City manager: $659,000 that state is withholding the biggest reason
SALISBURY — Faced with state cuts and requests for more services from Salisbury residents, City Manager Doug Paris is proposing a 2.9 cent property tax rate increase, 2.9 percent water-sewer fee increase, $1 monthly garbage fee increase and rate increase for Fibrant television customers.
“This year’s budget will be a challenging one,” Paris told City Council members Friday. “We are facing two contradictory pressures — the city’s revenues from the state of North Carolina will significantly decrease this year due to the General Assembly not continuing sales tax ‘hold harmless’ funding, while at the same time our community is requesting additional projects and services for the upcoming year.”
Nearly all of the proposed 2.9 cent property tax increase — 2.45 cents — would cover the loss of $659,000 caused by the expiration of “transitional hold harmless” allocations the state has been making each year to about 100 cities in North Carolina, including Salisbury.
The allocations were enacted by the legislature in 2002 to help communities make up the loss of shared revenue from a tax on business inventory, which had been repealed.
There was a concerted effort in the House of Representatives to extend the hold harmless funding, Paris said. N.C. representatives Harry Warren and Carl Ford, who represent Rowan County, and Rep. Julia Howard, who represent Mocksville, worked to extend the funding, but the bill did not have support in the Senate, Paris said.
The Senate decided to end the funding and use the money to help balance the state budget, he said.
“Our city depended on this revenue stream to provide for General Fund services,” Paris said.
If the city does not raise the tax rate next year by 2.45 cents to replace the state funding, Salisbury would have to cut services and reduce staffing in a year that residents have requested more services from city government, he said. The new fiscal year starts July 1.
The additional .45 cents in Paris’ proposed tax rate increase would go to four projects:
• Widening Newsome Road, including the city’s first bike lanes, $279,000
• Sidewalks on Bringle Ferry Road, $59,730
• Expanding public transit service to Wallace Commons and medical offices on Julian Road, about $40,000
• More street lights in the West End, about $40,000
These are the new projects and service expansions that people have advocated for during public meetings with City Council, Paris said.
“They are ultimately projects that improve the quality of life in Salisbury,” he said.
The city’s expense to widen Newsome Road and put sidewalks on Bringle Ferry Road would be 20 percent of the total cost. The state would pay 80 percent of the cost of the projects — about $1.1 million of the $1.4 million needed to widen Newsome Road, and $238,920 of the $298,650 needed for sidewalks on Bringle Ferry.
Councilwoman Karen Alexander said the city needs to make sure the public is aware of the opportunity to take advantage of state funding. Alexander and Councilman Brian Miller encouraged residents in the Newsome Road and Bringle Ferry Road areas to speak at the budget public hearing, set for 4 p.m. June 17 in City Hall, 217 S. Main St.
“Is this something that folks in that part of town really want?” Miller said. “I need to hear that.”
Mayor Pro Tem Maggie Blackwell and Mayor Paul Woodson both said they have heard from residents who support the projects.
Miller congratulated the city’s solid waste operation for becoming more efficient.
Two years ago, City Council discussed how much the city would need to charge for the garbage fee to cover the entire cost of garbage collection. At the time, full cost recovery would have required a fee of $14 per month.
City Council set the fee at half that — $7 per month — and asked staff to improve efficiency. Paris said with his proposed $1 increase, the garbage fee will eventually cover the entire operation.
Initially, the $1 increase will pay for the annualized cost of an automated single-arm trash truck and new rollout trash carts that work better with the automated truck.
The city’s current trash bins lack an edge and when the automated truck raises the bin to dump it, the entire cart falls into the trash truck, Paris said. This causes work to stop and results in safety issues when removing the bin from the truck, he said.
“With the direction we are headed, we expect full cost recovery to stabilize around $8 per month. This is a great value,” Paris said.
By comparison, Granite Quarry charges $11 per month and Spencer charges $15 per month for garbage pickup.
For the past two years, the city did not raise water-sewer rates. During the past 20 years, the annual rate increase has averaged 7 percent.
Paris said he is proposing a 2.9 percent rate increase next year to cover ongoing operational cost increases including:
• Increased maintenance to replace broken or leaking sewer infrastructure
• Higher cost for Salisbury-Rowan Utility employee health care
• A 2.5 percent merit pool for SRU employees.
Paris is proposing a 2.5 percent merit pool for all city employees who exceeded satisfactory on their last performance review. This marks the third year for proposed salary increases for employees.
Two years ago, the budget included the first proposed salary adjustment in many years, a $1,000 increase to the base salary for employees rated beyond satisfactory. Last year, employees received a 2.25 percent raise. This year, Paris proposes a 2.5 percent merit pool funded through the elimination of vacant positions, not the property tax increase.
Paris said he would go over the vacant positions proposed for elimination and demonstrate how they will not impact service delivery during the budget workshop, set for 10 a.m. June 23 and 24.
Paris said the goal of the proposed budget is to strike a balance between the cost of new projects and service expansions that residents desire while not burdening taxpayers with an excessive property tax increase. The biggest impact to the budget is the loss of the state’s hold harmless revenue, he said.
The budget does not include some projects that residents requested.
“While we understand there are additional citizen requests for funding and projects, as well as additional departmental requests for expanded budgets, we did not feel it was appropriate in this economic climate to propose a property tax increase above 2.9 cents,” Pairs said.
By comparison, Kannapolis is proposing a 4 cent increase, Rowan County a 3.75 cent increase, Granite Quarry a 2-to-2.5 cent increase and China Grove a 2 cent increase.
“If the Senate had passed the House version of the sales tax ‘hold harmless’ bill, we would only be proposing a .45 cent property tax increase this year for the new quality of life projects,” Paris said. “The bottom line is that the Senate’s action to not take up the House version of the bill will hurt us financially. This is no fault of our staff or our citizens.”
Councilman Pete Kennedy said the council had heard from Paris and now needs to hear from the public.