County Budget May Include 12.5 Cents Tax Increase-Transylvania County, NC

 

June 10, 2019



On top of a proposed 10.5 cents property tax increase to pay for the voter-approved $68 million school bond, a majority of the Transylvania County Board of Commissioners are recommending a further 2 cents tax increase for long-term capital needs, such as the courthouse or a new EMS station.

The 2 cents tax increase was discussed during a second budget workshop Thursday in the commission chambers. Commissioners David Guice, Mike Hawkins and Page Lemel supported the increase, while Commissioners Will Cathey and Jason Chappell indicated they didn’t. The 12.5 cents increase is only proposed at this time, and commissioners must formally vote on it before the budget is approved for the new fiscal year, which begins July 1. The current county property tax rate is set at $.511 cents per $100 valuation. If approved, the new tax rate would be set at $.636 cents.


At the meeting, consensus was also reached on funding for the school system and the county fire departments. Consensus was reached to allocate funding for the school system’s entire request by taking $582,196 from the unassigned fund balance for current expenses. The funding will be made available after a decision is made at the state level on salaries and benefit increases. If the full funding is approved, it would total $13,011,809, a 7.9 percent increase per student, for operating expenses.

Consensus was also reached on capital funding for the school system, with $1,851,886, a 0.1 percent increase from the current fiscal year capital outlay, to be approved in addition to the $6.2 million that would go into an education capital reserve for the bond projects.

Agreement was further reached to set the tax rates in each fire district at $0.055 cents and to take $1,261,782 from the county’s unassigned fund balance to pay the $3,904,182 total for all the fire district requests that commissioners app-roved during the first budget workshop. There was also majority consensus to move toward a “flat tax” fire rate in the future.

Planning for the Future

The proposed additional 2 cents property tax increase for long-term capital needs was made after commissioners discussed the major building and other projects facing the county.

This includes:

•$75.3 million of identified capital needs by the Board of Education over and above the $68 million earmarked for improve-ments to Brevard High, Rosman High and Rosman Middle schools.


•An estimated $26 million to $31 million needed for a permanent solution for the courthouse. The county is seeing a spike in construction costs that could change the funding amount.

The county may also need to invest in a short-term solution for the courthouse’s small courtroom, which is inadequate.

•A 2014 community-wide water needs study identified $40 million in infrastructure improve-ments.

•A new EMS station estimated at $1.6 million.

•A parks and recreation study identified $32.2 million in needs.

County Manager Jaime Laugher would not recommend commissioners implementing all these projects, and others, at the same time. The county has previously used debt roll off to fund increasing funding requests for education operations.

Laughter recommends the county use debt roll off to fund capital campaigns to stabilize the tax rate and that commissioners develop a comprehensive capital program, with funding strategies.

The county is projecting a $1.8 million increase in its total fund balance by the end of this fiscal year on June 30.

The county’s previous 2 cents property tax increase for capital improvement programs.

Funds from that tax increase mean $2.4 million will be added this fiscal year and next combined, and projects that have been funded from this amount include a $1.2 million VHF radio upgrade, $600,000 software upgrade, $250,000 for air conditioning at the recreation center, $3.4 million for the Ecusta Road Industrial Project, $398,000 for the Gaia Herb/Town of Rosman Sewer project for next year among other capital projects.

This estimate would change if commissioners authorize a major parks and recreation, another economic development project or public safety project.

Prior to backing the additional 2 cents, Guice said there was “no question” the county needed a comprehensive capital program, including ways to pay for it. For Guice, addressing the courthouse, particularly its safety challenges, is paramount.

“The real challenges at the building have not changed,” he said. “They have gotten worse.”

Guice suggested the county shouldn’t delay making a decision on the courthouse or the EMS station, and he supported a property tax increase to address these issues. He said it is a “huge challenge” but questions would be asked, and the county would face liability concerns, if something happens that “we fear” in the courthouse.

Cathey said he was elected on keeping the courthouse downtown and that there are options to make it happen. He said he never raised taxes when he was a Democrat and served 12 years as mayor of Rosman. He said it would have to be “imperative” to raise taxes now as a Republican.

Chappell said he didn’t disagree with Guice about the courthouse and that safety was his top concern, as well.

He highlighted commissioners’ previous 2 cents tax increases to pay for capital projects.

