Cleveland avoids tax hike, will keep Spring Fest alive
SALISBURY — Cleveland town commissioners agreed Wednesday to avoid a tax increase and keep the spring festival going.
Instead, commissioners said they intend to remove a planned employee incentive bonus worth $12,000 from the 2013-14 budget. They decided to keep a 2 percent raise for town employees.
To balance its budget, the town will take $70,249 from its fund balance. Commissioners said they are hoping, based on past budgets, that Cleveland will end the year with more money than expected, so it can replace at least some of those funds.
The town is facing a budget deficit in the coming fiscal year because it will no longer be receiving more than $95,000 in hold harmless funds from the state.
The N.C. General Assembly approved those funds in 2002 when it repealed inventory and other taxes. It levied a half-percent local option sales tax to make up for the loss of local reimbursements. It also agreed to pay “hold harmless” funds to municipalities like Cleveland that couldn’t make up the money they lost.
But that agreement expired in 2012, and so far, state legislators aren’t planning to renew it this year.
During Wednesday’s discussions, Mayor Pro Tem Danny Gabriel suggested taking out both the raise and the bonus to help make up the shortfall. He said the town is paying for a 17.75 percent health insurance rate increase this year.
“We are absorbing that cost that’s not being passed on,” Gabriel said.
Commissioner Pat Phifer said he could agree to leaving out the bonus, because holding that back will affect employees’ salaries in future years.
At the first budget workshop last week, commissioners talked about a tax increase, possibly as high as 5 cents per $100 valuation.
Gabriel said residents have asked him why the town would raise taxes when it has more than $2 million in savings.
“I know you can’t keep going back to the bank, but it’s hard to tell them that you can’t go one year and give them a break when we have a good fund balance,” Gabriel said.
The town also had discussed cutting the $16,000 that funds its spring festival. But the quickly decided Wednesday to keep it.
Commissioner Mary Frank Fleming-Adkins said she heard from a number of people who wanted it to stay.
“They said they love the festival, they’ve been coming for years and they brought their kids out there,” she said. “I had one lady come up and give me $25.”
Also put on the table was the town’s $25,000 annual donation to the Cleveland Volunteer Fire Department.
Commissioner Travis Summitt said that funding was meant to stop at some point anyway, and the fire department is asking the county for a tax increase of its own.
“I think we need to take it out this year,” Summitt said.
But Phifer, Gabriel and Fleming-Adkins argued the town should keep the donation precisely because of the possible tax increase.
The fire department wants to raise the fire tax rate by 2 cents per $100 valuation to fund a new building that will house the fire department, the new EMS station and a Rowan County Rescue Squad vehicle.
Cleveland’s water fund budget — which must sustain itself — includes a 3 percent rate increase. The town’s sewer fund budget also includes a 7 percent rate increase to help fund a capital project scheduled for this year to replace a lift tank.
Contact reporter Karissa Minn at 704-797-4222.