one-step advancement in the pay scale for full-time employees and a 2% cost of living adjustment for all employees. This will cost the county a little under $1 million.
There is an increase of $335,405 in operation funding to Macon County Schools in the 2024-2025 budget, bringing the annual contribution for operations to $10,031,774. This is the first increase to operational funding since fiscal year 2019-2020.
Even with the increased allotment, this falls short of the school system’s requested increase of $2,546,433. The school system asked for the increase to fund 26 additional positions in the coming school year. These positions were created during the COVID-19 Pandemic and funded through the Elementary and Secondary Schools Emergency Relief Fund, which is coming to an end this year.
Of those 26 positions, 19 are teaching positions, at an annual cost of $1,735,811. Since 2018, local funding has covered an average of 30 local teaching positions annually. If the county were to fund the additional teaching positions requested it would mean a 63% increase in the number of locally paid teaching positions, and about 1.3 pennies on the tax rate.
Seven of the 26 positions the school system wanted to fund from local dollars were mental health professionals at an annual cost of about $489,040, or less than half a penny on the tax rate.
“Prior to the pandemic, local funding has never paid for mental health professionals working in the school system,” said Roland. “This is very needed, nobody’s disputing that, the enhanced level of service this offers is undeniable. But the revenue conditions that we’re currently in demand a flat level of service and it is not within the revenue parameters of this budget, without a tax increase, to expand the scope of service or to increase the commitment to services in these magnitudes.”
Roland said that funding the school system’s request would signal a new level of commitment and that before he can include that in the recommended budget, that new level of commitment would need to be agreed upon between the Macon County Commission and Macon County Board of Education.
Southwestern Community College will see an appropriation of $526,659 from Macon County if the proposed budget is approved as is. While this is an increase in $50,000 over current fiscal year funding, it also falls short of SCC’s $1,581,951 total request.
“The fiscal year 25 recommended budget is probably the most important to me because it has been a decade in the making,” said Roland. “This budget sets the foundation for $145 million in CIP improvements.”
The Macon County Commission was set to reconvene its budget workshop at 6 p.m. May 28 to discuss the Macon County School System budget. Expected adoption of the budget will take place June 11, prior to which the commission will hold a public hearing on the proposed budget.
