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Manager To Ask For No Property Tax Hike - Brevard NC

 

Last updated 4/23/2020 at 10:23am



Brevard City Manager Jim Fatland will recommend no property tax increase for the 2020/2021 fiscal year, which begins July 1.

Brevard City Council met on Monday in the County Administration building, where the meeting was live streamed for viewing to follow Gov. Roy Cooper’s Executive Order prohibiting gatherings of more than 10 people.

In the meeting, Fatland presented his ideas on how to approach the budget given the impact of COVID-19.

“Normally, the manager presents the proposed budget at the regularly scheduled meeting in May, but I’d like to share it with council now why we are doing certain things,” he said. “We are recommending that the revenue projections be lowered by $200,000. Two, we are recommending no increase in trash or recycling fees.”

He suggested budgeting the proposed sales tax at the 2010-11 level, which would reduce sales tax revenue by $700,000, with no budgetary transfers to the utility fund for reimbursement of the general fund.

“That would be a reduction of $600,000, which is a major impact to the general fund,” he said.

For expenditures, staff estimated that having no salary or benefit increase for city employees, no new positions, and no funds budgeted for travel and training will save the general fund $60,000.

Freezing vacant pos-itions, deferring capital equipment purchase and replacements, deferring capital improvements that are currently not under contract, and no budgetary transfers from the general fund to the Downtown Masterplan, the Parks and Trails and the Rosenwald fund would give a total savings of $425,000.

For the Water and Sewer fund, Fatland recommended no water and sewer increase.

“We are budgeting water and sewer revenue at 10 percent below last year’s level, which is about a $540,000 decrease in our projected earnings,” he said. “On a conference call I had last week with the State Treasurer’s Office, it was recommended that some cities consider a 20 percent reduction in revenue.”

Since Cooper ordered that local governments not charge late fees, there will be a decrease in the water and sewer budget by $20,000.

“As far as the expenditures will go, again, I recommend no salary and benefit increases for the city employees, no increase in the water and sewer fund, no new positions and no fund budget for travel and training,” he said. “This will save about $24,000. If we freeze the two vacant positions we have in water and sewer, that will save about $84,000, and then we defer all capital expenditures currently not under contract in FY22 and beyond.”

Councilman Gary Daniel asked if this included the Mary C. Jenkins Community Center.

“It’s pretty far along with planning, but we are talking about not preceding with projects not under contract, which it (the center) is not. Are we going to be able to do that?” he asked.

Fatland said his recommendation is to defer it to next spring.

“The design is now complete. I’d like to get the project done in the same fiscal year, but we just defer it. The loan payment wouldn’t be due until after the completion of the project,” he said.

Another recommen-dation, he said, would be formalized in May – requesting a revolving loan fund delayed for one year.

The $1.5 million is due May 1, 2021, and it is for the water and sewer fund.

“We are asking the N.C. State Treasurer if he can assist, because I don’t think they want to see their local governments and the state default on any debts,” Fatland said. “Subsequent to the conference call we had last week, the State Treasurer is sending out a form that came in Sunday night to every local government throughout the state asking them to take a hard look at its budget. When they adopt their budget, it needs to be very lean and mean, though it can be amended at a later date.”

Fatland will present the budget on May 18, with a budget workshop scheduled for June 1.

There will be a public hearing scheduled for June 15.

“What I’m looking for is a budget ordinance amendment discussion with City Council on Sept. 21,” he said. “We will have a lean budget if council supports that, but in September we will have new information for the first time. As you know, we started collecting our property tax last year. As of Aug. 31, 2019, we had collected 63 percent of our property taxes and that will be a good benchmark to compare our collections through Aug. 31 of 2019. “Also, the weakest months in sales tax are going to be the cash receipts we get from Raleigh in June through September, so we will have a full impact of what the sales tax means to this community. Then, we are hoping that if we budget conservatively, we can make an appropriation to free up money to make these things happen in this community.”

Fatland said that when a recession occurs, the private sector is hit first, and then the public sector follows.

“So far, we’ve had no layoffs during this time and we are still paying all of our employees,” he said. “If you wait until the full negative impact hits, it’s really too late. It’s important that we assess the negative impact on the city of Brevard’s finances on cash flow. We must be prepared to address the decrease in property taxes, sales taxes, and water and sewer utility revenue.”

In his 40 years of “preparing and monitoring” public sector budgets, he called this one the “most difficult budget that I have faced in my professional career.”

“When I first came to Brevard as your finance director in the fall of 2011, I shared with the mayor and City Council the importance of a balanced budget, our annual monthly and financial reporting, and our cash flow,” he said. “We have taken great pride in providing the essential services to our community, providing for our employees, replacing capital equipment with a solid replacement schedule, financing capital projects with grants, no- or low-interest loans, investing in our parks and trails and in our downtown, and providing funding for nonprofits in the community.”

Since 2011, he said he’s watched the monthly sales tax increase every year.

“The decline in sales tax today will not even be felt by this community until June, July and August,” he said. “Our most recent sales tax report came in on April 10, and that was for the month of January, and it was the highest in the last 10 years. However, this reflected sales before the advancement of COVID-19.”

The closure of restaurants and businesses and lodging facilities that have seen a “dramatic decrease in revenue” will equate to lower tax revenue for the city, he said.

“Gov. Cooper issued a second executive order requiring utilities not to be turned off for nonpayment by residential customers, so the city has not turned off any customer whether they are residential or business for nonpayment,” he said. “This, coupled with lower water consumption from restaurants and business closures, will dramatically affect our utility revenue for water and sewer enterprise funds.”

Fatland said the city remains in a “strong economic position.”

“We are really looking at the future of the City of Brevard, and if we want to come out of this thing strong, we need to make these tough decisions,” he said.

 
 

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