After loss of $95K in state funds, Cleveland board considers budget cuts, tax hikes

  • Posted: Wednesday, May 15, 2013 1:09 a.m.

CLEVELAND — The Cleveland Town Board of Commissioners may have to cut its budget or raise taxes to make up for more than $95,000 in lost state funding.

Commissioner Pat Phifer presented the town’s fiscal year 2013-14 budget estimates to the board Tuesday at a budget workshop.

“There’s not anything in here that we spend an exorbitant amount of money on. We don’t have a lot of extras,” Phifer said. “We may be able to squeeze by and cut back a little, but then what’s going to happen? We’re going to have to do it another year and another year.”

The town board agreed to set another budget workshop for Wednesday, May 22 at 7 p.m. The board will then hold a public hearing on the proposed budget at its June 3 regular meeting.

Cleveland’s general fund expenses are projected to be $892,182 next year, up from $836,842 estimated for this year. The increase in expenses is spread out among a number of rising costs and other needs.

Projected general fund revenues for next year total $829,630 — down from an estimated $911,890 for the current year. That leaves a gap in the budget of $62,552, or more if there are unexpected expenses.

Phifer said the town has built in very little contingency funding in its budget.

The drop in revenue in the coming year is due to the loss of $95,613 in hold harmless funds from the state.

Those funds fill the hole left by lost local reimbursements from the state for inventory and other taxes. The N.C. General Assembly repealed the reimbursements in 2002 when it levied a half-percent local option sales tax.

For municipalities like Cleveland, which couldn’t make up the loss in sales tax revenue, the state agreed to make “hold harmless” payments until August 2012.

“The state has not said one way or the other whether they’re going to appropriate that money this year,” Phifer said. “But the state is telling us that this is going away. Whether it goes away this year, next year or they do away with it incrementally, it is going away.”

Phifer said Cleveland could get by for a year by taking some money from the fund balance.

But the town will have to face the problem soon, he said, before its deficit gets worse. That means either generating more revenue or cutting expenses.

He said he doesn’t want a tax increase and hates to suggest it, but raising taxes may be the only way for the town to keep funding its services.

“We can save money by cutting costs, but we can’t make money by cutting costs,” Phiifer said.

Mayor Pro Tem Danny Gabriel said Cleveland may have to cut its $25,000 fire department donation, along with the $16,000 that funds its spring festival.

“I just can’t take away from public safety and think the citizens are going to want us to raise taxes for a festival,” Gabriel said. “Then again, they may show up and say they want the festival.”

Phifer said that making up $95,000 would require a property tax increase of 5 cents per $100 valuation, which would be about $7 per month for a family living in a $120,000 home.

Gabriel replied that while it may seem like much to ask, the fire department is also requesting a fire tax increase.

“That would be a double whammy,” he said.

Commissioner Travis Summitt agreed, saying that local residents are feeling the same burden of increased costs as the town.

“Their insurance is going up, too, and their fuel is going up, too,” Summitt said. “Where is it going to end?”

Contact reporter Karissa Minn at 704-797-4222.

Notice about comments: is pleased to offer readers the ability to comment on stories. We expect our readers to engage in lively, yet civil discourse. cannot promise that readers will not occasionally find offensive or inaccurate comments posted in the comments area. Responsibility for the statements posted lies with the person submitting the comment, not If you find a comment that is objectionable, please click "report abuse" and we will review it for possible removal. Please be reminded, however, that in accordance with our Terms of Use and federal law, we are under no obligation to remove any third party comments posted on our website. Full terms and conditions can be read here.

Do not post the following:

  • Potentially libelous statements or damaging innuendo.
  • Obscene, explicit, or racist language.
  • Personal attacks, insults or threats.
  • The use of another person's real name to disguise your identity.
  • Comments unrelated to the story.