Laughter told commissioners that it was “important to note” that to meet the school system and fire department funding requests the county would be taking roughly $3.9 million from its unassigned fund balance.

This amount is equal to an 8 cents tax increase. The previous funding strategy for the courthouse was 40-year loan to pay for courthouse improvements, she said, it would require a 2.5 cents tax increase but that rate is no longer available and the 40 year term may also not be available requiring approximately double the previous rate increase.

Guice reiterated that the courthouse and EMS stations are “critically important” but that he didn’t run on one issue for commissioner. He said he also didn’t run as a Democrat or a Republican but to do “what is right.”

Hawkins agreed with an earlier observation by Chappell that all the issues facing the county are “inter-related. Hawkins said he supported planning for the future and addressing the issues now that the county faces.

The county, however, has to decide how to fund them. In the past, the county was able to transfer funds from debt service to pay for the school system’s operating expenses but is now considering doing it through the fund balance. Hawkins said there is a “cost to being the fourth highest school spending (county) in the state,” but it’s not a “wise path to take it out of fund balance.”

He supported raising property taxes to pay for school funding.

Laughter also has concerns about taking nearly $4 million from the fund balance and recommended that the county, including the school system, investigate ways to be more efficient. Lemel also backed the proposal “to look critically at being responsible and efficient and comparing (Transylvania) with others.”

Hawkins said the Board of Education rejected an earlier proposal from the county to pay for an “outside study.”

Guice said the county has “historically” looked to be efficient but there “comes a time when you face challenges that are somewhat off the chart.” Building a courthouse doesn’t happen every day, he said.

Guice challenged the “value” of the county having the 94st lowest tax rate in the state out of 100 counties. If the county was 70th lowest, it would have more money. “It’s a balance,” said Guice, who noted that he’s raised taxes as a commissioner in the past and been re-elected.

“I’m not concerned about being re-elected,” he said. “I’m interested in doing what is right for the community.”

If county officials were “afraid” in the past, Guice said, the library and the public safety facility wouldn’t have been built. The county funds a lot of things it’s not required to do but has “chosen” to do it, he said.

“We are Transylvania County, and we are different,” he said.

Hawkins said the key to the county’s long-term growth is infrastructure development. The county doesn’t have adequate water and sewer, broadband, affordable housing and transportation, he said, and needs to show a “commitment to fund.” Hawkins said he supported a 2 cents property tax increase this year and next year to build a capital reserve.

Chappell said he understood the county’s “needs,” but that all Transylvania County taxpayers would be impacted by the tax increase on top of the 10.5 cents to pay the school bond.

He said he also had “grave concerns” moving ahead in a “compressed amount of time,” with two public hearings on the budget coming up.

The first public hearing on the budget is scheduled for 9 a.m. Tuesday in the commission chambers. A second will be held at 7 p.m. on June 24.

Hawkins said he understood the impact on taxpayers and that’s why he didn’t support a 4 cents increase this year.

Lemel said she supported a 2 cents increase, as well.

Guice said the 2 cents is “low,” but the county has to “start somewhere.” He also doesn’t want the county “to lag behind salary wise and lose employees” nor to not adequately fund the school system.

As far as the bond, he said, the voters in every precinct but one passed it in a “big way.” The expectation, he said, is to “move forward, be careful of dollars and plan for the future.”

Education Funding

Initially, the school system requested $13,011,809, a 7.9 percent increase, for operating expenses.

In her initial budget, Laughter recommended the system receive $12,429,613, a 3.1 percent increase in per student funding based on student projections. This would have maintained Transylvania as the fourth highest per student county funder in the state, Laughter said.

The school system also requested $1,892,650, a 2.3 percent increase, for capital outlay, but Laughter recommended it receive $1,561,886, with an additional $114,929 for school debt and the funds for the $68 million bond capital payments.

In her recommendation to commissioners, Laugher said that any increase in funding needs to be based on “thorough and transparent information for review. All of the requests made should be available to the public and Board of Commissioners.” She also recommended against special allocations and for all funding to be classified as local current expense, which has been done historically.

Prior to recommending the funding the school system, Hawkins asked for commissioners’ feedback. He said the school system has “legitimate concerns” about its requests for school funding as it doesn’t know how much state lawmakers will provide for teacher pay and other expenses because the state hasn’t approved its budget yet.

