Commissioners talk tax increase during budget presentation

Published 12:10 am Saturday, February 7, 2015

Rowan County Commissioners on Friday considered the possibility of a sales tax increase as a way to pay for expenses in the 2015-16 fiscal year.

With budget season just getting underway, County Manager Aaron Church presented several possibilities for the fiscal year 2015-16 budget to commissioners as a part of their planning retreat. His lowest option for the coming year included a 2 percent increase in expenditures and no additional proposals. The proposal was largely based on the current year budget.

“This is the perfect world,” Church said about the first proposal. “All the requests are no more than 2 percent, and the manager is able to recommend 2 percent because the revenues are flourishing.”

Subsequent proposals, which included items such as a small percentage pay raise for teachers, would’ve required a tax increase to achieve a balanced budget. Church clarified that actual requests for departments weren’t included in his presentation and the estimates were for illustrative proposes only. However, Church said a tax increase could be needed to achieve a balanced budget without significant increases in tax revenue.

The largest budget proposal presented included a 5 percent increase in school employee pay, a 2 percent increase in county employee pay, capital investment for economic development, expanding public safety and animal control services, an airport expansion and increasing the fund balance. All told, the largest proposal was nearly $149 million, more than $14 million greater than the county’s current year budget. That proposal, Church said, would require a 15-cent property tax increase.

“It would have to be done to make all of that happen,” Church said about a tax increase.”Again it’s for illustrative purposes. It could be up or down a couple of million. It could be up or down a couple of cents.”

He added that commissioners could control a $14 million increase simply by not approving it. Cutting budgets or approving a budget identical to the current year is another option.

As a reference point during discussion, Finance Director Leslie Heidrick said this year’s revenues are about the same as last year, but that’s not quite what she expected.

“As far as what we’re actually receiving, it’s exactly the same amount, which is odd,” Heidrick said.

Church said tax revenues could increase with new developments, including a retail shopping center off of Julian Road that’s scheduled to open this year. The revenue, he said, wouldn’t be nearly enough to fund a $14 million increase in the county’s budget.

Commissioners chuckled at the highest proposal made by Church. Whether it was to use the restroom or simply to take a break from budget talk, Commissioner Craig Pierce briefly left during the presentation and jokingly asked when he re-entered if there was any vomit on his shirt.

In discussion about an increase, commissioners shied away from property tax and instead focused attention on sales tax.

“A lot of us ran on economic development, which takes a long time to see a positive return on that, except for the jobs that may come in here immediately,” Vice Chairman Jim Greene said. “We’re already the highest rate of any of the counties around us. I don’t see the continuing increase in property tax helping us in the long run.”

Continuing to increase property tax, he added, just puts more of burden on property owners to fund county government.

Pierce said a sales tax would generate more revenue per percentage point because fewer Rowan County residents own property than shop and patronize local businesses.

“Because Salisbury has developed a policy of being the home of housing projects, you keep putting more and more people into this county that are going to demand more and more services from the county, and they’re not participating in any contribution,” he said. “So, if it’s a sales tax situation, it passes it on to everybody, even if they’re on government entitlement.”

As a proposed solution to a revenue shortfall, Pierce referenced a proposed sales tax increase which was forwarded to the N.C. General Assembly several years ago, but never formally considered. The sales tax increase was sent to Raleigh when State Rep. Carl Ford, R-76, was a commissioner. Ford was elected in 2008 to the Rowan County Board of Commissioners and to the House of Representatives in 2012.

The resolution never advanced in the state legislature, Ford said. To achieve any sort of increase, Ford said the county would need to pass another resolution.

“Even then, I don’t know if it’ll happen,” he said. “There’s been several entities that have tried in the last couple of years to get additional sales tax passed. I know I, as a citizen and a business owner, don’t want a tax increase, and, most of all, I don’t want a property tax increase.”

During Friday’s planning retreat, Church also presented a schedule that outlined the rest of Rowan County’s budget season schedule.

The schedule includes meetings with various county departments starting March 24 with the County Manager’s and Finance departments. The schedule ends on April 15 with the Rowan County Sheriff’s Office, which is schedule to start at 9 a.m. and continue until the end of the day.

The Board of Commissioners would talk about the budget during an April 29 joint retreat with the school board, according to the schedule. A public hearing on the budget would be scheduled for June 1 and the budget would have to be adopted by July 1, the schedule stated.

Contact reporter Josh Bergeron at 704-797-4246.