Staff provides council budget, tax options

kjahner@newsobserver.comMay 16, 2014 

— Town staff has provided council members a detailed budget option that eliminates its recommended one-cent tax increase – and another that halved it – in what’s turning into a prolonged and unusually complicated budget debate.

Discussions will continue this week as council members discuss how much they are willing to trim in order to negate a tax increase. The staff proposal mostly relies on dipping into fund balance for some police equipment purchases, delaying other town equipment purchases as well as organizational restructuring, and reducing an emergency services reserve.

Councilman Buck Kennedy in particular has pushed council for more information and alternatives as he seeks to prevent the one-cent increase a year before the 2.75-cent bump in 2015 to fund a 2013 bond referendum approved by voters.

But town staff and Mayor Ronnie Williams said the town needs the increase to stabilize the budget process. Proponents of the tax suggest the cuts to balance the budget merely push long-term needs and operational costs down the road and leave structural shortfalls.

Kathy Behringer and Gra Singleton, members of the law and finance committee, recommended the increase initially to deal with a fire agency that has been shortchanged.

“We know the fire service needs what it needs, and we know Wake County hasn’t been forthcoming with the money,” said Behringer, who hadn’t decided yet Wednesday whether she’d support either of the new proposals, which leave most of the fire requests intact. “We’re just trying to explore every single angle we can.”

Each penny of tax increase would cost the owner of an average Garner home ($170,000) an additional $17. The town’s tax rate has been 49 cents per $100 of valuation since being adjusted downward from 57.9 cents in 2008 following revaluation. Property taxes in Garner exceed most municipalities in Wake County, but finance director Emily Lucas said including water and trash fees pushes Garner’s effective tax lower than most towns in Wake County.

The one-cent tax increase would generate $297,000, money that would have to be replaced in the $26.6 million budget to avoid a tax increase without violating policy. Kennedy said he wanted to make sure no stones were left unturned before taxes are increased and believes it can and should be done. He’s requested a variety of additional information and figures on a variety of topics from the staff.

“I’m not trying to hold it up, but to get to a point where people are satisfied, where there’s sufficient information upon which to act,” Kennedy. “I hope that allows us to have a better structured debate than what each of us likes individually.”

One stone he expressed willingness to overturn – but one that staff has not – is the 3-percent merit increases for town employees just restored last year after being halved during the recession. With 2014-15 revenue projections essentially flat compared to 2013-14 (discounting already existing fund balance to be used for debt service and new money from the property tax proposal) Kennedy questioned the expansion of personnel costs. He suggested reducing it to 1.5 percent and called it “a legitimate question that needs to be out there.”

Williams said halving merit increases would not go down well.

“If the merit amount was decreased or done away with, it would be a big morale burst. It appears to be an effort to balance the budget on the backs of the employees and I don’t think that’s a good idea,” Williams said.

The staff proposal for eliminating the tax increase does not reduce the 3-percent merit increase. Personnel costs would increase $396,000 (2.6 percent), which includes three new positions and some increased benefits costs. Salaries alone excluding proposed new positions would rise $90,000, a rate of growth much lower than the 3-percent increase because of savings from retirement of long-tenured employees.

Carving out the money

Much of the $297,000 needed to avert the tax increase proposed by staff comes from tinkering with emergency services. Nearly $70,000 comes out of a future emergency services reserve. Garner Fire would take a separate $20,195 cut in travel, vehicle maintenance, software and furniture. Another $12,500 will be saved by reducing the purchase of police radar units.

Other money would just come from a new source. The plan finds $90,000 in “new revenue” taken from the general fund balance for purchase of police equipment. Uncommitted reserves would remain above policy-required 30-percent of the annual operating budget. The purchases are one-time rather than ongoing so they can satisfy town policy of not using the fund balance to cover operational expenses. The line becomes blurred considering the police budget, this year at $7.1 million, frequently has to replace or upgrade equipment.

The plan would save another $15,000 by not installing a new gateway sign welcoming people to Garner on U.S. 401, and another $10,500 not replacing a public works mower. Over a dozen cuts from $6,500 to $1,000 make up the balance, along with another $10,000 in new projected revenue from building permits and parks and recreation sponsorship opportunities.

The simpler option for a half-cent tax increase would still remove the money from emergency services and take the rest from the fund balance for police equipment, but wouldn’t make most of the other changes.

Jahner: 919-829-4822; Twitter: @garnercleveland

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