Guice said he “has great respect” for those who run for elected office, particularly for the school board, which is conducting a “guessing game” until the state provides funding. He said the county could set aside funds, using the “worse scenario,” until the likely salary and benefit increases are announced. “Some say,” Guice said, that Transylvania is funding the schools at levels higher than others, but commissioners have “chosen to do it.” Guice said he wasn’t interested in “diminishing” all the good things done in the school system. As far as the capital expenses, he supported setting the funding aside and being “prepared” for when it is needed.

Lemel said she supported setting money aside, so that the employees receive “their due” and for needed capital expenses.

Chappell agreed to funding the school system for its total request and adding $25,000 to the $250,000 for the food and nutrition program. The $25,000 would provide funding for Brevard Academy.

Lemel said she wants to provide the necessary funding but that she also wants to know the “impact” of declining student enrollment numbers and its impact on costs and the food and nutrition program.

Broad agreement was reached to put funds aside and wait for the state to approved its budget. For school capital spending, Laughter had initially recommended not funding a requested $290,000 for general improvements because of a “lack of detail.” A majority of commissioners, however, backed putting the $290,000 in the fund balance to be used if and when needed.

Fire Districts

In its first budget workshop, consensus was reached to set the fire district tax rates at different levels based on the requests from each department.

Of all the departments, North Transylvania Fire would have seen the most significant increase, going from $.14 cents to $.2139 cents. For the second budget workshop last week, commissioners asked to hear other options to fund the departments.

The options included funding all from the general fund, which would impact the property tax rate; or setting all the fire district tax rates at $0.055 cents and taking the remainder, nearly $1.3 million (requiring a $0.2187 tax increase), to fund the different requests from the general fund; or taking the $1.3 million from the unassigned fund balance, which would require no tax increase.

Guice asked what the financial impact would be if the county implemented a flat tax this year to fund all the department requests.

Laughter said that, excluding the City of Brevard, it would mean a roughly 8 cents tax instead of the fire district individual taxes meaning a tax increase for some and a decrease for others.

Hawkins said the county needs a “long-term solution” to funding the fire departments and he doesn’t like taking from the general fund or fund balance to pay for individual fire departments.

North Transylvania Fire has funding issues, he said, that other departments will face in the future. Last year, commissioners voted to give North Transylvania Fire funding out of the fund balance and to set its tax rate at $0.14 cents, a maximum for all districts.

Guice said the work the volunteer fire departments do can’t be replicated, but firefighters are facing more challenges than in the past, such as training requirements and different types of calls. The work the fire departments do is as important as law enforcement, he said. Throughout the community, there “should never be a question” about whether a fire department can respond to calls and have the correct, modern equipment, he said. Everyone in the county should receive “the same level of service,” he said.

Guice said that funding the Sheriff’s Office or the school system by districts “wouldn’t work” and that a “flat tax” would address the funding issues for the fire departments. He was not interested, he said, in creating a county-wide fire department but in creating “equity” and making sure everyone feels “safe.”

Cathey didn’t support changing the funding method for the fire departments, believing the “taxing authority should be kept as close to the people as possible.”

Lemel said she’s supported having a “flat tax” for the past six years but backed taking money out of the fund balance this year.

Chappell agreed with Cathey about keeping the current funding model, though, he said, it may not be “ideal.” He said that last year he “hesitantly” supported capping the rates and taking out of fund balance. He said commissioners had discussed setting up a committee to review the fire department funding and to come back with recommendations, but it hasn’t been done. For this year, Chappell supported setting the tax rates for each district based on their requests.

Hawkins said he understood Cathey’s and Chappell’s position and agreed that a committee needs to be formed, but he wanted to try and find a way to “alleviate” the pressure on North Transylvania. He supported setting a tax rate for all the districts and taking money from the fund balance to meet the department requests this year. Like Guice and Lemel, Hawkins supported a “common tax” for fire services across the county.

In the end, Guice, Hawkins and Lemel recommended setting all the county fire department rates at $0.055 cents and taking funds from the unassigned fund balance to pay the fire district requests that commissioner had approved.

With all the recommended changes, the county’s general fund budget for the 2019/2020 fiscal year is now set at $63,919,039, up from Laughter’s initially recommended budget of roughly $60.5 million.

 
 

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